Another day, another explanation of Mitt Romney’s oh-so-nuanced position on the auto bailout. And this time, for reasons that will soon become clear, it’s pushing the GOP frontrunner’s stance towards something that seems straight out of South Park.
Last night, Romney made the case that Detroit’s car makers needed to go through a managed bankruptcy — hence his famous “Let Detroit Go Bankrupt” editorial — and suggested that the private sector could have kept them from going under along with maybe just the slightest helping hand from the government.
“If they go through that managed bankruptcy and shed the excessive cost that’s been put on them by the UAW and by their own mismanagement, then if they need help coming out of bankruptcy, the government can provided guarantees and get them back on their feet,” he said. “No way would we allow the auto industry in America to totally implode and disappear. That was my view. Go through bankruptcy. When that happens, then the market can help lift them out.”
Now, to some degree, this is what the Obama administration did: the car companies eventually went through a managed bankruptcy.
Romney, at times, has even given credit to Obama for his approach and claimed it was the path he recommended himself. But what he has not clearly answered is whether he would have approved the part of the deal that conservatives hate, but made the whole thing work: providing loans to the car companies so they survived the bankruptcy process at all.
See, “the market” Romney refers to — i.e. big finance — was in such miserable shape at the time of the bailout that economists were seriously suggesting the US should nationalize it to avoid a Great Depression. They weren’t lending to anyone, let alone an entire industry in crisis. Several of Romney’s top Michigan supporters, most notably Gov. Rick Snyder and Rep. Fred Upton (R-MI), supported the bailout for exactly that reason. “There was no one that could have picked up those pieces other than the federal government,” Upton said in an interview this week, disagreeing with Romney.
I asked Saul Anuzis, an RNC committeeman and a top Romney surrogate in the state, just how Romney would have kept the industry afloat through the bankruptcy process if Upton was right and there were no loans available.
“The governor basically was saying he wanted to start out with a managed bankruptcy,” Anuzis said, arguing that Romney would only then have considered whether or not this or that federal loan was needed. He added that “if government needed to step in at that point it would have been a very different approach.”
What approach? How much money? Nobody knows for sure. When asked about direct loans last week, Romney’s campaign only told TPM that Romney was “willing to help” and didn’t want companies getting money without having to make tough restructuring decisions (which was a condition of Obama’s bailout). His rare, more specific suggestions so far, like guarantees for private sector loans and warranties, are still pretty vague and unwieldy.
It appears as if Romney’s plan is to get applause at Republican debates for stressing the word “bankruptcy,” and then get indignant when Michigan reporters suggest this would have left the auto industry anything less than booming. All without ever mentioning tens of billions it took to get from one point to the other.
The whole game resembles an oft-quoted 1990s episode of South Park in which a group of gnomes gather people’s boxer shorts as part of a grand three-part business scheme: Step 1: Collect underpants; Step 2: ???; Step 3: Profit. Despite their best efforts, nobody can explain what Step 2 was supposed to be.
So with Romney, we now have the following. Step 1: Bankruptcy. Step 2: ??? Step 3: Record profits.
Composite picture contains an image from gnurf/ Shutterstock
Benjy Sarlin is a reporter for Talking Points Memo and co-writes the campaign blog, TPM2012. He previously reported for The Daily Beast/Newsweek as their Washington Correspondent and covered local politics for the New York Sun.