And they call Obama "elitist"?
NOTE: I highly commend your attention to Congressman Gary Peters' diary I was there – why Romney is still wrong on Michigan’s auto industry. It deserves your attention and RECOMMENDS.
Today, in a Detroit News op-ed titled "Taxpayers should get GM shares' proceeds", Mitt Romney doubled down on his previous New York Times editorial in which he declared the Obama administration should have let the auto industry perish.
From the NYT piece "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.Of course none of this turned out to be true. It's so far from how things actually went, in fact, that Romney is now having to scramble to save face in his home state. To do this he has picked up the gun again and taken firm aim at his other foot. With today's Detroit News piece, he scored another direct hit.
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.
He starts out his piece this way:
I am a son of Detroit. I was born in Harper Hospital and lived in the city until my family moved to Oakland County.This is a blatant attempt by Romney to be seen as a hard-core Detroiter. But here are the facts: Romney lived in Detroit until he was only five. Then his family moved to affluent Bloomfield Hills. In other words, they were part of the "white flight" mass migration of wealthy white Detroit residents to the burgeoning communities ringing the industrial city. Bloomfield Hills. Rochester Hills. Beverly Hills. Auburn Hills. The rich white people of Detroit literally ran for the "Hills" and Mitt Romney was among them.
According to his Wikipedia entry, Romney "aspired to be an executive in the [automotive] industry". Mitt didn't want to build cars. Mitt wanted to be the boss of the people who built cars.
The boss of the unionized autoworkers.
And what does Mitt have to say about these workers today? This, referring to "bailout" of the auto industry:
[I]nstead of the free market doing what it does best, we got a major taste of crony capitalism, Obama-style.The man who once dreamed of being the boss of a company full of unionized workers feels that they should have taken a back seat to other creditors. Mitt Romney is disgusted that the workers of Chrysler were given a majority stake in the company they work for. That, apparently, is only for those who headed for the "Hills".
Thus, the outcome of the managed bankruptcy proceedings was dictated by the terms of the bailout. Chrysler's "secured creditors," who in the normal course of affairs should have been first in line for compensation, were given short shrift, while at the same time, the UAWs' union-boss-controlled trust fund received a 55 percent stake in the firm.
Here are a few of those "union bosses", marching in the Labor Day parade in Detroit in 2011:
[Photo credit: Anne C. Savage. Used with permission.]
From Justin Hyde, writing for Yahoo! Autos:
Chrysler's secured creditors were a group of Wall Street banks — including J.P. Morgan, Citigroup and Goldman Sachs — and investment firms, some of whom had bought the company's secured bonds in the months ahead of bankruptcy hoping to cash in. They could have rejected the government's offer of 28 cents on the dollar in cash for their $6.7 billion in bonds and paid to liquidate Chrysler themselves, but decided that not only would they come out even further behind, they'd also be blamed for destroying an American automaker. (GM's secured creditors − also mostly Wall Street banks — were paid in full, and endorsed the Obama bankruptcy plan.)The profound fallacy in Mitt Romney's absurd argument that Chrysler and GM should have been forced to go through the normal bankruptcy process is the suggestion that there were, at the time, any banks willing to lend money to any company, much less two of the largest companies in the world. No financial institution was going take a risk that large at that point in time. I remember that time well, actually. I was purchasing a new car myself and, even with a solid credit rating, I had a tough time getting a loan!
As for the "union-boss-controlled trust fund," that's what's known as a VEBA trust that now pays the health care of 426,409 retirees from GM, Ford and Chrysler — and in return, owns all future health-care obligations from the companies for those retirees. With this, Romney appears to argue that before hundreds of thousands of UAW retirees got health care, Wall Street should have been made whole.
To suggest that the route Romney recommended was even possible is to rewrite history and deny that we were in a crisis of almost zero-lending by America's banks. Justin Hyde again:
[Romney:] "The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better."But Romney is struggling. Given the Clown Show of 2011™ (i.e., the Republican Presidential Primary), the Michigan primary in a couple of weeks has taken on a level of importance that is unusual. Suddenly Romney NEEDS Michigan to come through for him.
The crux of Romney's argument: If Obama had not acted, private companies would have stepped in and run a "managed bankruptcy." What this ignores is that in the fall of 2008, before Obama was even sworn in, no one on Wall Street or anywhere else was willing to lend GM and Chrysler a penny — let alone the $81 billion they and their financial arms eventually needed.
Both companies' bankruptcies required money on a scale not seen in legal history. Unlike airlines, which can keep running with much smaller short-term loans while they restructure, automakers need massive amounts of up-front capital to pay suppliers and workers while they build cars; their finance companies need even more to keep making car loans that can bring in revenues. The potential damage wasn't just layoffs; Chrysler executives testified on the first day of bankruptcy that without immediate cash the company risked destroying hundreds of millions of dollars' worth of equipment.
Even after Obama took office, GM and Chrysler searched frantically for paths to avoid bankruptcy, including a possible merger. Chrysler held a one-week garage sale of its assets in February 2009, inviting anyone with enough money to bid for parts of the company. No one bit.
Unfortunately, after today, he is now hobbling into our state on crutches with a self-inflicted bullet hole in each foot.
When Romney first published the NYT op-ed, the response in Michigan was swift and negative from auto workers and auto executives (the real "bosses"). In her book A Governor's Story, former Governor Jennifer Granholm wrote:
Within days, in an act many saw as treasonous to the state he'd won through pandering in the primary, Mitt Romney penned an op-ed for the New York Times entitled "Let Detroit Go Bankrupt". Auto executives and workers alike were apoplectic. Romney's column was the only topic on the local news shows. My legislative director, Tim Hughes, spoke for many when he declared, "Romney will never, ever win Michigan again. In fact, he'd better not even try to set foot in the state after knifing us in the back like that."Given the recent "surge" by Rick Santorum and in light of this newest insult to Michigan autoworkers, I'm inclined to agree.
This latest effluvium from Mitt Romney simply confirms what everyone in Michigan knows: Mitt Romney has no interest in the working class. His interests are ensuring that business owners are successful, even if that is at the expense of the workers. The idea of the workers owning a controlling share of a company is his worst nightmare. That is an arrangement that prevents the type of profit-skimming Romney came to know and love during his time at Bain Capital.
Mitt Romney spit on union members with this Detroit News piece today. I believe he will amply paid back for it by Michigan's voters.
Cross-posted from Eclectablog.