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The New York Times confirms that Bain Capital really, really REALLY did not want to lend GM and Chrysler money for their managed bankruptcies. Really.

According to an article in today’s New York Times, Bain Capital was asked to do so, but declined.  Well, actually it was asked to help GM out, and declined.

The article recounts much of the controversy concerning Romney’s actual position on a government bailout for the companies back in 2008-09 and his current statements about it, and how these are playing out now politically here in Michigan and possibly in other states in which there is a heavy auto-industry presence.  About two-thirds down, the article says:

To go through the bankruptcy process, both companies needed billions of dollars in financing, money that auto executives and government officials who were involved with Mr. Obama’s auto task force say was not available at a time when the credit markets had dried up. The only entity that could provide the $80 billion needed, they say, was the federal government. No private companies would come to the industry’s aid, and the only path through bankruptcy would have been Chapter 7 liquidation, not the more orderly Chapter 11 reorganization, these people said.

In fact, the task force asked Bain Capital, the private equity company that Mr. Romney helped found, if it was interested in investing in General Motors’ European operations, according to one person with direct knowledge of the discussions.
Bain declined, this person said, speaking anonymously to discuss private negotiations.
This is an especially serious matter because the very foundation of Romney’s candidacy is his vaunted business acumen.  If he really believed that private funding existed for managed bankruptcies of these two companies, then he based that belief on something other than fact, something other than evidence.  And if, as is likely, he well knew that no private funding would be available, and that without government funding these companies’ bankruptcies would be liquidations, then why was he claiming otherwise?

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A final (for now) comment on Romney’s virulent hostility toward the UAW (and organized labor in general, and union members)

Late Tuesday night, a Washington-based blogger for The Economist who covers U.S. politics posted a several-paragraph takedown of Romney’s op-ed published that morning in the Detroit News.  I learned of the op-ed yesterday when I read a then-two—day-old entry about it by Matthew Yglesias (not a favorite of mine, but I’ll leave that subject for another post) on Slate’s Moneybox blog. The key paragraphs of the Economist post are:

The purpose of Mr Romney’s op-ed is to clarify his position on the auto bail-out ahead of Michigan’s primary on February 28th. And the piece rivals Cirque du Soleil in its display of contortions. Mr Romney seems loth to gush about the success of the bail-out, noting only the good news that “Chrysler and General Motors are still in business”. He certainly doesn’t mention that 2011 was the best year for America’s carmakers since the financial crisis, with each of the big three turning a solid profit. But he does imply that this achievement is a result of his own advice. “The course I recommended was eventually followed”, Mr Romney writes.

As with much of Mr Romney’s excessive rhetoric, there is some truth to this statement. Following the bail-outs, the president eventually forced Chrysler and GM into bankruptcy, a step Mr Romney thought should occur naturally. And the government oversaw painful restructurings at both companies, which were largely in line with Mr Romney’s broad suggestions. But the course Mr Romney recommended in 2008 began with the government stepping back, and it is unlikely things would’ve turned out so well had this happened.

Free-marketeers that we are, The Economist agreed with Mr Romney at the time. But we later apologised for that position. “Had the government not stepped in, GM might have restructured under normal bankruptcy procedures, without putting public money at risk”, we said. But “given the panic that gripped private purse-strings…it is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended.” Even Ford, which avoided bankruptcy, feared the industry would collapse if GM went down. At the time that seemed like a real possibility. The credit markets were bone-dry, making the privately financed bankruptcy that Mr Romney favoured improbable. He conveniently ignores this bit of history in claiming to have been right all along.

But the next paragraph, the final one in the post, begins:

In other areas of his op-ed Mr Romney is more accurate. Unions did win some special favours in the bail-out deals, though they are not as egregious as the candidate claims. For example, a health fund for retired workers was unfairly favoured over secured bondholders at Chrysler.

