If Ohio has been President Barack Obama’s “firewall” – the state guarding against a disappointing Electoral College result on Nov. 6 – then the president’s re-election team might consider Obama’s well-publicized auto industry rescue as a type of firewall within a firewall.
Obama has taken every effort to remind voters in Ohio of his authorization of a 2009 bailout of General Motors and Chrysler that is widely credited with preserving the companies as they stood on the brink of catastrophe. In the same breath, the president is sure to mention the op-ed – “Let Detroit Go Bankrupt” – penned by Romney for the New York Times, which called for a managed bankruptcy for the automakers supported partially by government guarantees.
There are real differences between how Obama sought the auto industry rescue and how Romney, judging by his own comments at the time, might have engineered support for GM and Chrysler. But if the Republican presidential nominee manages to win Midwestern states like Ohio and Wisconsin on Nov. 6, he could point to his recent messaging on the auto bailout as a reason why.
Romney has essentially tried to take credit for Obama’s actions, arguing that it was the president who ended up following Romney’s counsel all along, and lead GM and Chrysler toward a “managed bankruptcy.”
"He said that I said we should take Detroit bankrupt. And that’s right. My plan was to have the company go through bankruptcy like 7-Eleven did and Macy’s and Continental Airlines and come out stronger," Romney said at last week's second presidential debate in New York. "And I know he keeps saying, 'You want to take Detroit bankrupt.' Well, the president took Detroit bankrupt. You took General Motors bankrupt. You took Chrysler bankrupt. So when you say that I wanted to take the auto industry bankrupt, you actually did."
Romney’s semantic argument, though, obscures a gulf between him and Obama over how such a managed bankruptcy would have been managed and its implications for the industry.
First Read wrote in February – as Romney sought to win Michigan’s Republican primary – about the precise differences between Obama and Romney when it comes to the bailout.
The separation between Romney and Obama on the issue of the bailout stems from two issues. First, Romney argues that interests of the labor unions were unfairly favored over some of GM and Chrysler's private creditors. The government-supervised bankruptcy did this, he argues, by allowing the autoworkers’ retirees program an equity stake in the restructured GM in exchange for providing financial support for the bankruptcy.
Second, Romney appears to differ with the president over the extent to which government itself should have stepped forward with money to help stave off liquidation of GM and Chrysler and provide for the restructuring process. The administration's approach did this in the case of GM by essentially establishing a new, restructured company in which the government became a majority shareholder. (Romney argued Tuesday for the government to divest itself from the company.)
Romney's position in the past has been that the private sector could have stepped forward to finance and more effectively manage the bankruptcy process -- especially in a way that would have treated private stakeholders in the companies more fairly.
One of the key points, though, involves the type of support Romney would have offered to the companies. His original op-ed called for the government to back warrantees and guarantee private sector financing for the companies when they emerged from bankruptcy. But the bipartisan Congressional Oversight Panel overseeing the various bailouts questioned whether any private financing would have been available in the first place, given the credit crunch in early 2009.
“Gov. Romney, you keep on trying to, you know, airbrush history here,” Obama said on the topic of autos Monday evening at a third debate versus Romney. “You were very clear that you would not provide, government assistance to the U.S. auto companies, even if they went through bankruptcy. You said that they could get it in the private marketplace. That wasn’t true.”
Setting aside the candidates’ very different approaches, what is clear is that, for months now, Romney has tried to play offense on the issue of autos. And his success in states like Ohio – where one in eight jobs is said to have ties to the auto industry – may depend on Romney’s ability to convince Midwestern voters that GM and Chrysler would be doing just as well as they are now if he were president instead of Obama.
It appears voters are interested in learning more. As a New York Times spokesperson noted on Twitter, Romney’s original Nov. 18, 2008 op-ed, skyrocketed Tuesday to the top of the list of the most-read stories on the Times website.
