Tuesday, October 23, 2012

What Mitt Romney Really Said About Allowing Detroit to Go Bankrupt

During last night's debate, Mitt Romney again tried to rewrite history in terms of what he said about allowing General Motors and Chrysler go bankrupt back in 2008.  Like almost everything the man says, last mights song and dance did not reflect reality.  Here are highlights from Romney's actual op-ed in the New York Times on November 18, 2008 which was captioned "Let Detroit Go Bankrupt":

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. 

I have several prescriptions for Detroit’s automakers. 

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations. 

Starving research and development is like eating the seed corn.  

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.  . . . .But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

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. 

Of course, as Romney - a vulture capitalist himself - well knew at the time given the collapse of the financial markets, financing during a bankruptcy of either automaker such has he proposed was non-existent.  Giving "post bankruptcy financing" to companies that had collapsed and had ceased to operate would have been too little, too late and many millions of Americans would have found themselves unemployed.  In short, Romney's plan would have been a disaster and GM and Chrysler would be out of business had his approach been pursued.  So once again. last night we heard Romney suffering from "romnesia" and rewriting his own words.  Thankfully, Bush and Obama rejected Romney's plan.  The American people need to remember what Romney proposed for Detroit and reject Romney on November 6th.

No comments: