Romney Changes Mind on Auto Bailout

In a NYT op-ed entitled “Let Detroit Go Bankrupt,” Mitt Romney argues that Congress should let creative destruction do its job.

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I agree wholeheartedly.  Funny thing is, though, when he was vying for votes in the Michigan primary — which he ultimately won — he was saying something rather different.  A January 13 NYT piece titled “McCain and Romney Tangle Over Job Losses in Michigan” tells the story:

Mr. Romney, a former governor of Massachusetts whose father was president of American Motors in the 1950s and ’60s, insisted that the auto industry can be revived and blamed Congress and Mr. McCain for ignoring Michigan’s problems.

“The question is, where is Washington?” Mr. Romney said, speaking to a gaggle of reporters across from a General Motors transmission plant near Ypsilanti, where 200 layoffs were announced this week. “Where does it stop? Is there a point at which someone says ‘enough’? Or are we going to allow the entire domestic automotive manufacturing industry to disappear?”

[…]

In Warren, Mr. McCain said he would be “ashamed” to tell voters that the lost jobs would return to Michigan, but he vowed to take care of displaced workers through a promised job retraining program that would be offered through community colleges. “We are a Judeo-Christian values nation,”Mr. McCain told the group at the town hall in Warren. “We cannot leave people behind.”

What a difference a campaign makes.

FILED UNDER: Campaign 2008, Economics and Business, US Politics, , ,
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. DC Loser says:

    I’m shocked, SHOCKED!!! That a politician would pander for votes.

  2. markm says:

    I agree wholeheartedly.

    Gaaah, this is killin’ me. Normally, i’d agree 100%, no conditions. But now, i’m torn. Over the past year and a half or so they American automakers have reorganized, redone union contracts, cut fat, etc. They are poised to turn it around BUT not in the current climate however long that lasts. This was the perfect storm. As for filing bankruptcy, as I understand it, there is a need for short term liquidity. That is something hard to come by as of late (unless you are a bank or insurance co). I really believe the majority of people saying “let it fail” don’t realize the scope of what they are saying.

    I keep hearing “the airlines did it and so should the automakers”. Well, yeah, the airlines did it but not in this economic climate…when they did it there were funds availble to proceed with the reorganization. That isn’t the case now.

    For the record, i’m from Michigan and have little ties to the auto industry but have many friends and relatives who are currently working for or retired from GM and Ford.

  3. Steve Plunk says:

    There’s quite a difference between cash bailouts and job retraining for displaced workers. Romney could also call for government help without advocating a bailout such as we see now. Without more specific contradictory statements I don’t think throwing stones is a good idea.

  4. duckspeaker says:

    They are poised to turn it around BUT not in the current climate however long that lasts. This was the perfect storm. As for filing bankruptcy, as I understand it, there is a need for short term liquidity.

    How about some sort of “guided bankruptcy” with government-guaranteed loans to finance the restructuring?

  5. Dan says:

    This will be it for the republican party.
    Way of a payback to the UAW for it’s unflagging support to the Democrats.
    There were a lot of closet conservatives in motown area.
    No more.
    Republicans are sealing their own fate by stonewalling help to bluecollar, but pouring money on the whitecollar banker types! I will never selectively vote again. I will pull one lever only, DEMOCRAT!

  6. Drew says:

    Dan –

    Most of Michigan has been pulling the lever Democrat for years now. I know the Michigan economy.

    How’s that workin’ out fer ya?

    I know you are PO’d, but don’t shoot yer ya-ya’s off, now.

  7. Drew says:

    James’ point is perfectly valid. After all, I have castigated Obama for ridiculous and improbable campaign promises.

    At least Romney has arrived at the proper conclusion.

    (Yes, its easier to have a seat in the critics section.)

  8. Dave Schuler says:

    How about some sort of “guided bankruptcy” with government-guaranteed loans to finance the restructuring?

    Yeah, that’s what I’ve been pitching over at my place for some time. I think that both the critics of a bailout and its supporters are right: Chapter 11 bankruptcy is the only solution for GM and it would have dire effects that could be counterbalanced by government guarantees. It’s not too big to let fail but it is too big let fail to encourage the others.

  9. Rick Almeida says:

    They are poised to turn it around BUT not in the current climate however long that lasts.

    You mean, until people start buying Yukon Denalis, Hummers, and Escalades again?

    I am pretty convinced that the auto industry needs to go bankrupt, but it is funny to see how quickly Republican politicians have rediscovered the free market.

  10. markm says:

    How about some sort of “guided bankruptcy” with government-guaranteed loans to finance the restructuring?

