President Obama looks at a Jeep during a visit to the D.C. Auto Show at on Jan.… (Olivier Douliery/Getty…)
Mitt Romney has car trouble. No, we're not referring to the notorious 1983 incident in which he forced the family dog to ride in a crate strapped to the top of his station wagon, but a matter likely to hurt him far more with blue-collar voters: his contention that the bailouts of the U.S. automotive industry by both Presidents George W. Bush and Obama were a bad idea.
If a speech last week by Vice President Joe Biden is any indicator, the Obama campaign is going to use the auto bailouts as a sledgehammer against Romney, should the latter emerge as the GOP nominee. Rallying a union crowd in Ohio, Biden slammed Romney for claiming that bailing out the Detroit automakers would turn them into the "living dead."
"Gov. Romney's predictions of a living dead? We have now living proof: a million jobs saved, 200,000 new jobs created," Biden said, to cheers. With Romney trying to sell himself as a better steward of the economy than Obama, his demonstrably wrong conclusions about the bailouts are grist for the Obama attack mill (the other GOP presidential contenders also opposed the bailouts, but the Obama campaign is focusing its criticisms on Romney). In 2008, Romney wrote an op-ed for the New York Times that began, "If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye." Not only has the industry failed to vanish, but GM has reported record profits and regained its crown as the world's biggest automaker.
COMMENTARY AND ANALYSIS: Presidential Election 2012
Romney compounds his problem by continuing to insist the bailouts were a mistake. His argument is twofold: The companies should have been allowed to go through a "managed bankruptcy" without government intervention, which would have reduced taxpayer risk. And, because the restructuring that followed the bailouts ended up handing large ownership stakes in GM and Chrysler to the United Auto Workers, "the president gave the companies to the UAW." Both propositions are disingenuous. A bailout-free bankruptcy would indeed have been a preferable option in 2008, but it wasn't a realistic one. The automakers needed a big infusion of cash to stay afloat during bankruptcy proceedings, and no bank was willing to provide it, making Washington the lender of last resort. Had the government failed to act, not only would the two companies likely have been liquidated but they would have taken much of the U.S. auto sector — parts makers and other suppliers — with them, causing devastating job losses. Meanwhile, the UAW ended up with big shares in the automakers because the companies were so deeply indebted to the union. That would have been the outcome even if Romney's bailout-free bankruptcy had taken place.
If ever there were an issue begging for a Romney flip-flop, the auto bailouts would be it. By uncharacteristically sticking with a losing position, Romney could be handing the keys to manufacturing states to Obama.