Forgive me if I’m missing something here, but why, exactly, was it unfair for the Obama administration to force the favoring of a health fund for retired workers over secured bondholders at Chrysler in the government-funded restructuring of that company?  Don’t bondholders take the risk of default when they purchase the bonds?  Don’t investors risk losing all or part of their investment when they invest?  Isn’t that an inherent part of capitalism?

And while it’s true that in bankruptcy proceedings, pension and other retirement-benefit agreements, including those negotiated in labor agreements, can be dissolved or significantly altered, why—considering that retirement benefits are given as deferred payment for the workers’ labor—is it unfair for a government that is funding a “managed” bankruptcy to favor a health fund for retired workers over bondholders?

This strikes me as at the very heart of what Mitt Romney is about: his bald preference for government policy that favors the wealthy over everyone else.  Santorum probably will win the primary in Michigan and the primary in Ohio a week later.  But what will put him over the top in these rustbelt states is not the social conservatives but instead blue-collar voters whose primary (and general-election) concern (yes, pun intended), is economic policy. 

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Clarification (my final one, I hope)

I just want to clarify again that the title of my original post, “Breaking news: Bain Capital wanted to lend money to GM and Chrysler for managed bankruptcies,” was intended as facetious, and that I had no idea that there was a recent report, rescinded as it turns out, that Bain Capital had been involved somehow in discussions with the Obama administration about the auto bailouts in early 2009.  Much less did I know that Bain Consulting apparently did advise the Obama administration concerning whether to go forward with the auto bailouts that the Bush administration had set in motion.   (Formally advised the Obama administration? At the request of the Obama administration? I have no idea.)

The point of that first post was to highlight that while Romney apparently has been claiming that Chrysler and GM could, have found private funding for “managed” bankruptcies (and that this somehow would have resulted in no layoffs, or fewer layoffs, or something), the absolutely clear truth, as both the Bush administration official and the Obama administration officials involved in the auto bailouts, have said all along, there was no private funding available to finance these huge restructurings, and so without the government bailouts these bankruptcies would have been liquidations.  Bain Capital is a venture capital operation, yet it did not offer to fund managed bankruptcies for these companies.  Either did any other private-investment company.

The title of that post was supposed to highlight that Romney’s claim is false. There was no private capital available, from Bain Capital or Goldman Sachs or any other firm, for “managed” bankruptcies of these companies—bankruptcies that would have allowed these companies to remain operational and recover.  My second post, “BREAKING NEWS: Bain Capital Really, Really, REALLY Did Not Want to Lend GM and Chrysler Money For Their Managed Bankruptcies!*”, which discussed Bain Capital’s PR agent’s email to Dan, explained this.  Or tried to.

But here’s another clarification: As several commenters to my posts have pointed out, Bain Capital and Bain Consulting are not as unrelated as Bain PR agent Lusk wants y’all to think.  They’re separate legal entities, and Bain Consulting, unlike Bain Capital, does not actually buy companies, in highly-leveraged purchases or otherwise, and restructure them.  Instead, they just sorta, I guess, arrange for others to do that.  Still, these two companies are … oh, I don’t know …second cousins, once removed?

Meanwhile, on the other subject of my posts of the last few days: Romney’s weird ad playing on the local evening news shows here in Michigan, in which he incoherently attacks Obama, as per “the liberals’” demands, he says, for negotiating with the UAW and obtaining only those union concessions necessary to allow these companies to emerge from bankruptcy and become profitable again?  According to an article in yesterday’s Washington Post, Which I read last night, Romney’s been making virulently anti-organized-labor, and especially anti-UW, statements a regular part of his speeches at campaign stops throughout Michigan in the last week or so, because he thinks Tea Partiers are anti-labor and, in Michigan, are especially anti-UAW. 

Ooookay. So this guy, who made more than $200 million running a “restructuring” venture capital company, thinks a virulently anti-organized-labor stance will help him get elected president, when his chosen Exhibit A is a union whose members made large concessions in order to keep their employer companies afloat and whose employer companies are now very profitable under the revised union agreements.

