Wednesday, February 15, 2012

Romney slams auto bailout, adopts political suicide strategy in Michigan

Mitt Romney was wrong about the bailout of the auto industry -- he was against it, and therefore in favor of the industry collapsing, and it's been a rousing success -- and yet continues to be riding the wave of his own failure.

In an op-ed in yesterday's Detroit Newt, Romney argues that the bailout was a bad idea, notes reluctantly that there has been some "indisputable good news" (i.e., GM and Chrysler still in business -- he doesn't mention all the jobs that would have been lost, all the lives ruined, all the families destroyed), and then shifts course and blames President Obama for mismanaging the bailout, apparently because criticizing the bailout itself is now ridiculous.

And for what specifically does he blame Obama. Well, it should come as no surprise that Romney plays the ever-popular-in-GOP-circles union-bashing card and blames him for not "standing up to union bosses," specifically Democratic and pro-Obama union bosses. And also for giving "American taxpayers," through the Treasury Department, a share of GM:

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.

Instead of a bailout, Romney preferred "managed bankruptcy." In other words -- surprise, surprise -- he wanted the banks to win, not the union -- not, that is, the workers.

By the spring of 2009, instead of the free market doing what it does best, we got a major taste of crony capitalism, Obama-style.

Thus, the outcome of the managed bankruptcy proceedings was dictated by the terms of the bailout. Chrysler's "secured creditors," who in the normal course of affairs should have been first in line for compensation, were given short shrift, while at the same time, the UAWs' union-boss-controlled trust fund received a 55 percent stake in the firm.

Confused? (Sure, it's complicated.) I'll let emptywheel's Marcy Wheeler explain:

He's complaining, of course, that VEBA (the trust fund run by professionals that allowed the auto companies to spin off contractual obligations – retiree healthcare – to the unions) got a stake in Chrysler while Chrysler's secured creditors took a haircut.

So, in part, he's basically complaining that the bailout preserved the healthcare a bunch of 55+ year old blue collar workers were promised. He’s pissed they got to keep their healthcare.

He's also complaining that banks took a haircut, as would happen in any managed bankruptcy.

But it's more than that. He's complaining that a bunch of banks that themselves had been bailed out had to take a haircut. He's complaining, for example, that JP Morgan Chase, Chrysler’s largest creditor at the time and the recipient, itself, of $68.6B in bailout loans, had to take a haircut on $2B in loans to Chrysler.

When Romney says he wants the free market to do what it does best, he must be referring to the sort of vulture capitalism over which he presided at Bain Capital, the sort of capitalism that rewards banks and investment firms will billions upon billions in profit with no regard for the human toll of their actions.

As Travis Waldron writes at ThinkProgress:

In the editorial, Romney, whose former company profited from a government bailout, called on the government to sell its shares in GM and return the profits to taxpayers. In other words, Romney is fine with destroying the company when it isn’t succeeding, but then wants to seize its profits if it turns around.

Meanwhile, he continues to ignore the success of the rescue plan he criticizes. Chrysler posted its first profit more than a decade in last year and expects those profits to continue growing in 2012. It has added 9,400 jobs since its rescue and plans to add 1,600 more at a plant in Illinois this year, and the success of Chrysler and General Motors has helped American automakers control more than half of the industry's market share. The industry has hired enough workers to make up for all those laid off during the recession, and American and foreign automakers plan to add 167,000 jobs at American plants this year.

Now, the demerits (and privileged rich douchebaggery) of his argument aside, what of the politics of his positioning? Surely this will kill him in Michigan, where he's currently trailing Rick Santorum, no? Er, no. As David Dayen notes at Firedoglake, "This isn't quite as suicidal as it looks. Romney needs to win Michigan, and Michigan Republicans actually don't support the auto rescue, in true what's-the-matter-with-Kansas fashion. So though this looks like the opposite of pandering, that's what it is, playing to the conservative lizard brain conception of greedy unions." Mistermix makes the same point at Balloon Juice:

We all know that Santorum is toxic as a national candidate, but the problem for Romney is the only way to beat Santorum is to adopt the same anti-gay, anti-woman and anti-progress positions in the primaries and bet that he can somehow reverse course this Fall. The longer the contest draws out, the more Romney has to pander, and the more he turns himself into the Goldwater-like candidate that the Republican establishment is desperate to avoid. There are two more debates before Super Tuesday and Mitt's going to have to be pretty fucking severe if he hopes to keep up with the new front-runner.

But of course it is suicidal in the long run, assuming he wins the nomination and finds himself up against Obama for real. Dayen again:

For the state as a whole, however, it's a really dumb double-down, especially when it can be so easily characterized as Romney favoring banks over people's health care. Not to mention the fact that Michigan's unemployment rate has fallen precipitously, led by manufacturing. Romney's lament about managed bankruptcies and union trust funds sounds like a fan whose football team has won 35 games in a row complaining about the new trim on the uniforms.

Well, it sounds much worse than that. It sounds like a privileged rich douchebag with a plutocratic sense of entitlement (as I've been writing for some time now) who got it terribly wrong but who is lashing out at Obama, advocating for the interests of the super-rich at the expense of everyone else (and at the expense of the economy, which he needs to be in bad shape to have any hope of winning in November), steadfastly refusing to acknowledge his own errors, and shamelessly pandering to the extremist base of his party.

Basically, what else is new?

The problem, for him, is that in doing and saying whatever it takes to win the Republican nomination, now more of a challenge with Santorum posing such a serious threat, he's effectively destroying whatever hope he has of winning in November. And the longer this remains a tight race, the longer Santorum keeps up the fight, the worse it will be for him.

Survival now, suicide later. Or, rather, survival through suicide. Isn't it ironic?


For more on all Romney's attack on the auto bailout, see Steve Benen at his new home at The Maddow Blog, where he posts this clip from last summer -- Romney being so very, very wrong, and certainly not someone who should be trusted with the presidency:

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  • The common mistake made by the President and repeated in left wing circles is the idea that GM would cease to exist had it not been for the bailouts. Many major corporations have gone through bankruptcy to reorganize and have later re-emerged. What the President did was to subvert the normal procedure that companies undertake when they get to far out of balance between revenue and expense. As a result of Obama's interference GM's secure creditors were made to take 29 cents on the dollar so that the UAW could get 40 cents in spite of the fact that they were lower priority unsecured creditors. Very few believe GM would have gone out of business if allowed to go through bankruptcy. Therefore it is inaccurate to say that the bailout saved jobs. It was a payback for union help to get him elected. Just more cronie capitalism.

    By Blogger manapp99, at 12:45 PM  

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