My diary last week, A Bankruptcy Lawyer (Me) Corrects Factcheck.org on the Auto bailout, set out why Factcheck.org was wrong on the candidate's statement on that subject in the third debate.
Now, Romney's notorious "Jeep Jobs to China" ad, which Politifact rates "Pants on Fire," begins by citing Politifact's own "Mostly False" rating of President Obama's statement at the debate. How is that for irony -- Politifact rates as a pants-on-fire lie an ad that rests on Politifact's own incorrect rating on the same subject.
Sigh. I had to correct Politifact also.
This should be a no-brainer for fact-checkers:
The auto industry was saved by government funding ordered by Presidents Obama (and Bush!). Romney, on numerous occasions, opposed that funding. The government funding succeeded.
End of story. And yet, the "fact-checkers" have twisted themselves into knots to say that President Obama and not Romney, made false statements about this at that debate.
Below is my letter:
As a bankruptcy attorney, I take very strong exception to the "Truth-o-Meter" rating of "Mostly False" for President Obama's statement at the October 22 debate that Governor Romney "would not provide government assistance to the U.S. auto companies, even if they went through bankruptcy." See Politifact Rating.
That rating should be changed. As you are likely aware, a current ad by the Romney campaign quotes the "Mostly False" rating to attack President Obama’s record on the auto industry. Ironically, Politifact has rated that ad "Pants on Fire" for falsely implying that Chrysler is moving Jeep jobs to China. Although these are two different findings, the incorrect "Mostly False" citation early in the ad buttresses the later "Pants on Fire" claim.
None of these facts can be contested:
In November 2008, Mitt Romney opposed government assistance at that time, to save the auto industry;
Presidents Obama and Bush supported government assistance to the auto industry;
Those companies survived today and over a million jobs were saved; and
Without that support, there never would have been any chance of exit financing.
And yet, Politifact found President Obama's statement “mostly false” based solely on the possibility that in his November 8, 2008 New York Times Op-ed article, Mr. Romney supported government financing to the auto companies (in the form of loan guaranties) after a successful bankruptcy (i.e., “exit-financing”).
That rating unquestionably errs by:
(1) limiting the analysis of Mitt Romney’s November 2008 position to his November 8 Op-Ed piece, while ignoring overwhelming other evidence of his position stated by Mr. Romney himself. In addition, (although not necessary to support the arguments herein), only Mr. Romney mentioned the Op-ed, while President Obama spoke more broadly of the "record." (See Transcript excerpt, footnote 1, below.)
(2) analyzing the question of whether Governor Romney meant government involvement during or after a GM or Chrysler bankruptcy, but ignoring that without government involvement the auto companies would never have emerged from bankruptcy;
(3) ignoring the heart of the issue: that Romney rejected government funding at a time when it was the only way to save the auto industry.
Below is a discussion of each of these factors:
(1) Sole Reliance on the November 8 Op-Ed: On the first point, it is uncontested that in November 2008, Mr. Romney categorically opposed government funding for the auto industry at that time (even assuming ambiguity in the Op-Ed piece about post or pre- bankruptcy government funding.)
On November 20, shortly after the Times Op-ed, Romney spoke out against the proposed government funding:
Former Massachusetts Gov. Mitt Romney is standing steadfastly behind the forces opposing a $25 billion "bridge loan" for struggling Detroit auto manufacturers. Speaking Thursday morning amid growing signs of gridlock in Congress, Romney said "there's no question but that if you just write a check, you're going to see these companies go out of business.”
On the same day, he appeared on CBS This Morning and said:
If you just write a check, then you’re going to see these companies go out of business ultimately. . . . Don’t just give them a check.
Romney continued to embrace this position consistently through the Republican primaries in 2011 and 2012. In a November 1, 2011 debate, Romney stated:
My plan, we would have had a private sector bailout with the private sector restructuring and bankruptcy with the private sector guiding the direction as opposed to what we had with government playing its heavy hand.
Therefore, there is no ambiguity about Governor Romney’s position as to government funding of the auto bailout at the relevant time – when the auto companies were about to run out of funds and possibly cease operations.
Finally, the transcript of the debate shows that only Governor Romney referred specifically to the November 8 Op-ed. President Obama repeatedly stated "let's check the record." As set forth above, the entire "record" shows that Mr. Romney opposed government funding, notwithstanding any ambiguity in the Op-ed.
(2) The Irrelevance of “Post-bankruptcy Financing”: The question of whether the November 8 Op-ed referred to post or pre-bankruptcy government funding is irrelevant and a distraction. As described above, other statements by Romney at the time were clear that he opposed the government “writing a check” then, not at some future time after a bankruptcy (even if the Op-ed was ambiguous on that). Moreover, although (according to your email conversation with him) Steven Rattner supports the post-bankruptcy, “exit-financing” theory of the Op-ed, he also clearly states “because there was not DIP financing available, the companies would have never come out."
