There is a growing feel that winning the Michigan primary is a do or die moment for the Romney Campaign. Still, winning the primary should be a slam dunk for him, as he is all but a native son. His father was a popular governor of the state, not to mention the Chairman and CEO of American Motors. So it was just a little curious, that at a time when even Clint Eastwood has become a cheerleader for the American auto industry Romney would take the opposite tack and writean op-ed in the Detroit Free Press attacking the auto bailout and insisting things would be better had the government not intervened
That argument, silly as it was on its face just got a huge hole blown in it, especially for regular voter today whenGM announced it had made a $7.6 Billion dollar profit. , Not so much because a huge corporation made a lot of money but because:
General Motors has posted its most profitable year ever in 2011, coming a long way since being bailed out in 2008 and going bankrupt in 2009. And for once, reading a corporate profits report feels pretty good, with news that union members are getting a nice payday for their part in GM's good year.That bang and scream you just heard was Romney 2012 shooting itself square in the foot
America's largest car company earned $7.6 billion in 2011, a 62 percent increase from 2010 and the most ever in GM's 103 years of existence. And as a reward of the banner year, GM "says union workers will get $7,000 profit-sharing checks.
To understand how bad this is for Romney, first consider the impact of those bonus checks financially: For most of us 99%'ers $7k is a LOT of money, especially if it comes all at one time. It could represent a year's tuition at a community college, or a semester at the State U for your kid. It's about half a new car or a decent down payment on a home (hell in some places in Detroit it's enough to BUY a home outright, and still have money left over).
Now, since there are about 47,000 Union workers employed by GM, that means the bonus payout will total about $329,000,000.00 which, added all at once to the economy will very like have on HELL of a stimulus effect, particularly in economically depressed areas like Detroit and Cleveland; and it won't cost taxpayers a dime.
Then consider the moral and political statement it makes. UAW rank and file workers made concessions and put "sweat equity" into saving GMr, and now they are seeing a real and tangible reward for their sacrifice. GM's rising tide is indeed lifting ALL boats not just a select. It gives you the same kind of warm and fuzzy feeling that Eastwood's "General Patton meets Coach Taylor" Halftime In America Speech does, a feeling that we are all in this together and we CAN do this.
But according to Mitt Romney it was all a horrible mistake.
The equally indisputable bad news is that all the defects in President Obama's management of the American economy are evident in what he did.Now, assuming he's not completely brain dead, why in the hell would Romney, in a Michigan newspaper no less, before a Michigan primary, take on a deal that not only saved thousands of Michigan jobs but an entire industry?
Instead of doing the right thing and standing up to union bosses, Obama rewarded them.
A labor union that had contributed millions to Democrats and his election campaign was granted an ownership share of Chrysler and a major stake in GM, two flagships of the industry...This was crony capitalism on a grand scale. 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.
Well some see it as a strategic hard right turn in order to woo Michigan's TEA Party voters who are generally perceived as supporting Rick "The Human Google Bomb" Santorum
Some GOP activists, however, said Romney's actions make sense. He already was on record opposing the bailouts. So his Tuesday op-ed in the Detroit News gave him a chance to elaborate, they said. And his stance will appeal to business-oriented Republicans as well as more libertarian-leaning voters who oppose government intrusion in general.Maybe. But for once, I have to say I think Romney actually truly and sincerely believes what he wrote. And that's a real problem-for him, and for this country. Let's look at What Mitt would have done differently in his own words:
"It may be dicey in the general election, but it's not dicey in the primary," said Lansing-based Republican strategist Steve Mitchell. "Republicans opposed the auto bailout. They opposed other bailouts. They oppose bailouts."
" Instead of a bailout, I favored "managed bankruptcy" as the way forward.For those who perhaps don't make a living immersed in the minutiae of corporate bankruptcies and the like, allow me to translate:
Managed bankruptcy may sound like a death knell. But in fact, it is a way for a troubled company to restructure itself rapidly, entering and leaving the courtroom sometimes in weeks or months instead of years, and then returning to profitable operation.
In the case of Chrysler and GM, that was precisely what the companies needed. Both were saddled with an accumulation of labor, pension, and real estate costs that made them unsustainable. Health and retirement benefits alone amounted to an extra $2,000 baked into the price of every car they produced.
Shorn of those excess costs, and shorn of the bungling management that had driven them into a deep rut, they could re-emerge as vibrant and competitive companies. Ultimately, that is what happened. The course I recommended was eventually followed. GM entered managed bankruptcy in June 2009 and exited it a month later in July.
The Chrysler timeline was similarly swift. But something else happened along the way that was truly egregious. Before the companies were allowed to enter and exit bankruptcy, the U.S. government swept in with an $85 billion sweetheart deal disguised as a rescue plan.
By the spring of 2009, instead of the free market doing what it does best, we got a major taste of crony capitalism, Obama-style.
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.
The pensions of union workers and retirees at Delphi, GM's parts supplier, were left untouched,
In bankruptcy, particularly a chapter 11, a Company can use the bankruptcy courts to essentially break any deal or void any contract they might have signed previously with anyone. In Romney's view, GM and Chrysler should have gone to the courts and asked them to wipe out any promises they made to the Unions and their rank and file workers about health care or retirement- so it's "Secured creditors" -large banks and financial institutions who loaned GM abd Chrysler money backed by liens on their assets could have gotten a greater financial recovery. (it is was a strange article of faith among the GOP in late 2008-2009 that the huge bonuses that Wall Street bankers were scheduled to be paid were enshrined in sacred CONTRACTS and therefore any attempt to cancel or limit them was rankest socialism and class warfare, but that Union workers are, to a man, “overpaid” and therefore their “sweetheart contracts” with various industries MUST be thrown out, for the good of the nation)
So basically, not to put too fine a point on it, he's saying that the little guy should have gotten screwed and the ultra-rich should have reaped the benefits. Now, lest you think this is an unfair and grotesque distortion of Romney’s views; let me point out to you, that this is the EXACT BUSINESS MODEL he used at vulture capital, excuse me, private equity firm, Bain Capital to amass his own gigantic personal fortune. Their pattern was simple:
1) find a “weak” company, one with substantial assets that was nonetheless “underperforming”
2) snap it up cheap, and then either
a. chop it up and sell the bones, or
b. leverage it to the hilt, and then take it through bankruptcy to wipe out its liabilities (to workers or suppliers or anyone else),
This is exactly how Romney thinks the American economy should be run, by and exclusively for the benefit of the managers and the investors and with no consideration for the workers. And While Romney in his op-ed tries to paint Obama's deal as a favor to "corrupt Union bosses" those $7,000 checks in the pockets of the rank and file, easily put paid to that lie.
I wouldn't be surprised to see even an Uber-conservative like Rick Santorum tee off on Romney for writing this piece and for opposing the auto rescue. This is too easy an opening NOT to attack in Michigan of all places. But if he doesn't Obama MUST.
In this Op-ed, Romney beautifully illustrates the dichotomy between the Americas He's offering to America and the one Obama outlined in his State of the Union:
-Obama wants one where everyone participates and contributes to the running of this country and in return everyone gets some of the benefit when prosperity increases.
-Romney embraces the status quo: where You have to somehow find yourself on the top rung of the ladder before you start seeing any benefits, and where those who Have, get a whole lot more, and everyone else squabbles over the scraps.
As those GM workers go home and try to figure out how to spend those bonuses, hopefully they'll be very clear on which America THEY want, and which candidate made that possible, and which one would have stopped it from ever happening