Again and again from the podium last night, Democrats attacked Mitt Romney for saying “Let Detroit Go Bankrupt.” Ohio Governor Ted Strickland, Chicago Mayor Rahm Emanuel, UAW President Bob King, and others all brought this line up to attack Romney.
This attack comes straight from the Obama campaign, and like many of the Democrats’ themes this week (and the Republicans’ themes last week) it’s fundamentally misleading.
Here’s the truth: what Romney proposed for Detroit was more or less what Obama did.
Romney’s plan for GM and Chrysler, articulated in his November 2008 op-ed headlined “Let Detroit Go Bankrupt” rested on this argument: “A managed bankruptcy may be the only path to the fundamental restructuring the industry needs.”
Do you know what Obama did in the Detroit bailout he’s touting so much these days? A managed bankruptcy of GM and Chrysler.
Here’s the MSNBC story from June 1, 2009:
General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration’s plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.
And here is Chrysler’s actual bankruptcy filing from April 30, 2009.
So Barack Obama let Detroit go bankrupt, so that GM and Chrysler could restructure their debt.
When I pointed this out last night on Twitter, Joe Weisenthal of The Business Insider suggested I cut the speakers some slack – that they were using “bankrupt” in the colloquial sense of “out of business.” But that’s not how Romney was using the term.
Check out Romney’s offending op-ed. He’s arguing (for better or worse) for saving the Big Three. He writes things like “management as is must go” and “it is not wrong to ask for government help, but the automakers should come up with a win-win proposition.” The presumption is that GM and Chrysler and Ford should be kept alive.
Romney writes that bankruptcy “would permit the companies to shed excess labor, pension and real estate costs.” Again, this assumes they emerge from bankruptcy.
In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.
Romney even explicitly called for federal loan guarantees for the automakers.
So, to recap:
- Romney called for bankruptcy, and Obama delivered bankruptcy.
- Romney called for saving the companies from extinction, and Obama saved the companies from extinction.
- Romney called for forcing shareholders and bondholders to take a bath, and Obama made shareholders and bondholders take a bath.
- Romney called for federal loan guarantees for the automakers, and Obama provided loan guarantees, direct loans, and equity investments.
So the difference is that Obama wanted more direct federal aide, but both guys wanted government aid and structured bankruptcy to save the companies.
Still, Democrats, speaking from Obama’s playbook, will keep attacking Romney for proposing mostly what Obama did. As Bill Clinton put it last night, “You got to give one thing: It takes some brass to attack a guy for doing what you did.”