I’ve been looking at the reactions to Mitt Romney’s panicked, dishonest defense of his opposition to the auto bailout. I’ve chosen a couple of Romney’s particularly egregious lies, with the facts following each, because I really do think these lies give one a good sense of the man and his priorities.
Romney’s a Michigan native; his father George Romney was a well-liked governor and head of American Motors. Yet Romney is neck-and-neck with rival Rick Santorum in polls ahead of Michigan’s Feb. 28 primary in no small part because of his opposition in November 2008 to the bailouts that saved GM, Chrysler and thousands of Michigan jobs.
I covered those bailouts in Washington as a reporter for the Detroit Free Press, following them through Congress to the White House to the bankruptcy courts a few blocks off Wall Street. As a first-hand witness, I can attest that some of Romney’s new arguments hold their own — but most don’t.
We have a witness! Unlike, say, Grover Norquist or the franchise known as Politifact, this guy was there!
“The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better.”
The crux of Romney’s argument: If Obama had not acted, private companies would have stepped in and run a “managed bankruptcy.” What this ignores is that in the fall of 2008, before Obama was even sworn in, no one on Wall Street or anywhere else was willing to lend GM and Chrysler a penny — let alone the $81 billion they and their financial arms eventually needed.
Both companies’ bankruptcies required money on a scale not seen in legal history. Unlike airlines, which can keep running with much smaller short-term loans while they restructure, automakers need massive amounts of up-front capital to pay suppliers and workers while they build cars; their finance companies need even more to keep making car loans that can bring in revenues. The potential damage wasn’t just layoffs; Chrysler executives testified on the first day of bankruptcy that without immediate cash the company risked destroying hundreds of millions of dollars’ worth of equipment.
Even after Obama took office, GM and Chrysler searched frantically for paths to avoid bankruptcy, including a possible merger. Chrysler held a one-week garage sale of its assets in February 2009, inviting anyone with enough money to bid for parts of the company. No one bit.
“Chrysler’s ‘secured creditors,’ who in the normal course of affairs should have been first in line for compensation, were given short shrift, while at the same time, the UAWs’ union-boss-controlled trust fund received a 55 percent stake in the firm.”
Chrysler’s secured creditors were a group of Wall Street banks — including J.P. Morgan, Citigroup and Goldman Sachs — and investment firms, some of whom had bought the company’s secured bonds in the months ahead of bankruptcy hoping to cash in. They could have rejected the government’s offer of 28 cents on the dollar in cash for their $6.7 billion in bonds and paid to liquidate Chrysler themselves, but decided that not only would they come out even further behind, they’d also be blamed for destroying an American automaker. (GM’s secured creditors − also mostly Wall Street banks — were paid in full, and endorsed the Obama bankruptcy plan.)
As for the “union-boss-controlled trust fund,” that’s what’s known as a VEBA trust that now pays the health care of 426,409 retirees from GM, Ford and Chrysler — and in return, owns all future health-care obligations from the companies for those retirees. With this, Romney appears to argue that before hundreds of thousands of UAW retirees got health care, Wall Street should have been made whole.
Romney opposed the bailout. Nearly all conservatives opposed the bailout. It was the DC-punditry- conventional wisdom standard to oppose the bailout. Mitt Romney really isn’t much of a risk-taker, so he followed the stampeding herd and took the safe bet against Detroit. Obama took the political risk, so is now collecting the political reward. If the bailouts had failed Obama would be getting killed on it, right now. That’s how political risk works. There’s a downside.
Romney, being Romney, wants it both ways: oppose the bailouts when it looks like they’ll fail, then try to weasel out of that when they succeed, by reciting stupid smears about “union bosses” to distract and cloud the issue. Did he learn this skill in the private sector? Dodging responsibility?
I know he’ll never admit he was wrong, but I do think it’s great that someone who knows something about what actually happened is examining his claims.
General Stuck
True fact. ask GWB about the downside. Ask the ghost of OBL about the upside. Risk + smarts = WIN!
MattF
The good news is that Romney’s constant dishonesty is now common knowledge– combined with the plain fact that he has nothing in his behavioral repertoire to actually deal with the situation. All he knows how to do is lie.
Linnaeus
And the “union boss controlled trust fund” is something the automakers wanted in the round of contract negotiations that produced it.
