Mitt Romney Defends 2008 Stance To 'Let Detroit Go Bankrupt'
WASHINGTON -- Speaking at the Arizona GOP debate less than a week before the Michigan primary, Mitt Romney defended the stance he took in 2008 against a federal assistance plan for Detroit automakers, arguing that the companies should have been left to go bankrupt and face the free market.
"These companies need to go through managed bankruptcy," Romney said to applause from the Michigan crowd. Rather than receive federal aid or loans to whether the downturn, the companies should have been left on their own to "shed the extra costs" incurred by labor contracts with the United Auto Workers union, Romney said.
"No way would we allow the auto industry to totally implode and disappear," Romney added carefully. "It would go through bankruptcy."
In fact, GM and Chrysler eventually did go through bankruptcy -- with the help of the $80 billion financing plan started under the Bush administration and broadened under the Obama administration. Many people believe it's unlikely the companies could have weathered the bankruptcy process without some kind of federal intervention.
In November 2008, Romney penned an oft-cited opinion piece for the New York Times laying out his position. The piece was entitled "Let Detroit Go Bankrupt."
"If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye," the piece started. "It won’t go overnight, but its demise will be virtually guaranteed."
Three years later, the auto industry has largely recovered since the crisis, and the financial rescue plan has played to Obama's political benefit. Romney's hardline stance may have endeared him to free-market conservatives, but there may be plenty of Republican voters in Michigan who continue to view the financial package as a prudent move.
During Wednesday night's debate, fellow GOP presidential hopeful Rick Santorum knocked Romney for what he described as inconsistency on the bailout issue. The former Massachusetts governor may have bristled at the idea of an auto bailout, Santorum noted, but he supported the much larger bailout of America's major banks, an industry that counts Romney as one of its own.
"He supported the folks on Wall Street," Santorum said of Romney. "When it came to the folks in Detroit he said no.... I believe in markets, and not just when they're convenient for me."
Separating the auto and bank rescues, Romney argued that leaving the major lenders to the free market would have had devastating effects across the economy. "I was concerned that if we didn’t do something there was a pretty high risk that not just Wall Street but all banks would collapse," Romney said.