Right-Wing Media Help Romney Hide His Opposition To The Successful Auto Rescue
Right-wing media are abetting Mitt Romney's attempt in the third presidential debate to hide his opposition to the successful U.S. automobile industry rescue. In fact, Romney condemned the auto rescue, a rescue that experts say was necessary to save the industry.
During Debate, Romney Claimed He Had Put Forward A Plan That Would Have Done No Harm To The Auto Industry
During Debate, Romney Claimed He "Would Do Nothing To Hurt The U.S. Auto Industry." During the final presidential debate, Romney claimed that he did not want to liquidate the auto industry, but instead had proposed a plan for U.S. auto companies to go through a managed bankruptcy:
ROMNEY: But the president mentioned the auto industry and that somehow I would be in favor of jobs being elsewhere. Nothing could be further from the truth. I'm a son of Detroit. I was born in Detroit. My dad was head of a car company. I like American cars. And I would do nothing to hurt the U.S. auto industry. My plan to get the industry on its feet when it was in real trouble was not to start writing checks. It was President Bush that wrote the first checks. I disagree with that. I said they need -- these companies need to go through a managed bankruptcy. And in that process, they can get government help and government guarantees, but they need to go through bankruptcy to get rid of excess cost and the debt burden that they'd -- they'd built up.
ROMNEY: You know, I'm -- I'm still speaking. I said that we would provide guarantees and -- and that was what was able to allow these companies to go through bankruptcy, to come out of bankruptcy. Under no circumstances would I do anything other than to help this industry get on its feet. And the idea that has been suggested that I would liquidate the industry -- of course not. Of course not. [Transcript of the third presidential debate, 10/22/12 , via The New York Times]
Right-Wing Media Echo Romney's Claim That He Wouldn't Have Hurt The Auto Industry
Daily Caller: Romney Said "The Government Should Play A Role In Handling A Managed Bankruptcy" Of The Auto Industry. The Daily Caller's Matthew Boyle tried to substantiate Romney's claim that he would not have let the auto industry collapse by pointing to the presidential candidate' 2008 op-ed in which Boyle claims Romney supported government playing a role in the managed bankruptcy of the auto industry. [The Daily Caller, 10/23/12 ]
National Review Online: Romney Called For "Government Support After Restructuring." A National Review Online post claimed that Romney called for post-bankruptcy government support for the auto industry, and hence did not propose "to let GM and Chrysler go bankrupt." [National Review Online, 10/22/12 ]
Fox Nation: "Romney Crushes Obama In Heated Auto-Bailout Exchange." Fox Nation gave the headline "Romney Crushes Obama In Heated Auto-Bailout Exchange" to a transcript of the exchange between Romney and President Obama, in which Obama claimed Romney would not have provided government help for the industry as it restructured:
[Fox Nation, 10/22/12 ]
In Fact, Romney Consistently Opposed Giving Government Funds To U.S. Auto Companies
November 2008: Romney Pushed For A Private Auto Industry Bankruptcy Rather Than Giving Car Companies Government Funds. In a 2008 New York Times op-ed, Romney claimed if the auto industry got an injection of federal funds, "you can kiss the American automotive industry goodbye." Romney argued, rather, that the federal government should only "invest in substantially more basic research," and "provide guarantees for post-bankruptcy financing."
If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won't go overnight, but its demise will be virtually guaranteed.
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research -- on new energy sources, fuel-economy technology, materials science and the like -- that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.
But don't ask Washington to give shareholders and bondholders a free pass -- they bet on management and they lost.
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 New York Times, 11/18/08 ]
June 2011: Romney Said Automakers Should Have Gone Through Private Bankruptcy Without Giving Them Federal Funds. On June 9, 2011, the Associated Press reported that Romney said that the auto industry should have gone through bankruptcy without the rescue:
Romney may have grown up in Michigan -- his father, George, was the governor in the 1960s and an auto executive -- but he received a frosty reception yesterday when he returned there to campaign. Reason: Obama, through the bailout, will argue that he saved unionized autoworker jobs. Romney opposed the bailout.
