In 2008 at the height of the financial crisis in our country, Mitt Romney wrote an op-ed column for the New York Times entitled, “Let Detroit Go Bankrupt.” While Romney does not believe that the American Auto Industry deserved to be liquidated, he strongly disagreed with government intervention. He felt that government intervention would mean the end of the U.S. auto-industry and that a managed bankruptcy could have left them stronger after the fact. Tough luck, Romney; in 2011, GMC posted its best year in history.
According to Mitt Romney, a managed bankruptcy would have allowed the auto-industry to shed excess labor as well as pension and real-estate costs. As reported by CBS News, Romney also claimed that the auto-industry would have emerged from the financial crisis that much stronger and ready to do business. As it stands right now the U.S. government still owns one quarter or General Motors, and if stock prices do not continue to rise they are set to loose billions of dollars.
However, the Obama administration has pointed out the success it has had in saving the auto-industry. President Obama a few weeks ago stated that, “some were willing to let the industry die,” while not getting specific. He also noted that through government bailouts over one million jobs were saved and an additional 128,000 were created.
Reeling from this criticism, Romney stated that he wished he could have gone back and changed the title to “How To Save Detroit.”
“I can’t even listen to that,” Romney said. “Of course I wouldn’t have allowed them to be liquidated.”
At the time of the bailouts the banks were not strong enough to loan the amount of money needed to the auto-industry. Romney’s plan would have involved providing federal loan guarantees to banks so they could in turn loan the money to Detroit.
However, two out of the three automakers did go through a so-called “managed bankruptcy;” they just did it with governmental support. Many conservatives believe Obama got the government too entangled in the affairs of private business.
The interesting part is that this criticism of Romney comes as the Michigan primary draws near. Romney way born and raised in Michigan and his father served as the Governor of the state. This is essentially Mitt’s home state, and a loss there would be extremely detrimental to the campaign.
“I want to make Michigan stronger and better,” Romney stated in an advertisement in Michigan. “Michigan has been my home and this is personal.”
Rick Santorum is showing a strong lead over Romney on the polls, though. After Santorum’s three state sweep, he moves into Michigan with a good deal of momentum. However, Romney, the savvy businessman he is, may find an advantage in a state that was battered by the financial crisis as hard as Michigan was.