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Romney and Santorum Get It Wrong on Auto Rescue

February 22, 2012 at 9:03 p.m. ET

 

Both Rick Santorum and Mitt Romney criticized the auto rescue in tonight’s debate, even though it has been credited with saving over 1.4 million auto industry jobs, creating more than 100,000 new jobs and making the American auto industry competitive again for the first time in decades. And despite being repeatedly proven wrong by auto industry leaders and economists , Romney continued to falsely claim that President Obama took his lead on the auto rescue—even though Romney argued in 2008 that we should “let Detroit go bankrupt” and refused to extend a bridge loan to keep GM & Chrysler afloat.   Had Mitt Romney had his way, GM & Chrysler’s doors would be closed today, and the American auto industry would likely no longer exist.

REALITY: ROMNEY SAID “LET DETROIT GO BANKRUPT” AND CALLED THE RESCUE A MISTAKE

ROMNEY OP-ED HEADLINE: “Let Detroit Go Bankrupt” [Romney Op-Ed, New York Times, 11/19/08]

  • Romney Said Of The Auto Bailout: “That’s Exactly What I Said. The Headline You Read Which Said ‘Let Detroit Go Bankrupt” Points Out That Those Companies Needed To Go Through Bankruptcy.” On the CBS Early Show Mitt Romney said, “‘Yeah, that's exactly what I said. The headline you read which said 'Let Detroit Go Bankrupt' points out that those companies needed to go through bankruptcy to shed those costs,’ Romney said. ‘And the federal government put in, I think, $17 billion into those companies before they finally recognized, 'Yeah, they need to go bankrupt, go through that process, so that they're able to get rid of excess costs.'" [CBS News, 6/3/11]

Romney: Government Funding To Rescue The Auto Industry “Were A Mistake.” In an interview with Mitt Romney, Piers Morgan asked, “But, the experts don’t necessarily say that it was just the bankruptcy or just the bailouts. It was the combined effect of the process, of both, that helped the recovery… The bailouts weren’t necessarily a failure. Were they?” Romney, “No the bailouts were a mistake.” [Piers Morgan, CNN, 6/7/11]

REALITY: SANTORUM OPPOSED THE AUTO RESCUE, PREFERRING BANKRUPTCY FOR DETROIT

Santorum: “We Should Not Have Had The Auto Bailout” Instead They Should Have “Gone Through A Structured Bankruptcy Without The Federal Government.” “SANTORUM: No, absolutely not. We should -- we should not have had a TARP. We should not have had the auto bailout. Governor Romney's right. They could have gone through a structured bankruptcy without the federal government. All the federal government did was basically tip to the cronies, tip to the unions, gave the unions the company. If they'd have gone through the orderly bankruptcy process, gone through a structured bankruptcy, they'd have come out in the same place, only we would have kept the integrity of the bankruptcy process without the government putting its fingers into it.” [Real Clear Politics, 6/14/11]

Santorum: I Opposed The Auto Bailout “On Principle” The Auto Industry Would Be Better Off If We Had Let It Go Through Bankruptcy To Strip It Of “Legacy Costs.” Santorum appeared on C-Span where he discussed the government intervention in the financial sector and auto industry, he said: “I called for a structured bankruptcy from the very beginning. Look, I opposed the Wall Street bailout, which of course was the funding source for the auto bailout. I was the only one up on that stage — between myself, Gingrich, and Romney — that did on principle oppose it, even though people were saying there could be a financial meltdown. The bottom line is, the greater meltdown over the long term for this country is having the government inject itself into the private sector in such a huge way. Allow the capitalist system to work, and that’s what I believe in. The same thing with GM and Chrysler, they could’ve gone through a structured bankruptcy and the only difference between those two companies coming out of bankruptcy and the bailout that Obama put in place was that the unions wouldn’t have a big ownership share of the company…You pretty much would’ve had the same company, maybe even a better company, because they would’ve been stripped of even more legacy costs that frankly makes it hard for them to be competitive.” [C-Span, Transcript via Think Progress, 1/20/12; 1/20/12]

REALITY: THE PRIVATE BANKRUPTCY ROMNEY ADVOCATED FOR WAS IMPOSSIBLE DURING THE FINANCIAL CRISIS

AutoNation CEO Mike Jackson: It Is “Pure Fantasy” To Suggest That Private Financing Was Available For Chrysler And GM.  LL: “What do you think of Mitt’s assertion that private financing ‘DIP’ was available in fall of ’08 into ’09?” MJ: “That is pure fantasy and you have to ask, what he was doing in ’08 and ’09 that he did not see this.” [CNBC, 2/16/12]

