President Obama and Mitt Romney again clashed tonight about the auto bailout. The president continually assailed Romney for proposing to let GM and Chrysler go bankrupt — which, of course, they did, just via a government-managed bankruptcy which favored certain labor groups, closed swaths of particularly chosen dealerships, and shortchanged many bondholders. Romney instead proposed a more privately managed bankruptcy — which, despite what the president says, or worse, might actually think — does not mean liquidation, but restructuring.
In his November 2008 New York Times op-ed, Romney proposed government guarantees for the auto companies’ post-bankruptcy financing. Obama adamantly denied this tonight, claiming you can “check the record.” Well, here it is: no proposal for liquidation, and suggestions for government support after restructuring, what Romney claimed tonight, and Obama denied he’d done:
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.
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.
Some conservatives may disagree with that proposal, but Romney did propose a middle-of-the-road solution in which the federal government would not now be holding an equity stake in the auto industry, the value of which has dropped dramatically over the past months, but would have provided some aid after bankruptcy. This was yet another issue where Obama attempted to accuse Romney of inconsistencies, where there was none.