"Some people believe in bailouts. I believe in the process of the law," the businessman and former Massachusetts governor told reporters. "The idea of just writing a check, which is what the auto executives were asking for, was not the right course ... It would have been best had the auto companies gone through the bankruptcy process without having taken $17 billion from government." [Associated Press 6/9/11 ]
February 2012: Romney Said Providing Funds To The Auto Companies "Was Crony Capitalism On A Grand Scale." In a February 2012 Detroit News op-ed, Romney claimed that the auto rescue was nothing more than Obama rewarding union bosses and "crony capitalism on a grand scale":
Three years ago, in the midst of an economic crisis, a newly elected President Barack Obama stepped in with a bailout for the auto industry. The indisputable good news is that Chrysler and General Motors are still in business. The equally indisputable bad news is that all the defects in President Obama's management of the American economy are evident in what he did.
Instead of doing the right thing and standing up to union bosses, Obama rewarded them.
This was crony capitalism on a grand scale. The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better.
My view at the time -- and I set it out plainly in an op-ed in the New York Times -- was that "the American auto industry is vital to our national interest as an employer and as a hub for manufacturing." Instead of a bailout, I favored "managed bankruptcy" as the way forward. [The Detroit News, 2/14/12 ]
Reuters: Romney's Claim That He Supported A Plan Similar To Obama's "Is, To Put It Politely, Far-Fetched." A Reuters opinion piece by Nicholas Wapshott explained that Romney is trying to have it both ways by saying he had the same plan for Detroit as Obama. After detailing Romney's repeated attacks on federal funds for the auto industry, Wapshott concluded: "Romney's sly suggestion now that you can't slip a cigarette paper between his plan and Obama's is, to put it politely, far-fetched":
[Romney's] insistence in the second debate that Obama's rescue of General Motors and Chrysler was the same as his plan was only half the story.
When Romney said "[W]hen you say that I wanted to take the auto industry bankrupt, you actually did. ... That was precisely what I recommended and ultimately what happened," he was leading voters to believe there was little difference between restructuring by the federal government car czar Steve Rattner and his own prescription: to let the firms go bust, let the markets clear, then reassemble the broken parts.
In February, in the heat of the GOP primaries, when Romney needed to appease those who believe the "creative destruction" creed of Joseph Schumpeter, he expanded on his thinking in the Detroit News and derided the auto rescue as "crony capitalism," a cozy collaboration between government and private enterprise much derided by the Koch brothers, major funders of Romney's super PACS.
"Obama stepped in with a bailout for the auto industry," Romney wrote. "[The] indisputable bad news is that all the defects in President Obama's management of the American economy are evident in what he did." Obama's plan saved millions of jobs, not only in the auto industry, but in the parts suppliers, dealerships, and all those who service motor production - and the storekeepers, realtors, teachers, and so on, who depend upon them - and, by the way, not only in Ohio but in all the Great Lake states and way beyond. Romney's sly suggestion now that you can't slip a cigarette paper between his plan and Obama's is, to put it politely, far-fetched. [Reuters, 10/17/12 ]
Even Though Government Funds Saved The Auto Industry
Ford CEO: Without Auto-Bailout The Entire Auto Industry "Would've Been in Real Trouble." In an interview with Fox's Neil Cavuto, Ford CEO Alan Mulally explained that without the federally financed auto-bailout the auto industry "would've been in real trouble." [Fox News, Your World with Neil Cavuto, 9/18/12 , via Media Matters]
Congressional Research Service: Without Injection Of Federal Funds, "GM Would Not Have Been Able To Pay Creditors, Suppliers, Or Workers." The non-partisan Congressional Research Service determined that General Motors would have been unable to pay its debts without an injection of funds in late 2008 and early 2009. And while GM successfully emerged from bankruptcy after receiving funds, if the government had not provided such funds, GM would have faced bankruptcy "with a less certain outcome."