Bruce S
Something tells me I’d like to play poker with General Stuck…
The whole point about risk is that there’s no guaranteed equation. The main ingredient is the courage to take the risk. That’s what sets one apart – knowing that there’s no safe bet, no sure win because of one’s “smarts” – otherwise we wouldn’t call it “risk.”
Villago Delenda Est
We know this because Mitt wanted assurances that if the Bain Capital startup flopped, he wouldn’t be held accountable reputation-wise or financially for the flop.
He’s a coward.
Brandon
Romney will never admit to being wrong, because he believes this in his soul.
Democratic Nihilist, Keeper Of Party Purity
Smart people usually think to themselves, when saying something in public, “how could this come back and bite me in the ass?”
Romney doesn’t have that. As a result, you can watch the guy flip-flop in one sentence, as he tries to get his ass out of whatever crack it’s currently wedged into.
Not a trait I want in a president.
kay
@MattF:
I agree. The lying thing is sticking. I thought it might.
Understandably., really. He does lie constantly. What I like is the state-specific nature of the lies. In South Carolina, he was raging against private sector unions. In Michigan, private sector unions are just fine. He’s a completely different person depending on what state he’s standing in.
PeakVT
Both companies’ bankruptcies required money on a scale not seen in legal history.
Nobody in the private sector would have ponied up the necessary amount. N-o-b-o-d-y. Creditors might have gotten ten cents on the dollar if GM went down… after about a decade in the courts. The government saved everyone’s bacon.
ETA: Been offline for a few days. How is the project to clone Kay going?
amk
Hopefully the MI’ganders will whack him both in primary and in GE (if he makes it that far) to show him how wrong this greedy, cowardly corporatist was.
slag
Well, at least Rmoney has one area of consistency.
ETA Kay, I click on your link, and all I see are comments there–no story. Is it just me?
Roger Moore
Not to mention the absurd counterfactual you quote above about things going better without the bailout. He’s tacitly acknowledging the success of Obama’s actions while claiming that his plan of fiddling while
RomeDetroit burned would have been even better. “Yeah, he succeeded, but I would have done even better,” is the last refuge of the truly hopeless.kay
@Linnaeus:
You’ve probably figured out why Palin and Romney parrot “union boss”.
That’s to differentiate with union members, because they need a portion of those votes.
I assume it was Luntz-tested phrasing and the GOP-bots just mouth it.
AxelFoley
@Democratic Nihilist, Keeper Of Party Purity: Smart people usually think to themselves, when saying something in public, “how could this come back and bite me in the ass?”
__
Romney doesn’t have that. As a result, you can watch the guy flip-flop in one sentence, as he tries to get his ass out of whatever crack it’s currently wedged into.
__
Not a trait I want in a president.
kay
@Roger Moore:
Even that’s purely political. He can’t prance around Michigan bitching that the auto bailout succeeded. He’s…. “celebrating!”
AxelFoley
@kay:
I’m wondering why this moron doesn’t seem to think President Obama ain’t gonna call his ass out on his very apparent lies in the general.
Amir Khalid
@Brandon:
I can’t quite tell if this is a typo.
kay
@AxelFoley:
I think it’s really damaging for him, because he personally seems inauthentic, and then he lies constantly.
I think people construct a total picture of a person, and then fill in the blanks. His fits together nicely into “untrustworthy”.
He could be personally “phony” seeming, and not lie, or he could be personally authentic-seeming and lie, but both is just deadly.
Villago Delenda Est
@Amir Khalid:
May be a fortunate typo.
Villago Delenda Est
@kay:
This is his single biggest problem as a candidate.
No matter how much he parrots the wingtard line, the wingtards simply don’t trust him, because he’s so inauthentic. It would work the same way on “moderate” Rethugs if such things existed right now. He keeps saying what people want to hear, and changes his message from crowd to crowd contradicting himself in the process. This is well documented and well known.
It’s very possible to be accused of “flip flopping” when you are confronted by new facts that change your position. I’ve experienced this myself, but because I was intellectually honest in the process, no one ever thought I was acting as a weathervane. OvenMitt can’t pull this off, because he’s so blatantly eager to please and pander to whoever he’s addressing right now. He’ll walk off and five minutes later pander to someone else and if they overheard the first conversation, they’ll instantly be repulsed by him.
kay
@Villago Delenda Est:
Bush was authentic-seeming personally but lied constantly. Kerry was inauthentic-seeming personally but didn’t lie constantly.
Romney is both inauthentic and a liar, so one just compounds the other, and it keeps looping back around.