    I sure don’t know all that that would entail. I would suspect if it was plausible that it would have already come up for debate.

  11. markm says:

    You mean, until people start buying Yukon Denalis, Hummers, and Escalades again?

    No, I mean until people start buying durable goods again, period. What you buy is up to you but people are not buying anything, foreign or domestic. Auto sales are down across the board. That said, they have plenty of lines that are small and midsized that get 30+ mpg. As for the vehicles you listed above, nobody put a gun to anyone’s head to buy them and people did buy them in droves. Hell, Toyota just threw billions at their pickup truck line yet I don’t hear anything about their management.

    I am pretty convinced that the auto industry needs to go bankrupt

    Were it any other economic period i’d agree, but it isn’t and if it were not for the current economic “crisis” we wouldn’t be talking about it either. Nobody I know of sounded any warning bells. In hindsight it’s apparent something was up with the Fed pumping liquidity into the banking system all summer but I don’t recall anyone mapping this out. This is a unique situation.

  12. Zelsdorf Ragshaft III says:

    The UAW is atleast a large portion responsible for the mess the automakers are in. The head of the UAW was not willing to give a thing. Good. Let the MFers go bankrupt just like anyother failed business. Tax dollars will not fix what is wrong. It costs too much in labor for car makers to develope new ideas. $2600 per US car, 200 per Japanese car made here just for healthcare and retirement alone.

  13. davod says:

    “Over the past year and a half or so they American automakers have reorganized, redone union contracts, cut fat, etc. They are poised to turn it around BUT not in the current climate however long that lasts”

    Pretty good reorganization where the workers are paid over double what the competition gets paid. I also like the fact that, when the workers are lid off because of a downturn, their unemployment benefits equal their normal pay. They bitch and moan of the hardship of having no overtime pay.

    What must the taxpayers of the country be thinking about all this money being used to keep losers afloat.

    It is indeed not surprising that most of the big three’s major manufacturing plants are in Michigan. Michigan’s economy has been going downhill for years, even when the other states were improving. The Democratic governors response has always been to raise taxes.

    No wonder she is on Obama’s transition committee.

  14. markm says:

    The UAW is atleast a large portion responsible for the mess the automakers are in. The head of the UAW was not willing to give a thing.

    While this is true it takes two to tango. GM, Ford and Chrysler made their beds with the UAW and are paying for it. It wasn’t until recently that the automakers got the upper hand on the UAW in the last contracts. Like I said, should they survive into next year when the contract starts they will be on par with the Japanese in those costs.

  15. markm says:

    Pretty good reorganization where the workers are paid over double what the competition gets paid.

    Not to beat a dead horse but that won’t be the case next year for both union and non-union types. The older higher paid salaried guys are all but gone. Any replacements are hired in with little benefits if any and substantially less pay. The “cradle to grave” are over.

  16. davod says:

    I have not followed the Union/Industry negotiations closely, but I doubt whether the big three can come close to competing with the non union groups unless they go into chapter 11. The loaded costs are just to high for normal negotiations to make a large enough difference.

  17. FireWolf says:

    There’s quite a difference between cash bailouts and job retraining for displaced workers. Romney could also call for government help without advocating a bailout such as we see now. Without more specific contradictory statements I don’t think throwing stones is a good idea.

    I agree with you Steve and I am surprised James that you would jump to conclusions like this. (Maybe I shouldn’t be 😉 )

    At any rate, who gives a shit what Romney or any other politician says these days. All of them have lied (which shouldn’t surprise any one here) and they have taken the John Q. Public taxpayer for a ride.

    If you weren’t pissed off at Washington before the election or bailout, you should be.

  18. odograph says:

    Does worker retraining work? Or does it just make everybody feel better?

  19. James says:

    Mr. Joyner, with all due respect I believe you misunderstand Romney’s January position. You imply from the NYT article you quote above that Romney supported a Washington “bailout” during the Michigan Republican primary. That is not true.

    While saying he wasn’t proposing a bailout, Romney proposed a five-fold increase – to $20 billion – in federal funding for energy research, fuel technology, materials science, and automotive technology.
    Detroit News, January 15th 2008

    [Romney] offered proposals to ease mileage standards, to lighten automakers’ burdensome employee health care obligations and to “make a fivefold increase — from $4 billion to $20 billion — in our national investment in energy research, fuel technology, materials science and automotive technology.”
    USA Today, January 16, 2008

    Gov. Romney has consistently supported active involvement from lawmakers in the American auto industry, but not a bailout. His most recent NYT op-ed reiterates his longstanding support for technology and energy research and a business restructure. Cheers!