Mitt Romney, struggling to regain the lead from Rick Santorum in national polls and facing a serious deficit in the key primary state of Michigan, has doubled down on his position against the auto industry rescue, arguing that the industry should have gone through a “managed bankruptcy,” mainly to squeeze out the United Auto Workers:
My view at the time — and I set it out plainly in an op-ed in the New York Times — was that “the American auto industry is vital to our national interest as an employer and as a hub for manufacturing.” Instead of a bailout, I favored “managed bankruptcy” as the way forward.
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.
Marcy Wheeler takes this apart pretty well. Basically, Mitt is mad that the unions stayed in place after the auto rescue, and that they got, through their health care management trust fund VEBA, a stake in Chrysler. As she says, “he’s basically complaining that the bailout preserved the healthcare a bunch of 55+ year old blue collar workers were promised. He’s pissed they got to keep their healthcare.” Mitt would rather that the stake in the auto companies went to bailed-out banks instead of the union health care fund.
This isn’t quite as suicidal as it looks. Romney needs to win Michigan, and Michigan Republicans actually don’t support the auto rescue, in true what’s-the-matter-with-Kansas fashion. So though this looks like the opposite of pandering, that’s what it is, playing to the conservative lizard brain conception of greedy unions.
For the state as a whole, however, it’s a really dumb double-down, especially when it can be so easily characterized as Romney favoring banks over people’s health care. Not to mention the fact that Michigan’s unemployment rate has fallen precipitously, led by manufacturing. Romney’s lament about managed bankruptcies and union trust funds sounds like a fan whose football team has won 35 games in a row complaining about the new trim on the uniforms.
UPDATE: A commenter at Brad DeLong’s place adds:
As I am sure you all remember, going into bankruptcy with no source of continued funding would mean liquidation for the auto makers and everyone understood that at the time including Keith Hennessy in public.
Saying he was for managed bankruptcy without a funding source was like saying he was for medical treatment but at the time refused to pay for the medicine or that he was for having a kid finish their degree only he refused to pay the tuition.