My only fear is that in the general election, Obama won’t point this out.  Although the unions will.  And if news coverage of the primary campaign in Michigan this week is any indication, so will the news media.

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Romney Ad in Michigan Advances “Liberal” Policy. Really.

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.

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Mitt Romney Reads Angry Bear!*

After the Bain Existence controversy about my post about Bain Capital yesterday, and whether or not Bain Capital really wanted to lend Chrysler and GM money to fund their managed bankruptcies, and about whether or not Bain Capital’s PR agency understands the concept of sarcasm and can recognize it even when it’s wearing a red flag, and about whether or not Mitt Romney knows that Chrysler and GM did file for bankruptcy and did undergo managed ones that, thanks to the government’s bailout money, enabled them to emerge as ongoing entities rather than pieces for liquidation, I swore off politics posts on AB and figured I’d just limit myself to my tried-and-true subject matter: legal analysis.

But, well, I live in Michigan, which is both Ground Zero for the auto companies and Ground Zero for the next big day of primaries.  And, well, Romney was in the state today (albeit not my part of the state) giving a speech and being interviewed by local journalists.  And his speech and the interviews were covered on the local evening news broadcasts, including the one I watched. 

I still might have resisted commenting, were it not that Romney apparently was asked by a reporter this afternoon why he continues to imply in his spoken comments and op-ed pieces that GM and Chrysler did not go through bankruptcy, or did not go through managed bankruptcy, as he repeatedly now says he recommended at the time, and instead were given the federal bailout money to survive without filing bankruptcy.  I say “apparently,” because the news clip I saw, on the Detroit metro NBC affiliate (clickondetroit.com), showed only Romney’s answer to whatever question was asked; it did not show the reporter asking the question. 

But, speaking between clenched teeth  embedded in a frozen “drop dead, you liberal elite member of the news media” smile—eyes flashing with barely-controlled rage—he said, um, that the car companies did file for “managed bankruptcy,” and that they finally did so at his urging, having earlier refused to do so, and that it is very nice that the companies have survived and are thriving now.

Which it is.  Very nice, that is.  But now that Romney has conceded that managed bankruptcy is in fact what the companies underwent, he now really should also concede that the only way they were able undergo and emerge from managed bankruptcy, rather than go through just a plain old bankruptcy whose endgame is liquidation, is that the federal government’s bailout financed it.  And that there was no other possible source of that financing.  Unless, of course, Bain Capital could done it, maybe through leverage provided by Goldman Sachs, which might have had the funds for it because it already had been bailed out by the government. 

Or maybe Bain Consulting (no relation to Bain Capital) had an even better idea—if only they’d been asked.

The managed bankruptcies that Romney had in mind in early 2009 for the two car companies pretty clearly were liquidations that would then allow Bain Capital or other venture capital firms to buy small parts of these companies, eliminate union workers, and … I’m not sure.  A weird, incoherent ad his campaign’s been running on the local news broadcasts actually hints at the elimination-of-union-workers thing, while actually advertising that “liberals” got “Obama” to save the auto industry.  Seriously.

Anyway, in keeping with my promise in my earlier post today in which I said I would never, ever—ever—again write something facetious would expressly identifying it as sarcasm, satire, or just a plain old joke, I make the following disclaimer: the title of this post is intended as a joke.  Mitt Romney probably does not read Angry Bear.  Even though he did seem awfully well prepared for the question.

The reporter who asked him the question must be an AB reader, though.*

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*That sentence was edited after this post was posted, to make clear that the reporter was quite well prepared, and that of course that indicates that he had read my AB post about Romney’s weird failure to acknowledge that the two car companies did go through managed bankruptcy and emerged from it as ongoing companies only thanks to the government’s financial assistance (a.k.a., the bailout) during the bankruptcy process.

