As Bain Capital PR agent Charlyn Lusk (see my post from yesterday morning) and other AB readers know by now, I’ve posted a series of posts here over the last few days that discuss the oddity that Mitt Romney has repeatedly claimed whenever the subject of the auto company bailouts arises, that, while, yes, he had in fact argued against the government bailouts for the two companies, and had written a New York Times op-ed saying that a government bailout would spell the end of the auto industry in the U.S.—apparently on the presumption that up is down and down is up—he had argued for an alternative that would have been better: managed bankruptcy.
My posts, and now reporters here in Michigan covering Romney’s campaign stops in the state—see my post from last evening, and the corrected final sentence of it—point out that, Romney’s comments notwithstanding, the companies did file for bankruptcy. My first post on this, prompted by a new Romney op-ed, this one in the Detroit News, mentioned that thanks to government funding of the process (a.k.a., the bailouts), the bankruptcies were managed ones, which enabled both companies to emerge from the bankruptcy process much smaller but intact.
My posts also noted that, Romney’s claims to the contrary, there was no private funding available to fund these managed bankruptcies. And that in any event, the solution that Romney claims to have suggested—private-equity loans backed by government guarantees for those loans—would not have saved any public money. It would, however, have handed the keys to the U.S. auto industry to private-equity firms. And in a bizarre ad running on local TV news programs here in Michigan, Romney makes startlingly clear what the difference would have been, and why he so objects to the government’s bailout of the two companies.
The result of the bailouts are indisputable, and Romney no longer attempts to dispute them: Hundreds of thousands of jobs in the auto industry were saved, the companies are now successful, and both are hiring again in order to add plant shifts. He did, though, claim without explanation in his Detroit News op-ed that the wrong workers’ jobs were saved. I.e., union jobs, a theme he advances in the TV spot.
The titles of my earlier posts in this series were intended as sarcasm. The title of this post is not. This ad is among the oddest I’ve ever seen, and among the most revealing. In last evening’s post, I described it as a weird, incoherent ad that “actually hints at the elimination-of-union-workers thing, while actually advertising that ‘liberals’ got ‘Obama’ to save the auto industry. Seriously.”
Seriously. The ad begins with photos of from the 1950s. One is of an AMC car of that era, another of Romney as a child, with his father at the Detroit Auto Show, circa late ‘50s. Romney is the narrator, and talks of his lifelong love of the Detroit auto industry. Then, abruptly, there’s the current Romney, driving a car down a residential street in a Detroit neighborhood, talking about how great it is that the auto industry is coming back to life. But as he’s driving, he suddenly says something like, “Obama gave the liberals everything they wanted” in the auto bailout.
Like what, exactly? The unions gave huge concessions in exchange for the bailout. Huge concessions. In any event, the concessions were enough to allow the two companies to thrive less than three years later, and for one of them, GM, to regain its place, from Toyota, as the leading auto company in the world. It announced record profits yesterday, after the ad was made and shown repeatedly, but GM’s success has been clear for some months now.
So what’s Romney’s problem with the bailouts? Bruce Webb summarized it well, I think, in a lengthy comment to my post of last evening:
On a serious note Romney in his statements about Obama selling out to unions makes it clear that his definition of “managed bankruptcy” is narrowly focused on Bain (Capital not Consulting) style bankruptcies that include ripping up union contracts and stripping pension funds to leave a “leaner, meaner” company whose interests are 150% aligned with the shareholders. …
That is Romney sees two different fors of ‘managed bankruptcy’, one that attempts to reach Pragmatic/Utilitarian Greatest Good outcomes, and another that attempts to maximize returns on capital and sees the former as inherently illegitimate. Morally. Obama by allowing labor to be a stakeholder as opposed to 100% privileging capital was to that degree a traitor.
Adding it all up, that does seem accurate. And it’s hard to imagine a nicer hat tip to liberal policies than Romney’s acknowledgment that the current success of GM and Chrysler, and, correspondingly, the suddenly enlivened economy of Michigan at least, and probably of Ohio (another big auto- and auto-supplier manufacturing hub) too is due to Obama’s caving into all the liberals’ demands. GM announced bonuses of up to $7,000 for most of its blue-collar workforce yesterday.