Romney continues his flip flops on auto industry bailout

By Ed Brayton 2/19/10 7:44 AM

Mitt Romney, former governor of Massachusetts and son of former Michigan Governor (and president of American Motors) George Romney, continues to flip all over the place trying to find a coherent position on the auto industry meltdown, what Obama did to stop and what he would have done if he had been elected president.

During the 2008 election, when he was campaigning for the Republican nomination for president in Michigan, he was all about getting federal help for the Big Three:

“The question is, where is Washington?” Mr. Romney said, speaking to a gaggle of reporters across from a General Motors transmission plant near Ypsilanti, where 200 layoffs were announced this week. “Where does it stop? Is there a point at which someone says ‘enough’? Or are we going to allow the entire domestic automotive manufacturing industry to disappear?”

Once the campaign was over and Obama was in the White House and working to help prevent a collapse of the auto industry, he was suddenly against a federal bailout for the auto industry, writing in an op-ed in the New York Times, “IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye.”

He wanted Obama to let GM and Chrysler go bankrupt — which they did, of course, but it was a managed bankruptcy combined with a federal bailout because there was no possibility of the companies getting debtor-in-possession financing to survive the bankruptcy on the open credit markets.

And now Romney is at CPAC in Washington telling the assembled conservative activists that he is bullish on the future of the auto industry. Of course, he can’t give Obama any credit for that, or mention that if he’d gotten his way (well, his second way, not his first), there would likely be no auto industry to feel good about. So he’s stuck having to say things like this:

Asked about Obama’s role in the managed bankruptcy of General Motors Corp. and Chrysler Corp., Romney said he would not have “sent $10 billion-plus to the industry prior to working out a managed bankruptcy. I think had the companies pursued that course, with the help of the government, of course, that they would have been in a far better position to protect their shareholders and their bondholders than they were having accepted federal funds.”

If you can find a coherent position in there, you’re a better person than I. GM and Chrysler did pursue a managed bankruptcy with the help of the government. But there was no way at all to do that without federal funds being involved. This isn’t even being against it before he was for it; this is being against it and for it simultaneously.

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adawakeman42

Good article. The way I see it places like used car dealerships NH are seeing good sales still because of consumer hesitance to buy new cars. The auto industry could change this with electric cars but simply doesn't appear to be pushing for this enough.

BillZ5

Mitt has been pretty consistent on the auto industry. When he campaigned for president, he specifically said there should be no bailout. Instead, he called for increasing the nation's investment in technology research, which would benefit the Big 3. He was also way ahead of everyone else in late 2008 when he said the auto companies should be reorganized under the protection of the bankruptcy laws. If we had followed his advice then, taxpayers would have saved $50 billion that was wasted in propping up a failing enterprise.

ebrayton

Um. The companies DID reorganize under the protection of the bankruptcy laws. We did follow his advice. Where he was wrong, and you are too, is in thinking that such reorganization could have been done without government financing. There was no chance that GM and Chrysler were going to be able to secure debtor-in-possession financing in the credit markets. No government loans, no managed bankruptcy, plain and simple.

dnlchisholm

Mitt isn't flip flopping at all. If you take all of Mitt's comments on the auto industry in context, you'll realize that Mitt hasn't changed at all. Back during the republican primary in Michigan in 2008, Mitt was complaining about the ridiculous regulations that Washington had put on the Big three that reduced their competitiveness. Then, in his piece on the auto bailouts, the NYTimes created the headline that got so much attention. If you read the article, Mitt actually wanted GM and Chrysler to use the opportunity to reduce duplications and inefficiencies and excess costs which they would've had the government let them. Instead, they avoided a lot of tough bu necessary decisions because the government bailout enabled them to. Ford not taking the bailout was the best thing that ever happened to them.

ebrayton

So if he disagrees so much with what the Obama administration did, and thinks all Obama did was make sure the companies could avoid the tough decisions that they needed to make, why is he now saying that he's so optimistic about the future of those companies? Both GM and Chrysler DID reduce their costs enormously in the managed bankruptcy. They are now in a position to break even at a far lower rate of domestic auto sales than before. But there was no way they were ever going to survive any bankruptcy without government financing, no matter who was in the White House. There was no way either company was going to be able to secure the financing to go through the bankruptcy on the open market given the tight credit conditions. A bankruptcy without those government funds would have meant the liquidation of both companies -- and still would have cost taxpayers at least as much as was loaned to the two companies because of the 3 million lost jobs and the government having to take over the pension systems for both companies (not to mention the further damage it would have done to property values due to a vastly increased number of foreclosures).

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Romney continues his flip flops on auto industry bailout