11/02/2012 04:23 pm ET Updated Nov 02, 2012

Mitt Romney Caught Between Economic Philosophy And Swing State Politics

Mitt Romney's campaign on Friday promoted a USA Today op-ed published online by Hal Sperlich, the former president of Chrysler Corporation, endorsing the Republican presidential nominee's candidacy.

The op-ed shows the degree to which Romney has been caught in a crosscurrent between his economic philosophy and swing state politics.

Sperlich accurately describes Romney's approach to making U.S. businesses more competitive: reduce the corporate tax rate from 35 percent to 25 percent, move to a territorial tax system so companies have more reason to locate their headquarters in the U.S. and to bring foreign profits back home, and streamline regulations.

Then Sperlich explains how Romney would approach the auto industry:

Every car company on the planet needs to focus on the market to try to best serve its customers. It needs the best products, the highest quality and the most competitive costs, and should go to whatever markets it chooses to serve. But here is where the politicians come in. What they can do is feverishly participate in a global competition among countries to make our country the most attractive location for production, thus bringing the best jobs to our people.

That is most likely accurate. But it's been contradicted by the Romney campaign's argument against Chrysler building Jeeps in China rather than in the U.S.

"Chrysler has the option of serving the Chinese market. They could do it in any number of ways. I think one of those ways is to increase production here in the U.S. And instead they chose to increase production in China," a Romney adviser told The Huffington Post this week. "The idea that even if they're adding, say 200 jobs here in the U.S., and adding, you know, 200 jobs in China, doesn't mean that they wouldn't be adding 400 jobs in the U.S. if they weren't adding those 200 in China."

Chrysler wants to produce Jeeps in China because to build them in the U.S. and ship them there is far less profitable as the Chinese levy stiff tariffs on imported vehicles.

And so to produce the Jeeps in China makes good business sense.

"Governor Romney understands this," Sperlich writes.

But Romney and his campaign also understand that China is the bogeyman for many blue collar voters in key swing states like Ohio, where manufacturing job losses have a tendency to be blamed on the biggest, easiest target. Sometimes, Chinese currency manipulation and cheaper labor is to blame, and sometimes it's not. But politicians know that if they blame things on China, it has a strong appeal to key swing state voters.

This is why President Barack Obama's campaign hit Romney over the summer for being an "outsourcing pioneer," because companies that Romney's private equity firm Bain Capital invested in created jobs in China.

Yet the Romney campaign's adoption of the line that Chrysler should produce Jeeps for the Chinese market in the U.S. suggests a level of government influence over private sector business that runs counter to conservative free market economics. And in addition, it contradicts good business sense.

So while Sperlich probably means to hit Obama by criticizing "small ball debates that have been going on lately about the auto industry," he also implicates Romney in the matter.

Romney doesn't have the hypocrisy lane all to himself. Obama attacked private equity for much of the summer, but took more private equity donations than any other candidate in 2008 and held fundraisers with them again in 2012. And the guys who helped Obama fashion the auto bailout, like Steven Rattner, were private equity heavyweights.



100 Years Of Election Night Losers