Mitt Romney's business acumen is fabled. With an estimated net worth of $250 million, that is, give or take a few stock options, he will not be clipping coupons anytime soon. In the GOP primaries, his main selling point as a presidential aspirant is his business success at Bain Capital. Hardly mentioned is his single term as a Republican governor in the very blue state of Massachusetts, pejoratively called Tax-a-chusetts by the Republican faithful. He single-handedly rescued the financially troubled 2002 Salt Lake City Olympics with the help of a government bailout. Given this emphasis on his private sector experience, should we vote for Mitt for his storied business acumen hoping it will translate into concrete policies that strengthen the economy? In terms of his previous statements on the housing crisis and the automobile manufacturer's bailout, it seems the answer is an emphatic "no!"
Romney's business success is as storied as is his political tone deafness. He chose the City of North Las Vegas, where home prices have plunged by two-thirds and vacant homes litter the landscape, to state the housing market should be allowed to bottom out. He continued:
"As to what to do about the housing industry specifically and are there things you can do to encourage housing: One is, don't try to stop the foreclosure process. Let it run its course and hit bottom. Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back. The Obama administration has slow-walked the foreclosure process... that has long existed and as a result we still have the foreclosure overhang."
In Florida, Romney doubled down saying that banks are feeling the same things as homeowners on the verge of losing their homes. However, with the banks frequent utilization of robo-signed, mass mailings of foreclosure documents, one wonders where Romney encountered this sensitive banker? Local North Las Vegas economist John Restrepo said he believes: "Philosophically, Mitt Romney's laissez-faire approach is wrong."
Romney's abject faith in free market mechanisms does not allow for a governmental role even in crisis situations. A wait-and-see, let-the-free-market-take-its-course attitude is his only response. One wonders what would have become of an executive at Bain with such a passive approach.
Likewise, Romney thinks it was wrong-headed of the Bush administration and, in turn, the Obama administration to bail out General Motors and Chrysler. He suggested a "managed bankruptcy" was the correct course to follow. He penned a now infamous op-ed article in the New York Times in November of 2008 saying:
"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."
Bush officials scoffed at Romney's judgement. A point man for the Bush administration firmly stated that auto manufacturers would have been liquidated if allowed to declare bankruptcy in December of 2008 without the infusion of government funds because private capital markets were completely dried up at that time.
"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 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 7th, 2009.
True to his Wall Street roots, Romney was strangely sanguine about TARP. "TARP got paid back and it kept the financial system from collapsing!" Romney concluded: "Well, it was the right thing to do!" So Romney is entirely at ease with bailing out his pals on Wall Street and the bailout he engineered of the winter Olympics, but does not see a governmental role in housing markets or to keep auto manufacturers from perishing. His views are characteristically inconsistent.
A vote for Mitt is a vote to let the free market take its slow, painful course. He is too wedded to this ideology to be effective at leveraging his prior business experience into effective economic policies. I mean, Herbert Hoover supported letting the economy take its course during the Great Depression and the result was 25% unemployment. The record profits earned at GM this quarter are testament to the success of the auto bailout, while Romney's admonition to former homeowners to "let them rent" sounds vaguely like the utterance of Marie Antoinette when saying "let them eat cake." Finally, if we want to worship at the altar of free market determinism, we may as well elect its high priestess Ayn Rand to the Oval Office, that is, of course, if she were still alive and a natural born U.S. citizen.