"Let Detroit Go Bankrupt" column dogs Romney in Michigan
Back in 2008 - at the height of the financial crisis - Mitt Romney wrote an op-ed for the New York Times opposing the Obama administration's plan to bail out the American auto industry. The headline put on the column: "Let Detroit Go Bankrupt."
In the op-ed, Romney argued that a "managed bankruptcy" could benefit General Motors, Ford and Chrysler because it would "permit the companies to shed excess labor, pension and real estate costs." Romney did not suggest the Detroit auto industry be liquidated, and he called the industry "vital to our national interest."
But the striking headline - with its implication that Romney was willing to see the American auto industry disappear - has dogged Romney ever since. Democrats have used it to hammer Romney and other Republicans for what they suggested was turning their backs on the auto industry, as in the Democratic National Committee video at left.
The Obama administration, meanwhile, has been quick to point out the positive impact of the president's decision to restructure two of the "Big Three" auto companies. Earlier this month, President Obama said some had been "willing to let this industry die" - though he didn't mention Romney directly. In October, the administration said its decision had saved over a million jobs and that the U.S. auto industry had created 128,000 jobs since the companies emerged from their restructurings.
Speaking to the Detroit Free Press editorial board Thursday, Romney said he wishes he could have rewritten that headline to "How to Save Detroit." The notion that he wanted to see the auto industry liquidated, he said, is "absurd."
"I can't even listen to that," Romney said. "Of course I wouldn't have allowed them to be liquidated."
This isn't to say Romney's position is unassailable. Romney was adamant in the column that the government not provide loans to help the industry survive, writing that if such a bailout takes place, "you can kiss the American automotive industry goodbye."
The bailout did take place - to the tune of about $85 billion - and the American automotive industry is very much alive. Just this week, General Motors released a 2011 earnings report showing the company with its largest profit in history.
Both GM and Chrysler did go through just the sort of "managed bankruptcy" that Romney as advocated in his column. The difference is they did it with government support. At the time of the column, the financial crisis had created an environment in which banks were reticent to lend the sort of money the auto companies were seeking. The White House has suggested that the companies thus could not have survived without the government assistance, and would have had to liquidate.
Romney argues that they not only would they have survived without the bailout - they would have been better off. His alternate course of action would have been to provide federal loan guarantees to banks that loaned Detroit the necessary money, as opposed to having the government offer the loan directly.
Romney also suggests that the Obama administration's close ties to organized labor allowed labor to get a sweetheart deal when the government provided the loan. His campaign spokesperson Andrea Saul told the Associated Press earlier this month that the bailout "cost taxpayers billions, and left the government improperly entangled in the private sector." The government still owns more than a quarter of General Motors, and unless the company's stock rises from its current level of $27.36 per share up above $50 per share, the government is poised to lose billions of dollars from the bailout.
Romney grew up in Michigan, and his father was both the governor of the state and a prominent auto executive. In a new ad running in the state, Romney is shown driving a car and talks about going to the Detroit auto show with his father.
"I want to make Michigan stronger and better," he says in the ad. "Michigan has been my home and this is personal."
Michigan holds its primary on February 28, and a loss for Romney in what is his home state could be devastating. Romney has been campaigning in the state this week, and his campaign (and the super PAC backing it) is already spending hundreds of thousands of dollars to run ads in the state. He has reason to be worried: A poll out Friday showed Rick Santorum leading Romney by five points in Michigan, and some polls are showing Santorum with a double-digit lead.
Below, a CBS News roundtable: What if Romney loses Michigan?
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