I don’t know that they can fix him, either :)
He’s been running for 4 years.
Montysano
@Democratic Nihilist, Keeper Of Party Purity:
In my work, I adhere to the Goodfellas rules: never rat on your friends and always keep your mouth shut. It’s served me well.
Teh day will probably come when Willard has to debate the POTUS. Obama will have a ready-made rack of various clubs with which to pummel the Mittster. It won’t be pretty.
Yevgraf
Buncha goddamn lazy fucks.
Conservatism is about lazily not solving issues and praying that “Big Daddy Warbucks” is going to kiss you before rolling out of bed.
Roger Moore
@Brandon:
Objection! Assumes facts not in evidence. There is no evidence that Romney believes anything, or that he has a soul.
pete
@Montysano: Not pretty? It will be a thing of great and awesome beauty! And Obama won’t raise his voice or change his tone. It will have all the hallmarks of a very sharp shiv between the ribs, the kind that has the victim on the floor before a drop of blood appears.
Mnemosyne
Of course, this completely explains how vulture capitalism works: Mitt has never been faced with a downside in his life, because he’s always rigged the game to be a win-win for himself. As other people mentioned, Bain Capital was set up in such a way as to guarantee that Mitt would never actually have to risk anything to reap those rewards.
He really is a walking, talking avatar for what everyone hates most about Wall Street.
Martin
@PeakVT:
Nobody in the private sector had $81B to loan in 2008 unless they could have convinced the tech sector to loan it to GM – Apple, Microsoft, Intel – they had it. The banks were drowning due to rapidly depreciating assets. Their stock holdings were in free fall, their mortgages and mortgage securities were, accounting-wise, worthless because there were no buyers in the market to give them any value. The whole point of the bailouts and the stress tests was to give the banks enough cash to work with so that they could unravel their assets and then make sure they kept enough cash on the books that they wouldn’t have to keep panic selling to raise cash to cover all of their imploding positions. Mitt thinks in that environment they should have used that cash to take on MORE liabilities? So the free market would have bailed out GM and then the banks would have rolled under a 2nd time. Great plan, asshole.
And what’s most enraging about his statement is that as the former head of a fund, he knows that better than almost anyone else. He knows about the liquidity death spiral and he knows the banks were all in it.
Steve
It’s also commonly heard that the administration “trampled the rule of law” by failing to pay the secured creditors in full in the bankruptcy. In reality, every single court to consider the issue ruled that the process had been legally followed. As I recall, when one of the Chrysler bondholders tried to pursue an appeal, the Second Circuit ruled against them about 15 minutes after oral argument had concluded. Yet people go on prattling as though the administration had simply cut the courts out of the process and done things the Chicago way.
Rafer Janders
@kay:
As the old saying goes, if you can fake sincerity, you’ve got it made. Romney’s problem is that he can’t.
amk
twitterdom
a hip hop artist from Idaho (fka Bella Q)
@Steve: Well these people certainly can’t let actual -and inconvenient – facts get in the way of a good narrative.
kay
@Yevgraf:
I’ll say. Most boring, repetitive, soul-dead opponents ever.
This is what they’re running on:
I demand more creativity and effort from conservatives. They run the same scam again and again and again. I expect them to amend the Ohio constitution to ban gay people entirely, to “get out their voters”, like 2004.
Why do they have to DRAG these sorry-ass candidates over the finish line?
amk
@Mnemosyne:
Doesn’t this gouger still get ‘retirment money’ from bain capital’s profits ?
harlana
wow, watching some of his Michigan speech was downright painful, not helped much by Tweety’s heaving and groaning and going “WAT’S THAT ABOUT?! help me out here! trees being the ‘right size’? what the heck is he talking about?! i can’t figure it out!”
cmorenc
@kay:
A useful conundrum to ponder is why Romney’s habitual prevarications are catching up to him and sticking firmly and damagingly, but somehow this never happened with George W. Bush, at least not until after he had successfully won a second term in 2004. George Bush had a relationship with truth that was at least as prevaricating and casual as Romney, to the point of being an outright sociopath, and yet he got away with it for not just one, but two complete election campaigns. Maybe the complete sociopathy of Bush and Rove is the key to why this is so.
kay
@Steve:
That’s in the linked article (he even mentions the bk judge, by name) and I agree it’s really important.
Once a lie catches hold it’s hard to dislodge, and media and conservatives really pumped that one. Pure fiction.
kay
@cmorenc:
I’ve said this before, but I think liberals consistently underestimated Bush as a politician.
