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Romney's Priority in Auto-Rescue Was Saving Investors -- Not Jobs, Not Even the Industry

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One cannot teach an old dog new tricks (even if transported on the top of the car). Mitt Romney's career at Bain Capital provided him a lot of experience with bankruptcies, including many that he created to buy him and his co-investors out of companies at huge profits, while saddling the company with bankruptcy-triggering debt it raised to do so.

So, it was natural that, as the Obama team was considering a rescue package for the auto industry, Romney reached into his old bag of tricks.

Although as an eager candidate Romney is scrambling to assert that his op-ed, "Let Detroit Go Bankrupt," proposed a plan that was just a couple of nuances different than President Obama's action that saved the auto industry, in fact it had all the fingerprints of the old Bain guy doing unto workers what he had perfected doing while at Bain -- destroying their lives, and this time there was a political payoff... or, so he thought.

Let us face it, Romney is very, very slick at blurring differences no matter how critical, no matter how wide they really are. He lies and dissembles so much that is exhausting to combat each element, and very hard for a listener to take in.

For example, Romney argues that he "also proposed a managed bankruptcy" and the "only" difference was that he wanted the government to provide guarantees for private investors after the bankruptcy proceedings, rather than the "pre-managed" bankruptcy with a massive infusion of government money going into the bankruptcy that the president did.

Them's a lotta words. Moreover, they are dense and boring. Unless one is familiar with the jargon, it will all seem like a lot of gobbledygook. Exactly what Romney wants.

Of course, one can explain, as the president and others have tried to do, that those nuances were night-and-day choices: that the auto companies were out of money, that customers would not purchase cars as the companies were going through Romney's proposed bankruptcy that would have taken months on end thus exacerbating the companies' problems, and that there was no private capital that was eager to step up so that the proposed "guarantees" would have been meaningless.

Romney also asserted that government money into the auto industry would mean its death knell. [One might also ask how many times one gets to be totally wrong about major policies and maintain credibility -- Romney was wrong about the auto-rescue, wrong about the stimulus, wrong about his own tax plan... and so on.]

But, Romney's purpose was at once far more insidious and also easier for voters to grasp. In addition to "guarantees to investors," instead of money from the government, Romney wanted a conventional bankruptcy to proceed because investors and creditors would be protected first (and perhaps, the only ones protected). That is the way our bankruptcy system works. Under normal circumstances, creditors get paid first, or, in reorganization get the lions' share of ownership of the new company.

That is, Romney's article was just telegraphing that he preferred his investor class over the workers, a.k.a, the United Autoworkers.

The president, on the other hand, said that all parties, workers included, fairly and proportionately, had to share in the sacrifice. The right-wing howled that the president circumvented the normal bankruptcy process to help "his union supporters" (a.k.a, workers) rather than allow the investors and senior creditors to walk off with the store.

He did. Good for him!

And, he should have no reluctance to say so in response to charges that he saved his union supporters, who just happen to be the millions of middle class families whose lives would become subsistence if Romney had had his way.

To those who say that such action destroys faith and confidence in our economic system, especially for investors, the president should tell them to look at the Dow Jones Industrial Average in general, and the investor interest when GM became born-again, since he rescued the industry.

So, now let us re-frame Romney's opposition to the auto-rescue to make it easier to grasp and distinguish politically.

Romney's plan had zero chance of saving the U.S. auto industry as we know it. Zero. The companies would have gone through a bankruptcy proceeding, with the parties all lawyered up, during which car sales would have nearly ceased. Workers' salaries would have ended because there was no money to pay them. Workers' rights and wages in the reorganized companies, if they had been reorganized, would have been squashed to as low a level as possible.

Romney knew it when he wrote the article.

And, the United Auto Workers would become, at best, a shadow of its former self -- lower salaried workers, fewer of them. The union itself would have been totally emasculated in the process, unable to protect its members.

But, the investor class Romney represents would have owned a much larger share of the reorganized companies, or have been paid off in liquidation to the fullest extent possible.

Then, of course, there were all the sweet words about profit-sharing (wonder how many of Bain's companies had profit-sharing?), government investments of $20 Billion/year in energy and energy efficiency (see any of that in Romney/Ryan budgets?), and the need to build more energy-efficient vehicles (didn't hear Romney cheering the President's CAFE standards, though, did you?).

Sound suspiciously similar to the Mitt Romney from Bain Capital? Surprised?

Romney cared about saving an industry, and middle class jobs, and communities as much as he cared about serving alongside his contemporaries in the Vietnam War he supported, honest-to-goodness he did.

And, if no investors stepped forward even with government guarantees, liquidation would be next.

For Romney, this was nothing novel. It is how he operated at Bain, one of the ways he amassed a fortune. And, for Romney, it was all in the natural order of matters. If workers, families, communities had to be decimated, so be it.

The bottom line politically is this: Romney had a political choice to make between the investor class alone and the investor class along with workers, between "his people" only and the American people as a whole. Romney chose the investor class, period.

What makes anyone believe that he would do anything differently if he were to be president?

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