Wednesday, November 09, 2011

Romney vs. Romney on the auto bailouts

In tonight's CNBC debate in Michigan, did Romney not tie himself in knots trying to differentiate the "managed bankruptcy he recommended for GM and Chrysler in November 2009 from the bankruptcies that the Obama administration in fact managed on their behalf? To the tape:
My view with regards to the bailout was that whether it was by President Bush or by President Obama, it was the wrong way to go. I said from the very beginning they should go through a managed bankruptcy process, a private bankruptcy process.

We have capital markets and bankruptcy, it works in the U.S. The idea of billions of dollars being wasted initially then finally they adopted the managed bankruptcy, I was among others that said we ought to do that.

And then after that, they gave the company to the UAW. They gave General Motors to the UAW and they gave Chrysler to Fiat. My plan, we would have had a private sector bailout with the private sector restructuring and bankruptcy with the private sector guiding the direction as opposed to what we had with government playing its heavy hand.
Notice that tangle in the middle: "they" "finally" did what I said "they" should do. Thing is, there were two "theys."  The Obama administration started pushing GM into "managed bankruptcy" two months after taking office.  And the Bush administration could not have done it in the midst of the financial meltdown.  Had there been no bailout, there would have been no re-emergence from bankruptcy.

So first, Romney excoriated the Obama admin for doing what he said should be done. But Romney must ever and always vilify Obama for undertaking policies he himself would have undertaken, so that's not good enough. Thus, Obama's 'managed bankruptcy' has to be distinguished from a 'private sector' managed bankruptcy -- managed by whom?  Does Romney want us to believe that the bankruptcy could have been managed without government funding -- and if not, that the government should have let someone else 'manage' it?  (Maybe, for example, a private equity chieftain? Oh, wait...) 

Then there's the complaint that  ' They gave General Motors to the UAW and they gave Chrysler to Fiat.'  Right -- 10%* to the UAW (a reduction of its pre-bankruptcy share) and 20% to Fiat, the only viable manager available. Are the UAW and Fiat public sector?  Presumably Romney would have been kinder to the bondholders and tougher on the workers -- champion of the middle class that he is.

Romney's 'private sector bankruptcy' would presumably have been far more effective than this unworkable plan, dependent on government bailout:
The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.
 The author of that proposal? Mitt Romney.

*Updated 11/11, via a WashPost fact check by Glenn Kessler

No comments:

Post a Comment

Share