He was a good politician, and I mean he, himself, not “Karl Rove pulling puppet strings”. He was good with his voters. He had a great and disciplined campaign, in 2004. Romney is not a good politician. To me, that’s the difference.
Linnaeus
@kay:
Oh, certainty. The “union boss” thing goes way back and it operates on a couple of levels.
First, as you say, the term is intended to drive a wedge between rank-and-file folk and their leaders. So you can go into union-heavy states and make it sound like you’re not talking about the salt-of-the-earth everyday worker, but rather the “boss” who doesn’t give a whit about that worker.
On a more general level, the word “boss” is intended to conjure up the image of the crude, cigar-chomping, black or white “ethnic” guy who is probably a criminal fleecing all the good folk of their hard-earned money. Contrast that with how folks like Romney get described; despite his position as a “boss” himself, he’s never described that way. He’s an “executive” or “business leader”. That conjures up the image of an accomplished, well-spoken, well-dressed person. Plus, aesthetically, “boss” has an uglier sound to it. It’s like “Democrat Party” in that sense.
PeakVT
@Martin: That’s all true, though even in a good economy it would take a multi-bank/fund consortium to put together the necessary money, and I doubt such a deal could be done in a timely fashion. No matter how you slice it, sufficient bridge/DIP/whatever financing wasn’t available from the private sector at the time.
I wish the country would learn a larger lesson here – industrial policy isn’t inherently bad – but I’m realistic about the chances.
Ed Drone
@Amir Khalid:
Well, as another commenter pointed out, he bends his truth to fit the state he’s standing in, so soul/sole, what’s the difference? It’s the standing version of “flying by the seat of his pants.”
Ed
Linnaeus
@harlana:
Romney’s trying to sound like a “real” Michigander, but is failing because he actually hasn’t spent that much time in the state since he left it.
amk
wapo tweet
amk
wapo tweet
mittmentum swoosh down the toilet.
The Other Chuck
@Amir Khalid:
Well he is a heel.
Steve
@Linnaeus: No real Michigander would abandon the Tigers for the Red Sox – ever!
Linnaeus
@Steve:
Oh, hell no.
cmorenc
@kay:
Saying that Bush got away with lying far better than Romney has because Bush was a much better politician amounts to saying that Bush was much better at covering his lies under enough layers of indirection and distraction that by the time events abraded through this protective cover to reveal the ugly truth, either most people’s attention had long moved on and refocused on other matters or else Bush had already succeeded in irreversibly obtaining whatever objective the lie was employed to help obtain.
RossInDetroit
@Steve:
He’s going to have to eat nothing but Coney Dogs* washed down with Vernor’s to atone for that.
*A hot dog combo that I was amused to discover is called a Michigan in parts of NY.
Libby
Even my conservapaper on the other side of town has been hammering him on the bailout thing. When even the Detroit News is willing to publish editorials that read very much like this post, you know Mitt’s in trouble.
Meanwhile I see on the front page, Willard is currently promoting right-to-work laws. Don’t know what he’s thinking. Not even the dishonorable Gov. Snyder wants to touch that one. In fact Snyder specifically announced in the last week or so, he doesn’t want to see any such law cross his desk.
Steve
Without the auto bailout we would basically be down to 49 states. It’s stunning that there is anyone at all in Michigan who doesn’t understand that.
chopper
mitt, as anybody in politics will tell you, if you’re explaining you’re losing. doubly so if your explanation is backpedaling garbage.
his ‘let Detroit fail’ bit is the gift that keeps on giving for Obama.
RossInDetroit
@Steve:
Eh, yes and no. The industry is more decentralized, and tourism and Ag are big in MI. More likely a lot of cities that rely on related industries would just flat go bangrupt. It would be a disaster, but a widespread one like the financial crisis rather than a localized one like New Orleans.
Even worse, the auto industry supports a number of related sectors in materials manufacturing, testing, research, electronics, tooling, etc. and all of the skills that go along with them. Without their biggest customer, those would be unsustainable. Then their smaller customers would have nowhere to go. Taking the biggest player out of our industrial economy would crash the whole manufacturing infrastructure.
rikryah
.
he’s a White man in America, born between third and home, and thinks that he’s the bestest person in the world as he trots towards home plate
and
that he’s better than all the rest of the peons who can’t seem to make it to second.
