Romneycare may be the wrong prescription for health reform, but the former Massachusetts governor’s solution for healing Detroit autos was good medicine. So naturally, Romney is getting pilloried in Detroit today by everyone from Big Labor to Thaddeus McCotter — for telling the truth.
In late 2008, Romney called for a managed bankruptcy of GM and Chrysler. Ultimately, that is exactly what the Obama administration did. The difference? Obama’s “UAW Bailout” used the bankruptcy process to gut investor interests and “put the finger on the scale” — as Romney put it on a visit to Michigan this morning — for his UAW cronies.
But as Suffolk University historian Robert Allison said about the knee-jerk reaction to Sarah Palin’s midnight ride of Paul Revere, the media has “a cartoonish view of history.”
Yes they do.
“Detroit should go bankrupt” blared the New York Times headline on Romney’s November 2008 op-ed protesting the no-strings-attached bailout advocated by the UAW and management at the time. If press and pols bothered to read the article, they would know that headline was shorthand for a “managed bailout.” At a time when capital was tight, limited federal intervention would have kept Detroit’s supply tail healthy while investors and management restructured the company.
“A managed bankruptcy may be the only path to the fundamental restructuring the industry needs,” wrote Romney. “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.”
Only a cartoonish MSM could twist those words into Romney’s throwing Detroit to the wolves.
His proposal was consistent with what most experts advised at the time, including Tennessee senator Bob Corker. The Big Lie — perpetrated by Obama lackeys today — is that Obama critics were opposed to a bailout. In fact, no serious player was. The differences were over how it should be managed.
Obama wanted to hand the company to his Big Labor cronies (to keep the union campaign-funding spigot flowing). Conservatives wanted the company restructured by its rightful owners.
Six months after his column appeared, much of Romney’s prescription (the union payoff aside) was carried out by Obama’s team in bankruptcy, including slashing UAW wages that added cost to Detroit cars “estimated to be more than $2,000 per car” (Romney’s words) and a revamp of management (“management as is must go”).
The “Romney solution” might have taken longer, but with government providing needed capital, the economy would have been saved a shock, GM and Chrysler would have emerged more competitive, and the fundamental rights of secured shareholders would have been preserved.