So any statement by Romney concerning “exit-financing” is a chimera. The only relevant question at that critical juncture was the immediate survival of the auto companies. If Romney was indeed talking about government funding at the end of a bankruptcy, he was talking about a scenario for which he offered no achievable plan.
(3) The “exit-financing” speculation is a distraction:" The fundamental questions at the time were: (a) Were there private funds for DIP Bankruptcy financing available?; (b) Did government financing succeed?
There is overwhelming evidence that the answer to (a) is no. Chief Bankruptcy Judge Arthur B. Gonzalez, who presided over the GM Bankruptcy, stated:
“The record before the Court was clear that there were no other sources of lending . . . One thing is clear, without government support in one fashion or another, there were no sources of funding. ”
In September 2009, a Congressional Oversight Panel concluded:
“In December 2008, Chrysler and GM faced a crippling lack of access to credit” due to the global financial crisis.
Bob Lutz, the vice chairman of GM at the time and an outspoken Republican, said the loan guarantees Romney talks about would not have made a difference due to the cash crunch at the time.
"The banks were even more broke than we were. Who had the money?" he told the Detroit Free Press in February. "Loan guarantees don't do any good if the banks don't have any money."
Finally, Mr. Rattner stated that
"not one (would-be lender) had the slightest interest in financing those companies on any terms."
The overwhelming answer to (b) is yes: Government financing has been validated by the success of the auto-bailout. For example, from yesterday's San Francisco Chronicle:
Oct. 29 (Bloomberg) -- Chrysler Group LLC is hiring more than 1,100 new workers at its sprawling Toledo, Ohio, manufacturing complex. JPMorgan Chase & Co. is looking for hundreds of bankers in Columbus. And the Cleveland Clinic has been adding registered nurses at such a clip that it rented out the Cleveland Browns football stadium for a job fair.
Long an emblem of rust belt decay and despair, Ohio is now outpacing the national economy. The Midwestern swing state, which may decide the presidency on Nov. 6, is shaking off the recession’s effects and minting paychecks. If the U.S. could swap its 7.8 percent unemployment rate for Ohio’s 7 percent mark, more than 1.2 million idle Americans would be at work.
In sum, the evidence is overwhelming that Governor Romney opposed government assistance to the auto companies in late 2008, that both Presidents Bush and Obama supported that assistance and that the auto companies are now flourishing.
The rating should be changed. It was incorrect in the first instance, and now it is being misused by the Romney campaign to support an obvious "Pants-on-Fire" Ad.
Thank you for considering this letter.
Sincerely,
Upper West
Footnote 1. Transcript of October 22 Presidential Debate (in relevant part).
MR. ROMNEY: I just want to take one of those points. Again, attacking me is not talking about an agenda for getting more trade and opening up more jobs in this country. But the president mentioned the auto industry and that somehow I would be in favor of jobs being elsewhere. Nothing could be further from the truth. I’m a son of Detroit. I was born in Detroit. My dad was head of a car company. I like American cars. And I would do nothing to hurt the U.S. auto industry. My plan to get the industry on its feet when it was in real trouble was not to start writing checks. It was President Bush that wrote the first checks. I disagree with that. I said they need — these companies need to go through a managed bankruptcy, and in that process they can get government help and government guarantees, but they need to go through bankruptcy to get rid of excess cost and the debt burden that they’d — they’d built up.
And fortunately the president picked —
PRESIDENT OBAMA: Governor Romney, that’s not what you said.
MR. ROMNEY: Fortunately, the president — you can take — you can take a look at the op-ed.
PRESIDENT OBAMA: Governor, you did not —
MR. ROMNEY: You can take a look at the op-ed.
PRESIDENT OBAMA: You did not say that you would provide, Governor, help.
MR. ROMNEY: You know, I’m — I’m still speaking. I said that we would provide guarantees and — and that was what was able to allow these companies to go through bankruptcy, to come out of bankruptcy. Under no circumstances would I do anything other than to help this industry get on its feet. And the idea that has been suggested that I would liquidate the industry — of course not. Of course not.
PRESIDENT OBAMA: Let’s check the record.
MR. ROMNEY: That’s the height of silliness.
PRESIDENT OBAMA: Let’s — let’s check the record.
MR. ROMNEY: I have never said I would — I would liquidate the industry. I want to keep the industry growing and thriving.
PRESIDENT OBAMA: Governor, the people in Detroit don’t forget.