On Tuesday, Ken Thomas of the Associated Press covered President Barack Obama's appearance at the Washington Auto Show and allowed Obama's criticism of Mitt Romney as being among those "willing to let this industry die" to stand, ignoring known history in the process.
Obama's statement marks him as a true ingrate, because for better or worse (my opinion: worse; your mileage, so to speak, may vary) Mitt Romney, after warning of the dangers of bailing out General Motors and Chrysler, shifted gears four months later and vigorously defended the President when the administration orchestrated a boardroom coup at GM which included the forced resignation of CEO Rick Wagoner. This was the point at which it became clear that Obama wanted the government to control what happened at GM until it either recovered or was forced into what most were already seeing as an inevitable bankruptcy filing. In a CNN interview the day the news broke, Romney complimented Obama for demonstrating "backbone." What follows are five paragraphs from Thomas's piece, a screen shot of the article CNN posted that day, and a transcript of the relevant portion of Romney's March 31, 2009 interview:
Obama plays up auto industry success story
... As the industry was collapsing in the fall of 2008, Romney predicted in a New York Times op-ed that if the companies received a federal bailout, "you can kiss the American automotive industry goodbye." Romney said the companies should have undergone a "managed bankruptcy" that would have avoided a government bailout.
"Whether it was by President Bush or by President Obama, it was the wrong way to go," Romney said at a GOP presidential debate in Michigan in November. Romney said the nation has "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."
Both the Bush and Obama administrations found themselves in uncharted territory in the fall of 2008 and early 2009. GM and Chrysler were on the verge of collapse when Congress failed to approve emergency loans in late 2008. Bush stepped in and signed off on $17.4 billion in loans, requiring the companies to develop restructuring plans under Obama's watch.
The following spring, Obama pumped billions more into GM and Chrysler but forced concessions from industry stakeholders, enabling the companies to go through swift bankruptcies. Obama aides said billions in aid - about $85 billion for the industry in total - was necessary because capital markets were essentially frozen at the time, meaning there was no way for GM and Chrysler to fund their bankruptcies privately.
Without any private financing or government support, they argued, the companies would have been forced to liquidate.
Here is the CNN report summarizing Romney's March 31, 2009 interview:
Here is the transcript of that CNN interview (bolds are mine):
Romney: I think a lot of people expected the president just to cave and to write a big check, and just hope for the better. I’m glad that he’s expressing some backbone on this and saying to those guys, “Hey, you’ve gotta get your house in order or you guys are gone. You’re going to go to bankruptcy.” That’s something I think he should have said months ago. There were a numbers of us who said that bankruptcy or a bankruptcy-like process was something that was needed to get GM and Chrysler, y’know, on their feet again. But by the way, kudos to Ford for running itself independently and apparently making a go of it on its own.
CNN Host: Now let me just bring you back to what you were saying about bankruptcy. In fact, you offered to call him on it. You said, quote, “In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.” Do you still think that that’s the best idea, to allow these companies to go into bankruptcy, restructure, then emerge?
Romney: Well it’s clear that just writing checks is not the answer. It really keeps the bondholders and the UAW and other stakeholders from taking the necessary haircuts that allow these companies to be competitive. You either have to go through a bankruptcy process, a pre-packaged bankruptcy, or special legislation giving an entity the power to get these companies through these difficult times. Or, if the parties want to do it voluntarily, great, but if they can’t do that — and apparently at this stage it’s looking like they haven’t been able to — then you’re going to have to have that kind of a club to get these companies to be able to restructure their excessive costs.
CNN Host: A couple of minutes ago, Jon Stewart made the joke about the government backing warranties here. The government’s gotten involved in so many things, backing warranties, guaranteeing bank accounts, buying up toxic assets. There was an interesting line in the New York Times this morning, quote, it said, “It means that the government is not only the ultimate guarantor of saving accounts and insurance policies – it will also cover that blown transmission.” The question that I had, in the next 30 days is, why would anyone but a Chrysler product, and in the next 60 days why would anyone but a General Motors product when they don’t know what the future of these companies is going to be, regardless of whether the government is backing the warranties?
Romney: Well, that’s in fact that’s why a number of folks, myself included, pointed out, said last November, “Don’t just write checks.” Because you’re sealing the fate of these companies, unless you help them restructure. Give confidence to the American people that they’re going to be here forever. If you don’t do that, well, just putting $17 billion into them is going to be wasted, and also, ultimately, seal their fate. You’ve got to get these companies back on a track where it shows that they can be successful and viable. That can only happen if they’re fundamentally restructured. Just writing checks, just saying you’re going to protect warranties, that’s not enough.
It's also worth noting that the Obama administration did what Mitt Romney said he wanted to see happen by taking GM and Chrysler into managed bankruptcies, except for one "little" thing: They were heavily managed by the government. As a result, United Auto Workers members at GM suffered very little while certain disfavored creditors suffered a lot (outrageous creditor favoritism, accompanied by White House intimidation, also happened earlier at Chrysler). The AP's Thomas "somehow" forgot to mention all of that too -- all in the name of letting the President get in a cheap shot feeding the untrue stereotype that Republicans and conservatives just wanted the domestic auto industry to die.
Cross-posted at BizzyBlog.com.
