Mitt Romney Insists He 'Was Frankly Right' On Auto Bailout Stance
WASHINGTON -- Mitt Romney has made a very simple argument about his controversial stance regarding the auto bailouts of 2008 and 2009: He was right all along.
As Democrats pounded him Tuesday for an op-ed he wrote in 2008 with the headline, "Let Detroit Go Bankrupt," Romney insisted in an interview with ABC News and Yahoo that the course he recommended in that New York Times opinion piece was, ultimately, the path that President Obama chose to take.
"I was frankly right. They had to go through managed bankruptcy," Romney said. "They finally went through bankruptcy. That was what was necessary in order to get rid of the excess costs and for them to be able to get on their feet."
Romney was correct that he advised managed bankruptcy as a way to sustain the Big Three automakers, and that he was not recommending their dissolution. But Romney's gripe over the initial $17 billion bailout is with former President George W. Bush, not Obama. Romney acknowledged as much during his interview with ABC's George Stephanopoulos.
"My criticism was not directed toward just President Obama. It was also President Bush. I said don't write checks. They need to go through bankruptcy. And that's finally what happened," Romney said.
But Bush said at the time that allowing the automakers to fail was "not a responsible course of action." Further, the point man for Bush in the White House at the time has subsequently said that General Motors and Chrysler would have been "liquidated" if forced to go through bankruptcy in December 2008.
"In the last week of December, GM and Chrysler told us they would file under Chapter 11 in early January if they did not get loans from the [Troubled Asset Relief Program]. They also told us, as did countless outside experts, that they were not ready for such a filing, and that Chapter 11 would lead to near-immediate liquidation. We estimated that about 1.1 million jobs would be lost if this happened," wrote Keith Hennessey, the former director of the National Economic Council in the Bush White House, on June 7, 2009.
"Confronted with a choice between loaning TARP funds to GM and Chrysler, and allowing both to liquidate in the weeks before his successor took office, President Bush authorized loans from the TARP to GM and Chrysler," Hennessey said.
It's this argument, essentially, that Democrats are using in their attacks on Romney, which will continue Wednesday as he heads to Detroit for the ninth debate of the Republican presidential primary.
"If Mitt Romney was president, there would not be an American auto industry. Industry experts have been clear: Our auto companies would have faced liquidation if Mitt Romney had his way and more than 1 million Americans would have lost their jobs," said Ben LaBolt, the spokesman for Obama's reelection campaign. "Mitt Romney must explain to Michigan voters this week why he would have let Detroit go bankrupt."
As to whether the Obama administration came around to Romney's argument that there should be a managed bankruptcy after initial resistance, there is some evidence that the White House was not sold on that approach early in 2009.
"Is Obama willing to go the bankruptcy route? He might be, if he thinks it's the best way to save the most jobs, but we don't know yet," a senior administration official told The New York Times in March.
Romney's position now is one that appears designed to capitalize on the intense and widespread hatred for bailouts of any kind. However, Romney's position is not a 100 percent condemnation of taxpayer-funded assistance to struggling industries. Romney said "support that came" after the auto companies entered the managed bankruptcy phase "was appropriate."
However, the biggest chunk of more than $80 billion in government funds that went to GM and Chrysler was a $30 billion payment to GM in June 2009, after it declared bankruptcy.
The Romney campaign did not answer questions about whether Romney favored that particular payout.
And when Stephanopoulos pressed Romney on whether he had any beef with Obama's approach, Romney switched gears somewhat to the complaint that the United Auto Workers were favored too much in negotiations over which stakeholders took the biggest haircuts during the bankruptcy process.
Romney, in fact, applauded Obama on March 31, 2009, when the president rejected the initial restructuring plans from GM and Chrysler.
"I think a lot of people expected the president just to cave and to write a big check and hope for the better," Romney said on CNN. "I'm glad that he's expressing some backbone on this and saying to those guys, 'You have to get your house in order or you guys are gone, you'll have to go to bankruptcy."