After credit markets tightened and the recession reduced auto sales in the fall of 2008, General Motors restructured its operations through bankruptcy and began operations as a new company in July 2009. The Bush and Obama Administrations used TARP funds to provide capital to General Motors during this time, in exchange for a majority ownership stake in the company. Without the U.S. government assistance, GM would not have been able to pay creditors, suppliers, or workers and would most likely have entered bankruptcy earlier with a less certain outcome. TARP support enabled it to reorganize itself in a more orderly manner and may have reduced collateral damage to many auto suppliers and some of the other automakers who buy parts from them. However, it exposed the U.S. government to risk that not all the assistance would be recovered. [Congressional Research Service, 9/7/12 ]
Governor Granholm: "We Would Have No Auto Industry" Without The Auto Rescue. Former Michigan governor Jennifer Granholm explained in an April 29 This Week appearance that there was no private financing available for auto makers, and without government intervention, "we would have no auto industry." [Media Matters, 4/29/12 ]
Moody's Zandi: Without Rescue, "Automakers Appear Headed For Bankruptcy And Liquidation." In a November 2008 post, Moody's Analytics Mark Zandi explained that because of the lack of private credit, the government had to intervene on behalf of the auto industry, intervention that ultimately materialized. The auto industry otherwise would have been on a path toward "bankruptcy and liquidation":
The U.S. auto industry desperately needs financial help, and the federal government should provide it. Without aid, the industry seems headed toward a quick liquidation, which would mean hundreds of thousands of layoffs at just the wrong time for the sliding U.S. economy.
Without government help, the Big Three will almost surely enter the kind of bankruptcy from which there is no exit. They could file for a Chapter 11 restructuring, but would most likely end up in a Chapter 7 liquidation. Their plants and other operations would be shut and their assets sold to pay creditors. Given the collapse in the financial system and resulting credit crunch, so-called "debtor in possession" or DIP financing would be all but impossible to get. Bankrupt firms need DIP financing to operate--to pay suppliers, finance inventories and meet payroll--while they restructure. It is risky for DIP creditors even in good times, but they do get first dibs on the bankrupt firms' assets and can earn high rates and fees. But in a credit crunch such as we are experiencing now, nothing will convince creditors to take the risk. [Moody's Analytics, 10/21/08 ]
Krugman: Attempting Privately-Financed Bankruptcy "Would Mean Wiping Out Probably Well Over A Million Jobs." In a 2008 New York Times op-ed, Nobel Prize-winning economist Paul Krugman explained that because credit markets at the time were not in "reasonably good shape," privately-financed bankruptcy would have resulted in over a million jobs lost:
If the economy as a whole were in reasonably good shape and the credit markets were functioning, Chapter 11 would be the way to go. Under current circumstances, however, a default by GM would probably mean loss of ability to pay suppliers, which would mean liquidation -- and that, in turn, would mean wiping out probably well over a million jobs at the worst possible moment. [New York Times, 11/16/08 ]
Center For Automotive Research Chief Economist: "Private Bankruptcy For Automakers Would Not Have Been Possible ... Because Credit Markets Were Frozen." Reuters reported that the Center for Automotive Research (CAR) chief economist Sean McAlinden responded to Romney supporters' claim that the auto industry could've gone through privately-financed bankruptcy, saying that this was impossible given that "credit markets were frozen" because of the 2008-2009 financial crisis:
"There were two ways to do it - either use crony capitalism, where government picks the winners and losers, or you go through the traditional reorganization process," said Saul Anuzis, a Romney supporter and former head of the Michigan Republican Party.
Sean McAlinden, chief economist at the Center for Automotive Research, or CAR, said there was one problem with that argument: a private bankruptcy for automakers would not have been possible during the 2008-2009 financial crisis because credit markets were frozen and GM and Chrysler were unable to get private financing to keep operating through bankruptcy.
Without federal help, the companies could have been forced to shut down, which would have devastated parts suppliers and threatened solvent carmakers such as Ford and Toyota, McAlinden said. [Reuters, 2/10/12 ]
Center For Automotive Research: Auto Rescue Saved 1.3 Million Jobs. Reuters reported that the Center for Automotive Research also found that the auto rescue saved 1.3 million jobs in 2009. CAR chief economist Sean McAlinden called the rescue 'the most successful peacetime industrial intervention in U.S. history." [Reuters, 2/10/12 ]