Steve
@RossInDetroit: I’m not sure which part of that was a disagreement with what I said. I completely agree that it’s the ripple effect that would be devastating. It’s not just the auto companies, or even the auto suppliers, but all the service-industry jobs that depend on those industries, and so on down the line. With Michigan’s economy being so fragile and so many businesses barely hanging on as it is, I do not see how Michigan could have survived. Yes, it’s true, there would still be people coming to see the dunes and buy Mackinac fudge.
RossInDetroit
@Steve:
The failure of the auto industry would have been devastating here. People failed to realize that the effects wouldn’t be limited to Detroit or to the Mitten State. Not really disagreeing, just pointing out that the loss of that major industry would have crippled a lot of other industries as well because they rely on the same suppliers. Some claimed that if the Big Three failed foreign automakers would have increased their US presence and few jobs would have been lost. I think that losing the major players in the industrial economy would have made it harder, not easier for foreign makers to produce efficiently and profitably here because of the loss of infrastructure. What Krugman has called the ‘Industrial Ecology’ problem.
JR in WVa
When Mittens denounced the auto industry bailout, I thought he was gonna lose every state where they build cars and trucks. MI, OH, KY, TX, help me out, I know there are several others.
Also, plus, he was gonna lie about it, even though there’s film of every time he denounced the big government bailout, telling America that letting GM go bankrupt was the “right” thing to do.
What a
champchump. He can’t lie honestly, how can he be a politician?NCSteve
Yes, he’s dishonest, yes he’s a liar, yes he’s talking out of both sides of his mouth while dancing like an awkward 70’s white boy who took a wrong turn at the studio and blundered onto the state of Soul Train.
But the schadenfreude we’re all enjoying is masking a very important point. Which is that three years ago, when Millard was already deep into his second presidential campaign, he looked at this deal and summoning all of his supposedly vast business acumen and economic knowledge, confidently ventured forth onto the public stage to loudly take a position that, in hindsight, was wrong, wrong, wrong!
Think about that. If we’ve learned nothing else about him during the ten years Millard Witt Ronmore has been a professional presidential candidate, it is that he is absolutely not either a gambler or a likely candidate for a Profile in Courage Award. Millard will cheerfully risk other people’s money, but when his own ambitions are on the line, he takes no risks.
My point here is that, unlike most of the stuff that emanates from his piehole when a camera is in front of it, Millard did not write that “Let Detroit go Broke” editorial because he figured he could get a transient political advantage from it. He put it in writing, under his own signature, because he was certain, absolutely, positively dead certain convinced, that the auto bailout was going to be an anchor rope around the neck of President Obama’s second term ambitions and, by writing that editorial, he would establish a reputation for savvy prescience.
And, as I mentioned above, this supposed Grand Master Super Genius of Finance and Economics wasn’t just wrong, he was “hey lookit me I’m dumber inna bag a hammers at the bottom of shitpile” wrong.
The man’s a dope. I keep hearing how smart he is and yet everything he says, everything he does, every calculation he makes indcates he’s a dope. A dope with some competence within a very limited range of activities, but a dope on everything important. Including macroeconomics.
RalfW
Kay @ top:
Yes. Yes he did.
As a former private-sector white collar guy and biz school graduate (cum laude, even, for the 12 cents that’s worth), I can say quite firmly that blame-shifting and responsibility-dodging is a key art in getting ahead in business.
Operating ethically also works (really), but there seem to be few consequences and plenty of rewards in business for being as slimy and slippery as Romney.
priscianusjr
@Bruce S:
priscianusjr
@PeakVT:
priscianusjr
@Mnemosyne:
priscianusjr
@kay:
pseudonymous in nc
Even Bush thinks the initial loan was worth it. And the risk, though , was made in the knowledge that GM already had most of the restructuring set in motion. They might have been slower to drop Saturn and Hummer and sell off SAAB, but they weren’t a hopeless case. (Chrysler was in a tougher position, with a lot of shitty cars, but it’s done a similar amount of streamlining.)
And again, what made Mittens Mittens wasn’t his dad or his Mormonism, but management fucking consultancy: the early years at Bain & Co., before the spinoff of Bain Capital.
General Stuck
deleted repetitive
General Stuck
You would lose, due to taking things you read on blogs at face value.
grandpa john
@Steve: Exactly. My daughter, who job was saved by the bailout, works in one of those downstream companies . Location? South Carolina, so yes the damage and job loss would have been a huge crippling blow to the economy and the country.