Patterico's Pontifications

10/23/2012

L.A. Times “Fact Checks” Detroit Op-Ed

Filed under: General — Patterico @ 7:30 am



You’ll be shocked to learn they give the edge to Obama:

In a presidential debate that was supposed to focus on foreign policy, the most contentious dispute over who was telling the truth was the exchange between President Obama and Mitt Romney over Detroit.

“You know, if we had taken your advice, Gov. Romney, about our auto industry, we’d be buying cars from China instead of selling cars to China,” Obama said, touting his role in the financial bailout of General Motors and Chrysler, which began under the George W. Bush administration in late 2008.

In an opinion article in November 2008, Romney urged the government, as the headline said, to “Let Detroit Go Bankrupt.”

“A managed bankruptcy may be the only path to the fundamental restructuring the industry needs,” Romney wrote. “The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.”

A managed bankruptcy is quicker and less chaotic than a regular bankruptcy and allows a company to restructure its operations to make it stronger when it emerges from the process. The dispute in the debate boils down to whether a managed bankruptcy for General Motors and Chrysler would have been possible at the time without the government providing approximately $80 billion in financing to keep the companies running during the process.

No, the dispute in the debate is whether Romney planned to liquidate the auto companies, and whether he planned to give them government assistance. I explained this last night. As Obama says: check the record.

Romney said Monday night that he had not advocated allowing General Motors and Chrysler to go out of business.

“I was born in Detroit. My dad was head of a car company. I like American cars. And I would do nothing to hurt the U.S. auto industry,” he said. “My plan to get the industry on its feet when it was in real trouble was not to start writing checks. … I said they need — these companies need to go through a managed bankruptcy, and in that process they can get government help and government guarantees, but they need to go through bankruptcy to get rid of excess cost and the debt burden that they’d built up.”

Obama accused Romney of trying to “airbrush history.”

“You were very clear that you would not provide government assistance to the U.S. auto companies even if they went through bankruptcy,” Obama said. “You said that they could get it in the private marketplace. That wasn’t true.”

The bipartisan Congressional Oversight Panel, the government-appointed watchdog for the $700-billion Troubled Asset Relief Program, backs Obama on this. It said in a January 2011 report that private financing was not available for General Motors and Chrysler in late 2008.

Nice. Through contortions they pretend Obama was the one telling the truth.

For the real truth, see my post from last night.

5 Responses to “L.A. Times “Fact Checks” Detroit Op-Ed”

  1. I tried to put this post up this morning, but there were problems with the site — which appear to have been fixed since then.

    Patterico (8b3905)

  2. They ran with Kessler’s mendoucheity.

    JD (8a1df4)

  3. Wait, I thought that one of the reasons Romney was better was that he would have let GM and Chrsyler go bankrupt rather than commit tax dollars to prop them up. Is that wrong? Was that not what he’s been saying? So the choice is between one guy who gave the domestic auto industry government funds and another guy who would have given them government funds via a different channel?

    Woot. Can’t wait to pull the lever on this one.

    time123 (873f99)

  4. . Is that wrong?

    Yes. Romney would not have screwed the secured creditors, screwed the non-union pensions at Delphi, and propped up the unions at the expense of the company, investors, and taxpayers.

    JD (8a1df4)

  5. Key point that I think even Patterico may have missed: Romney did not propose government money even after bankruptcy. What he proposed was that “the federal government should provide guarantees for post-bankruptcy financing”. Guarantees are not loans, let alone aid. Assuming the company pays its debts the guarantees don’t cost the government a cent. (The same is true for the loan guarantees that form a major part of US “aid” to Israel; since Israel has always paid its debts on time, the guarantees have never cost the US a cent, and there is no likelihood that they ever will.) But they do solve the problem of how to get financing in a credit-frozen market. Banks that were sitting on money and afraid to lend it out would have been delighted to do so to the bankrupted car companies, if they had federal guarantees.

    Milhouse (15b6fd)


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