Romney: Fed Bailout Harmed, Not Helped, Auto Industry
President Barack Obama used the bailout of U.S. automakers to enrich union supporters, marring the industry’s recovery, Republican presidential candidate Mitt Romney said today in an op-ed column in the Detroit News.
As part of Obama’s plan to save Chrysler Group LLC, the United Auto Workers’ trust fund received a 55 percent stake in the Auburn Hills, Michigan-based company while Chrysler’s secured creditors got “short shrift,” he wrote.
Romney, whose father, George, was president of American Motors Corp., also said the Obama administration should sell government-owned shares of General Motors Co. (GM) and turn the profit over to taxpayers.
“The president tells us that without his intervention things in Detroit would be worse,” Romney wrote. “I believe that without his intervention things there would be better.”
Obama has made the taxpayer bailout of Detroit-based General Motors and Chrysler, which is majority-owned by Fiat SpA (F), a theme in his re-election campaign. Romney is vying for support in Michigan’s presidential primary on Feb. 28, seeking to fend off a resurgent challenge from Rick Santorum in the Republican race.
In his article, Romney described Steven Rattner, who headed the government’s auto task force, as a “politically connected and ethically challenged Obama-campaign contributor” whose role in managing the bailout was part of “crony capitalism on a grand scale.”
Rattner, in an interview, called the column “one of the most remarkable pieces of retroactive hallucination that I’ve seen in a while.” He said that without the action Romney decried, the car companies would have died.
Rattner said the “managed bankruptcy” Romney advocated instead of a government rescue package wouldn’t have been possible, and he contended that the Obama administration demanded more concessions than George W. Bush’s Republican administration had sought when the first round of bailout loans for automakers was approved in late 2008.
“We asked for more sacrifice from the stakeholders than the Bush administration had asked,” said Rattner, who is now with Willett Advisors LLC.
Michigan Democrats said Romney’s approach would have worsened the state’s economic downturn.
‘No Private Entity’
“The Romney path would have meant the end of one and perhaps two of our major industries,” U.S. Representative Sander Levin told reporters on a conference call sponsored by the Democratic National Committee. “He can’t have it both ways. There was no private entity to provide the financing.”
Romney, who was born in Michigan, is “pandering to a national audience,” said former Michigan Governor Jennifer Granholm.
“He comes from Michigan and he knows better,” she told reporters. “The bailout worked.”
Automakers are increasing production after U.S. light- vehicle sales rose at least 10 percent for two straight years for the first time since 1984. Last month, GM announced it had regained the title as the top-selling global automaker, which it lost to Toyota Motor Corp. (7203) as it slid into bankruptcy.
Chrysler Sales Surge
Chrysler’s U.S. sales increase of 44 percent last month surpassed eight analysts’ average estimate for a 32 percent gain. The company’s free cash flow was $1.9 billion last year, Chrysler said in a statement earlier this month. The company forecast $1 billion free cash flow for 2012.
The column by the former Massachusetts governor was published a day after the release of two surveys showing him running behind Santorum, a former Pennsylvania senator, in the Michigan primary.
An automated telephone poll of 404 Republican primary voters taken Feb. 10-12 by Public Policy Polling shows Santorum ahead of Romney, 39 percent to 24 percent. The survey has a margin of error of plus or minus 4.9 percentage points.
A telephone poll by American Research Group, taken among 600 likely Republican primary voters Feb. 11-12, has Santorum leading Romney, 33 percent to 27 percent. The survey’s margin of error is plus or minus four percentage points.
Arizona, where Romney campaigned yesterday, also holds a primary on Feb. 28.
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