Rep. Paul Ryan, running mate of the presumptive Republican presidential nominee Mitt Romney, voted in December of 2008 to lend billions to General Motors and Chrysler. His vote puts him at odds with Romney and spotlights the difference in political needs of a sitting congressman versus an out of work governor.
Ryan was one of 32 Republican members of the House of Representatives who voted that year to lend money to the automakers from an already appropriated pot of money for the Department of Energy to make loans to automakers to aid in the development and manufacture of more fuel-efficient vehicles.
Ryan, a fiscal hawk, has said on different occasions that he did not want to see the automakers go bankrupt because, under a traditional bankruptcy, thousands of GM UAW retirees in his district could lose their benefits. Ryan's district includes Janesville, Wis., which was home to a GM plant that shuttered in 2008.
Romney, the former governor of Massachusetts who had no skin in the game except for his desire to run for president in 2012, advocated for just such a traditional bankruptcy in 2008 and specifically said the union and retirees should take their lumps with bondholders. In the end, the Obama White House directed a tax-payer financed rescue of the auto industry that committed some $85 billion to reorganize GM and Chrysler, as well as provide liquidity to parts companies and the automaker finance arms. The U.S. Treasury has said that the final bill to taxpayers after the loans to GM and Chrysler has been repaid and when the U.S. sells its remaining 26 percent stake in GM should be about $25 billion.
But even that number has some room to argue. The rescue saved approximately one million jobs from being disrupted and an unknown number lost. And there have been some 236,000 jobs added to the industry since 2009. The savings from not having to pay unemployment benefits and the fact that all those employees are paying taxes should be considered when assessing the total cost of the rescue.
Ryan said in a 2010 interview on Fox News that he would not have voted for the rescue had the first round of money he voted for been drawn from the Troubles Asset Relief Program (TARP). Ryan has criticized the Obama Administration's handling of TARP as a "slush fund."
Obama Administration officials, though, have rightly defended using TARP to rescue the auto industry because recalcitrant Republicans, especially those from the Southern states in both the House and Senate, were rooting for GM and Chrysler to go through a traditional bankruptcy because the process would have likely resulted in breaking the United Auto Workers. Under that scenario, the U.S. auto industry would have been crushed. The worst unemployment would have followed. And GM and Chrysler would have been broken up into pieces with private equity funds picking up the pieces and moving manufacturing to non-union states and foreign countries with cheaper labor.
The Obama plan subjugated the bondholders to the union, and gave the UAW stakes in both GM and Chrysler in exchange for the billions owed to the union in health care benefits.
Romney's position was to let the automakers go bankrupt without the federal government providing oversight or financing, despite the fact that there was no other source of financing (banks were reeling from their own problems). Ryan has said he shares that view, despite the fact that such a proceeding would have likely cut off the retirees in his district who he previously said he was looking to protect. Ryan is going to have trouble defending his position in Michigan and Ohio, and even his own state of Wisconsin.
The bill Ryan voted for died in the Senate. But when he voted he issued the following statement:
To be clear, this bill is not intended to save the American auto industry and makes no guarantees that layoffs in this industry will end. Congress must stop overselling what it can do. At the very least, I am hopeful that by extending these loans to the American auto manufacturers, bankruptcy will be avoided in the near term and protections for retirees will remain intact.
When Romney and Ryan arrive in Michigan to campaign, they will be attempting more political jujitsu about how they were in favor of the auto rescue... just not the way the Obama White House went about it. The devil is in the details for voters in Michigan to decide who they think is playing it straight. But President Obama's plan clearly worked, and left no question as to whether union health care benefits would be protected.
Given Romney-Ryan's wish to repeal the Affordable Care Act (Obamacare), which helps tens of millions of people get affordable health insurance, retired union members are going to be happy to have those in-tact benefits if the president loses in November.