AutoNation Inc. CEO And Romney Supporter, Mike Jackson Called Romney’s Detroit News Op-Ed Defending His Opposition To The Auto Industry Rescue, “Truly Reckless, Detached From Reality, And Dishonest.” Bloomberg wrote of Romney’s 2/14/12 op-ed about the auto industry rescue: “The piece drew criticism from Mike Jackson, chief executive officer of AutoNation Inc. (AN), the largest auto-dealer group in the U.S., who called it ‘truly reckless, detached from reality, and dishonest,’ as well as ‘very bad politics, especially in Michigan.’ Jackson, who has been a Romney advocate, said in an e-mail to Bloomberg News the assertion that private financing should have been used to fund GM and Chrysler bankruptcies was ‘fantasy,’ adding, ‘Everyone knows we were in the midst of the greatest financial meltdown since the 1930s.’” [Bloomberg, 2/16/12]

Former GM Vice Chairman Bob Lutz Saw Romney Opposition To Federal Government’s Auto Industry Rescue As “A Political Ploy To The Right” And That Romney Was “Playing The Same Song As Rush Limbaugh And Glenn Beck.” “Some Republicans have criticized Mr. Romney’s insistence that federal intervention was wrongheaded as an example of what they see as his willingness to say anything to win over skeptical conservatives. ‘He’s playing the same song as Rush Limbaugh and Glenn Beck,’ said Bob Lutz, a former vice chairman for General Motors who said he was still so upset with Mr. Romney that he had cast his absentee ballot in Michigan for Rick Santorum. ‘I think all of us in the auto industry who knew what the situation was were profoundly disappointed and, I would say, angry,’ Mr. Lutz said. ‘We all saw it for what it was, which was a political ploy to the right.’” [New York Times, 2/19/12]

Detroit Free Press Fact Check: While Romney Argued Against Using Taxpayer Money In The Auto Rescue, “Private Financing Was All But Nonexistent In The Frozen Credit Markets Of Late 2008 And Early 2009.” “Romney consistently has argued against taxpayer money being used to prop up the firms outside of bankruptcy. He seems to suggest that there could have been some funding after the fact to keep them up and operating until private financing kicked in. But people who were part of the rescue argue that this wouldn't have worked. Private financing was all but nonexistent in the frozen credit markets of late 2008 and early 2009. And both the Republican administration of President George W. Bush and the Democratic administration of President Barack Obama found it necessary -- if distasteful -- to put up billions of dollars to keep the companies open while they sorted out what should be done longer term (i.e., the ‘managed’ bankruptcy Romney suggested), though that took time. To withhold money then, supporters of the rescue have said, would have forced the companies into liquidation. Romney said Thursday he wouldn't have allowed that to happen.” [Fact Check, Detroit Free Press, 2/17/12]

REALITY: THE RESCUE OF THE AUTO INDUSTRY SAVED JOBS AND PREVENTED LIQUIDATION  

President Obama Extended Emergency Loans To The Auto Industry, Saving Over An Estimated 1.4 Million Jobs. “[The] federal loans to the auto industry are estimated to have saved more than 1.4 million jobs…” [Detroit News, 11/18/10]

Moody’s Chief Economist Mark Zandi: Without Government Assistance, The Big Three Will Go Bankrupt And Be Liquidated, Resulting In Hundreds Of Thousands Of Layoffs. “Without any government help, the Big Three will quickly end up in bankruptcy and be effectively liquidated, resulting in hundreds of thousands of layoffs at just the wrong time. They would file for Chapter 11, a restructuring, but it would likely turn into a Chapter 7 liquidation. Their factories and other operations would be shut down and their assets sold to pay creditors.” [Hearing Of Senate Banking Committee, 12/4/08]

Center For Automotive Research: The Auto Rescue “Averted Certain Economic Catastrophe Had The Companies Been Allowed To Fail.” “These [government] loans and other financial assistance provided to General Motors and Chrysler by the U.S. and foreign governments averted certain economic catastrophe had the companies been allowed to fail.” [Center For Automotive Research, 12/17/2010]