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BREAKING NEWS: Bain Capital Really, Really, REALLY Did Not Want to Lend GM and Chrysler Money For Their Managed Bankruptcies!”*

Oookaaaayyy.  Normally when I receive an email message that I want to forward or mention elsewhere, I first ask permission of the emailer.  Not this time, though.

The following email was sent to Angry Bear last evening, and forwarded to me by Ken late last night:

On Wed, Feb 15, 2012 at 6:27 PM, Charlyn Lusk <CLusk@stantonprm.com> wrote:

You currently have a blog posting regarding Bain Capital, GM and Chrysler, which is incorrect.  Refer to the CNBC retraction below.  Please update your story accordingly.

Best,

Charlyn Lusk

Charlyn Lusk

Stanton Public Relations & Marketing

880 Third Avenue

New York, NY 10022

            212-366-5300       (main)

            646-502-3549       (direct)

Allow me, please, to not just refer the CNBC retraction Ms. Lusk links to be to republish it here in its entirety:

WITHDRAWN: CNBC Report that Bain Advised Obama Administration on Auto Company Bailout Has Been Refuted

By Andrew C. McCarthy

January 13, 2012 8:56 A.M.

UPDATE: CNBC HAS WITHDRAWN ITS EARLIER REPORT THAT MITT ROMNEY’S FORMER FIRM, BAIN CAPITAL, ADVISED THE OBAMA ADMINISTRATION ON THE AUTO BAILOUT. CNBC says the “Bain Consulting” in the report turns out not to be related to Romney’s Bain firm.

I am deleting my earlier post about it, though I will save it in the event there needs to be some record of it — I haven’t thought that through, but in fairness to the Romney campaign, I want to delete the earlier post now.

Ah. Who knew?  Okay, well, who who doesn’t read the National Review or watch CNBC knew?

Anyway … late last night, Ken emailed Ms. Lusk back:

Sent: Wednesday, February 15, 2012 11:43 PM
Subject: Re: Your story on Bain Capital, GM and Chrysler

Updated to make the distinction clear.  I leave it to Beverly if she wants to change her title and/or any of the other text.

Ken

He cc’d it to Dan, Bruce Webb and me.  I responded, clicking the “All” response button:

Yikes.  The title of that post was intended as facetious.  Given the content of the post—which did not say that Bain actually wanted to lend GM and Chrysler money for their managed bailouts, but instead made the point than no private equity money or other private-source funding was forthcoming or likely to be forthcoming—I assumed that it the facetious intent of the title of the post would be obvious.

Silly me.  But then, I actually had no idea that there had been a report last month saying that Bain had … whatever … much less that the report was withdrawn.

Geeeeez.

I will write up a separate post now explaining this. The title of the post?  How about: “BREAKING NEWS: Bain Capital Really, Really, REALLY Did Not Want to Lend GM and Chrysler Money For Their Managed Bankruptcies!”

Beverly

By then, Dan had emailed me saying simply, “Can you follow up on the correction?

And so I have. 

Lessons learned:

1.      Never, ever write facetiously for public consumption without specifying that what you’re writing is intended as sarcasm, satire, whatever;

2.      Subscribe to the National Review, because you never know when it might have to retract a statement about a corporation, at the request of the corporation’s PR firm;

3.      That Bain Capital is an entity entirely distinct from Bain Consulting; and

4.      That I really need to retain a PR firm.  Or a lawyer.

What I didn’t learn, but really want to now, is what, exactly, Bain Consulting advised the Obama administration about the auto bailouts.  I can guess, though.  That it should allow the two auto companies to file for unsupported bankruptcy, so that vulture capitalists—er, venture capitalists can acquire what they want of the companies’ remnants on whatever terms they dictate, maybe?

Beverly

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*I just corrected the formatting of the post so that the font and font size are consistent throughout.  The weird font changes in the original were the result of cut-and-paste things (as well as my utter cluelessness about how to avoid such things). I did not intend that parts of the post make it look like I was shouting. Not that I wouldn’t mind shouting.  Or screaming.  But ….

