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Economy

The Debate About Romney’s Position On The Auto Bailout

In a recent piece on the Huffington Post, former Michigan Governor Jennifer Granholm takes issue with the position Mitt Romney articulated on the auto bailout during the debates.  As has become the norm for liberals, her  argument does nothing more than misrepresent Romney’s position and call him names.  The facts be damned.

At the risk of being accused of name calling myself, Governor Granholm is a mental midget.  She accomplished very little as the governor of Michigan and was in charge when the auto industry found itself in need of help shortly before the bailout arrived from Washington.  So to take her word on either what the situation called for or what Romney said about it would be akin to taking advice from the local first grader on how to fix the insolvency of Social Security and Medicare.

Granholm’s argument is that the federal government was the only institution that could help at that time.  Digging deeper, her point is that the federal government was the only one with the resources and willingness to step in and save Detroit.  She continues by suggesting that no private entity or bank would help.  No kidding.  They did not want to buy into the trouble that came with entangling themselves in all the problems that were costing the car companies money.  More on that in a moment.

The fallacy of Governor Granholm’s argument is only made worse by her unsubstantiated claim that it saved over a million jobs followed by her shot at Romney and his time at Bain Capital.  Throwing all sense of logic and adult-like behaviour out the door, she then closes by accusing Romney of lying and calling his integrity into question. 

For those that want to read it in its entirety, Governor Romney’s op-ed on the subject can be found here.  In short though, he argues for a change in culture in the auto industry.  It would necessarily have to start with, among other things, addressing the enormous costs associated with the role of organized labor in building American cars.  Romney correctly pointed out that the car companies had become health and welfare companies that made cars as a way to pay those bills.  The bankruptcy process gave the car companies the best chance to break those contracts in a managed way and refocus their energy on developing and manufacturing cars again.  Of course Granholm and the President didn’t want that, because it would not have allowed them to turn control of the companies over to their political allies in the UAW and freeze out secured creditors. 

It was these very same entanglements that scared private equity off.  Granholm puts the metaphorical cart before the horse in making her argument.  It was not that private equity could not invest.  Rather, private equity needed the bankruptcy to happen first, as Romney suggested, in order to break those contracts and make the car companies a wiser investment.  Doing it in the correct order, however, would have hurt the unions.  President Obama and Governor Granholm could not let that happen for political reasons though.

What’s more, Romney explicitly calls for the involvement of government where appropriate in his op-ed (whether this is a good idea or not is a different issue).  He specifically states government has a role in helping to develop new technologies like fuel efficiency and other products that will benefit Detroit.  He also says that the federal government should provide the necessary guarantees to ensure private investment and protect warranties.  The difference between this and what Granholm and the President did is more than semantics.  It’s the difference between the federal government guaranteeing the money (think the FDIC) and cutting the check itself.

The truth is that the revisionist history of both the President during the debates and now Governor Granholm in her defense of those misrepresentations is being concocted because they cannot come up with a sensible defense of what they did and correspoinding results.  Under the guise of “saving jobs”, they nationalized portions of the auto industry by cutting a huge bailout check and conditioning the loan on the company being turned over to the UAW to run.

Rather than take a difficult problem head on and face the cultural issues in the industry, the President and Governor Granholm treated the symptom (the shortage of cash) rather than the problem (the bad culture that lead to the shortage of cash).  Sound familiar?  Maybe like say … the Democrats approach to saving Social Security or Medicare?

Governor Granholm, perhaps you should focus on sound policy and the facts before you put pen to paper.  It would be much wiser than trying to come up with nice quips and campaign slogans that you then have to try to bend the facts to match.

Folks, when you hear a liberal argue that Obama did the right thing with the auto-bailout, ask that person when the American people get their money back and whether the car companies are doing anything to change the culture that Governor Romney correctly identified as the problem.  Then ask them how we solved the problem so that the American taxpayer doesn’t have to bail them out again in 10 years or less.  I bet they don’t have an answer for you.

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About Josh Quinter

I am a politcally active private practice attorney in Suburban Philadelphia.

Discussion

One thought on “The Debate About Romney’s Position On The Auto Bailout

  1. Josh,

    Please, PLEASE submit this article as an editorial to the major newspapers in the area!

    I read all your posts, every one, and this one is the best to this point.

    David A. Thompson President [cid:image001.jpg@01CDB2A2.482A24E0] 610-970-4214 610-970-4215 Fax 610-633-3202 Cell

    ________________________________

    Posted by David Thompson | October 25, 2012, 11:17 am

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