REALITY: THE AUTO INDUSTRY HAS REGAINED HUNDREDS OF THOUSANDS OF JOBS – AND IS ON TRACK TO ADD THOUSANDS MORE

Since GM And Chrysler Exited Bankruptcy In June Of 2009, The Auto Industry Has Added Over 207,000 Jobs. [data.bls.gov, Accessed 2/6/12]

  • In 2011, The American Auto Industry Added 101,600 Jobs, The Industry’s Strongest Year Of Job Growth Since 1994. [BLS.gov, Accessed 2/6/12]

Center For Automotive Research: US Auto Industry Will Add As Many As 167,000 New Jobs Over The Next Four Years. “Employment in the auto industry will return to prerecession levels by 2015, with carmakers and their suppliers adding about 167,000 jobs by then, according to estimates by an auto industry research firm.” [New York Times, 11/29/11]

REALITY: GM AND CHRYSLER HAVE MADE LANDMARK GAINS IN PROFITABILITY AND MARKET SHARE

For The First Time In Seven Years, The Detroit Three Are All Profitable. “For the first time in nearly seven years, Detroit's car companies are all making money.” [Associated Press, 5/2/11]

  • For The First Time In 23 Years, All Three Detroit Automakers Have Gained Market Share. “This year, for the first time since 1988, all three Detroit automakers have gained market share in the U.S.” [Detroit Free Press, 12/12/11]

General Motors Has Regained The Title Of World’s Largest Automaker, Selling 9 Million Vehicles In 2011. “Less than two years after emerging from bankruptcy, General Motors Co. has regained the title of the world's largest automaker. GM's worldwide sales rose 7.6% to 9 million vehicles in 2011. The Detroit manufacturer last held the top spot in 2007 before it was surpassed by Toyota Motor Corp. the next year.” [Los Angeles Times, 1/20/12]

§  February 2012: GM Posted Its Largest Annual Profit In History, Earning $7.6 Billion. “General Motors reported the largest annual profit in its history on Thursday, even as losses in Europe dragged down fourth-quarter earnings. For all of 2011, G.M. earned $7.6 billion, nearly all of it from North America. That was 62 percent higher than the $4.7 billion it earned a year ago and more than G.M.’s previous record of $6.7 billion in 1997.” [The New York Times, 2/24/11]

February 2012: Chrysler Posted Its First Yearly Profit Since 1997. “Chrysler, propelled by higher sales of Jeeps and other revamped cars and trucks, reported its first annual net income since 1997, capping a pivotal turnaround year that many thought would never come.” [Associated Press, 2/1/12]

REALITY: THE AUTO BAILOUT REQUIRED FAIR AND SHARED SACRIFICE FROM BOTH MANAGEMENT AND LABOR

AP: “ROMNEY: President Barack Obama ‘Gave GM To UAW, He Gave Chrysler To Fiat.’ THE FACTS: That's Not What Happened In The Bailout.” “ROMNEY: President Barack Obama ‘gave GM to UAW, he gave Chrysler to Fiat.’ THE FACTS: That's not what happened in the bailout. A trust owned by the United Auto Workers received a 17.5 percent ownership stake in GM to help that trust pay for its retirees' health care…The trust now owns about 10 percent of General Motors. That's much smaller than the government's stake of about 30 percent, and it doesn't support the notion that the government ‘gave’ the company to the union. Moreover, the union did not get free rein in return for its share. It was barred from going on strike over wage issues during recent contract talks with GM and Chrysler, as a condition of the bailouts. Nor did Obama give Chrysler to Fiat.” [Associated Press, 11/10/11]

Chicago Tribune: President Obama’s Auto Rescue Plan Wrung “Extraordinary Concessions” From Chrysler, GM, And The UAW. “As with Chrysler LLC, which filed its own Chapter 11 case on April 30, the Obama task force has been able to wring extraordinary concessions from GM management, the United Auto Workers union and a large group of creditors to eliminate many of the costs that made it vulnerable to foreign competition.” [The Chicago Tribune, 6/2/09]

Detroit Free Press: The White House “Insisted On Big Concessions From The UAW,” Including Freezes On Wages And Benefits, Cuts To Retirement Benefits, And Restricting The UAW’s Ability To Strike. “Washington also insisted on big concessions from the UAW. They included changes in work rules that limit job classifications for skilled trades workers, a freeze on wages and benefits for entry level employees and cuts to retiree benefits…To ensure that the billions taxpayers invested would not be wasted, the government demanded that the UAW accept limits on its right to strike over pay and benefit increases in 2011 talks, sources said.” [The Detroit News, 10/24/09]

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