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BREAKING NEWS: Bain Capital Wanted to Lend GM and Chrysler Money For Their Managed Bankruptcies!***

**This appears to be incorrect. It was based on a story that CNBC has now updated. It was “Bain Consulting,” not Bain & Co., that advised the government on re-financing the automobile companies. — klh

Ah!  Mystery Solved! Yesterday,in my post, “Crony Capitalism On A Grand Scale“—the title of the post borrowed from an op-ed piece by Romney in yesterday’s Detroit News characterizing the auto bailouts that way—I noted that Romney seems unaware that both companies filed for bankruptcy.  Romney says, as apparently he says often when forced at gunpoint to explain his opposition to those bailouts, that he was for the idea of “managed bankruptcy” for both companies, and never actually acknowledges that that is what happened.  Much less that these bankruptcies were “managed,” and therefore were able to emerge from bankruptcy as ongoing enterprises rather than as pieces of physical assets, machinery and the like, for a Bain Capital-owned company in the process of being restructured, to scavenge and resell.

This was a mystery to me. Sure, Romney regularly makes up facts to match Tea Party of Club for Growth ideology.  But in Michigan,everyone—everyone—knows that GM and Chrysler went through formal bankruptcy proceedings.  In court. How, I wondered, did he expect to get away with pretending that these companies didn’t go through managed bankruptcies?

Ah! Mystery solved! In an ABC News report last night by Chris Bury (a genuine news reporter,not a pundit disguised as one, and a long-ago favorite of mine from back when he was reporting for Nightline), illustrates the impact of the bailouts on Michigan’s economy, which is suddenly resurgent.  And in the report, which is today’s Yahoo News highlighted ABC NEWS video, explains what Romney means by “managed bankruptcy.”

Turns out, he means, best as I can tell anyway, that private equity firms lend the corporation the money to get through bankruptcy, in exchange for ownership of the company after its emergence from bankruptcy.  In the case of GM and Chrysler, many tens of billions of dollars.  In an op[ed in the New York Times back then, he described the managed bankruptcy he had in mind as one in which the government would guarantee private loans, but it would not itself provide the financing.  Which raises the question of how, exactly, this would have saved the government money, since the companies are repaying the government the loans to the extent possible.

But it also raises the question of Romney’s recommendation that the government play Russian Roulette with the auto industry.  Bury’s report points out that Bush Administration officials who put together the initial bailout legislation recognized, as did the Obama administration officials who took over, that the chance was nil that private equity money in such large sums would be forthcoming.  And why he conflates ideology with fact, even when the stated fact is baldly nonsensical. “If(automakers) get the bailout … you can kiss the American automotive industry goodbye,” Bury’s report quotes Romney as saying in that New York Times op-ed.  Destroying the industry by saving it?

Meanwhile, an editorial in today’s Washington Post* says,in complaining about Obama’s proposal to raise taxes on bailed-out banks in order (the editorial says) to cover the auto bailouts:

TARP was the price the country paid for a public good — financial stability — that the country needed. It’s inconsistent for the president to hail the bailout of one private industry —autos — while playing politics with the bailout of another — banking — that was and is no less necessary to a modern economy. It compounds the inconsistency to demand that the latter pay for the former.

Apparently the [Post]’s editorial board thinks GM and Chrysler caused the housing bubble and sold subprime mortgage-backed securities.

—–
*The sentence has been corrected to say that the editorial is in today’s Washington Post. Originally, the sentence said incorrectly that the editorial is in today’s Wall Street Journal.

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***Yup.  Definitely incorrect.  See my above post on the subject. 

As I just wrote in response to a comment, I’m still sorta dismayed that the title of my post was treated, even by a PR firm representing (I guess) Bain, as a representation of fact rather than as the sarcasm that it pretty clearly was.  

Oh, well.

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UPDATE to “What if Eisenhower’s budget were your (grandparents’) family’s?”

