Tuesday night Rachel Maddow sat down with David Letterman and Letterman accused the president of misrepresenting Mitt Romney’s position on the auto bailout saying he was “disappointed” that President Obama took Romney’s statements from his New York Times op-ed titled “Let Detroit go Bankrupt” out of context.
Maddow came to the president’s defense saying Romney’s plan depended on private funds and added, “there was no private finance in the country.” Maddow (and the Left in general) go on to say this would have resulted in the entire automotive industry fading away.
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.
But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.
The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.
In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.
Not only did the Romney plan envision government as a key partner in the auto industry, but as its banker. This line proves it: “The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.”
As for Maddow’s claim that there was no “private finance” available, take this November 12, 2008 NYT piece on bankruptcy as an option for GM. Nowhere in the piece is it mentioned that there isn’t private money available for the financing. What is mentioned is how the UAW would be negatively affected, however.
Also remember GM was in total denial of its problems insisting all the company needed was a short-term bridge loan to make it through its mess. Andrew Ross Sorkin of the NYT, on the exact same day of Romney’s op-ed, wrote a very similar piece to Romney’s. An excerpt:
But there is a fix. Call it a government-sponsored bankruptcy, a G.S.B., if you will. It might sound a bit like an oxymoron, but it is an idea that has been quietly making the rounds in Washington. It makes a lot of sense.
Here’s how it could work:
First, let’s recognize that G.M. doesn’t need life support. What it needs is Chapter 11. The bankruptcy process is not a bad thing — indeed, it should be embraced. Bankruptcy allows companies to do tough things they could never do in the normal course of business. It has helped many companies turn themselves around and come out even stronger.
Bankruptcy would give G.M. enormous leverage with its debt holders — and, perhaps more important, with the U.A.W., whose gold-plated benefits are one reason G.M. is no longer competitive. A bankruptcy filing would also give G.M. the cover to close plants, rid itself of unprofitable brands and shed dealerships. In fact, unless G.M. files for bankruptcy, state laws would make it prohibitively expensive to shut dealerships.
The fact is, Romney was right. The Obama bankruptcy plan, by avoiding private lenders, allowed the government to pick the winners of the bankruptcy process, which included the UAW.
So, everyone, stop lying about Romney’s plan.