In my first of two posts yesterday, “What if Eisenhower’s budget were your (grandparents’) family’s?”, about an ABC News item from the evening before discussing Obama’s proposed 2013 budget, and propagating the truism, so popular among pols and pundits, that the federal budget is like a family’s, only with eight zeroes following total expenditures, income receipts and carried debt, I mentioned that the piece contained a February 2009 clip of Obama promising that his final first-term budget would halve the deficit that his administration inherited.  I saw the video because it was highlighted on the Yahoo News pages yesterday morning.

Jake Tapper, ABC’s White House correspondent said Obama was now breaking that promise. I pointed out that the promise probably was based in part on Obama’s intent to end some of the Bush tax cuts (the clip shown was just a few words of Obama’s comments).  Reader RJS noted in the comments to my post that Dean Baker also posted a takedown of the ABC News report and of the silly federal-budget-and-family-budget analogy. 

Baker also mentioned Tapper’s inclusion of the clip of Obama’s February 2009 promise to halve the deficit, and points out that the main reason that the promise is unfulfilled is that the economic downturn proved far more severe than Obama and most mainstream economists recognized at the time, and so the tax revenues have been correspondingly lower than anticipated.  

I thought of mentioning this in my post yesterday, but didn’t because, well, y’know, a promise is a promise, and the Tapper’s point concerned specific economic legislation proposed by Obama.  Baker notes that if Obama kept his promise now and proposed a budget that halved the deficit for fiscal 2013, the deficit reduction would be, um, pretty temporary, since drastically cutting government spending in a weak economy with a persistently high unemployment rate would weaken the economy further, leading to lower tax revenues ….

Of course, communicating this requires a short explanation of Keynesian economics.  Which—who knows?—maybe Obama will actually start doing.  If a gun is held to head.

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Crony Capitalism On A Grand Scale

An article in yesterday’s New York Times, which I think deserves much more notice than it seems to be getting,  says that last week, “Mr. Romney’s campaign held an elaborate “policy round table” fund-raiser at a Washington hotel, featuring panel discussions run by lobbyists [who are] former cabinet officials or members of Congress.”
Today in the Detroit News, that very same Mr. Romney has an op-ed piece complaining that the GM and Chrysler bailouts were “crony capitalism on a grand scale.”  The reason for the epithet?  That by prior agreement heading into the managed bankruptcies of those companies—bankruptcies that in fact were “managed” ones rather than just plain bankruptcies, and that therefore allowed the companies to emerge from bankruptcy and continue operating—union jobs received more protection than non-union jobs, and because Chrysler’s secured creditors were not protected. 

Okay, well actually, he doesn’t acknowledge that the two companies did file for bankruptcy, and instead claims that they should have been forced to do so.  To file for “managed bankruptcy,” that is.  At least if I understand him correctly.  And actually, he claims (again, if I understand him correctly) that GM’s secured creditors will, by fiat of the Obama administration, not be repaid in full.  And he says that were it not for the bailouts, the companies would have survived without layoffs, or without as many layoffs, or without non-union layoffs … or ….

What?

In fact, as every Michigander (and Ohioan) knows, both companies filed for bankruptcy, the bankruptcies were “managed,” and both emerged from it much-downsized but still employing many thousands of people directly or via their suppliers.  And, as they also know, neither company would have emerged from bankruptcy at all without the government’s financial assistance.  Which is why the government agreed to the bailout.  

And, according to a comment to the op-ed, GM’s secured creditors in fact were promised that they would be repaid in full, and expect to be. 

So what’s Romney’s point? Best as I can tell, adding the actual facts to the op-ed, it’s that Chrysler’s secured creditors, who would have been paid virtually nothing had the company dissolved, weren’t privileged over the employees, in the restructuring.  This doesn’t sound to me like a serious plea for votes.  Not from employees—even laid-off ones—anyway.  And, since most of Chrysler’s secured creditors probably don’t vote in Michigan, not from the secured creditors either.  But maybe they’ll attend his next fundraiser, to meet those lobbyists whom Romney will delegate his policymaking to. 

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What if Eisenhower’s budget were your (grandparents’) family’s?

What if Eisenhower’s budget were your (grandparents’) family’s? What if Kennedy’s were? How about LBJ’s?  Nixon’s? What if Reagan’s were your parents’ or your own family’s? How about G.H.W. Bush’s? Clinton’s? G.W. Bush’s?
One of my pet peeves is the use by political reporters and pundits of sophistic or downright imbecilic supposed analogies.  (Like last week’s classic from Politco’s Jim VandeHei, analogizing Obama’s justification for agreeing to team up with a Super PAC, notwithstanding his opposition to the Citizens United decision, to a teenager’s refrain that he wants to what “everyone else” is doing—as if what the teen’s friends are doing would have a profound effect on the teenager and others unless that teenager went along.)
So this morning when I clicked on the Yahoo News page, my opening page for one of the web browsers I use, and saw that one of the featured videos was a clip from last night’s ABC Nightly News broadcast, titled “What if Obama’s Budget Were Your Family’s?”, I shook my head in dismay at the sheer persistence of this ridiculously false analogy. 

The clip begins with Diane Sawyer introducing a piece by ABC’s White House correspondent Jake Tapper purporting to explain Obama’s submitted budget by reducing the basic amounts of money—the budget total, the deficit in the budget, and the amount of debt already owed—by lopping off eight zeroes at the end, so that $38 trillion becomes $38,000 (a plausible middle-class annual expenditure), for example.  In this analogy, the family’s annual deficit is about $9,000, because this is a so-called working-class family whose annual income is $29,000. The $9,000 deficit will be added to the family’s already-existing “credit card” debt of $153,000.  Or something.

The clip then shows Tapper at Jay Carney’s press briefing yesterday asking whether, given the increase in amount of debt after one year, this isn’t irresponsible.  Tapper then moves to a Feb. 2009 clip of Obama promising to reduce the deficit his administration inherited, by one-half.  Tapper says Obama’s budget breaks this promise.

Which it does, assuming that the promise wasn’t based partly on a proposal to end most of the Bush tax cuts.  The clip is, well, clipped, so its context is missing.  But since Obama’s attempts to end enough of the Bush tax cuts to substantially lower the deficit have been blocked by the Republicans, any reference to this broken promise should give Obama the opportunity to point this out.  All he has to do is actually take that opportunity to do that.  Which, with Obama, is problematic.

But as for the tiresome family-budget analogy, Obama himself is partly to blame for its persistence, having (stupefyingly) adopted it, repeatedly, himself rather than explaining the easily explainable: that the analogy is false and destructive.  Basic Keynesian economics is really not very hard to explain, so why make false representations of economic fact that undermine your policy positions, rather than bother to explain it?

But even just taking the analogy on its own terms, I’m wondering why all of that working-class family’s current $153,000 debt is described as credit card debt rather than, say, mortgage debt, or student-loan debt, or car-purchase debt owed as monthly car payments (and necessary for the family breadwinners to get to work).  Or why the credit card debt might not reflect necessary purchases such as food and gas, or, say, a furnace or roof replacement for the home.  Is their income too low for them to own a home?  Have a car?  Take out college loans?

And this is not even to mention that families cannot raise their annual income by deciding to do so, as governments can by, say, increasing tax receipts. 

Which brings me to the point in the title of this post: What if Eisenhower’s budget were your (grandparents’ or parents’) family’s? Really were?  What would the country be like now if it had been?  What if Kennedy’s were? How about LBJ’s?  Nixon’s?  How about Reagan’s?  G.H.W. Bush’s? Clinton’s? G.W. Bush’s?  And what if the current budget, and revenue-raising options, really were like your family’s?

Any takers?  Jake Tapper? 

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