Obama Criticizes Romney for Supporting Structured Auto Bankruptcy that Administration Adopted
“When the American auto industry was on the brink of collapse, more than 1 million jobs were on the line, Gov. Romney said we should just let Detroit go bankrupt,” Obama said at a campaign rally Thursday in Maumee, Ohio. “I refused to turn my back on communities like this one. I was betting on the American worker, and I was betting on American industry. And three years later, the American auto industry has come roaring back.”
Auto jobs are significant in Ohio, a critical swing state in the presidential election where Obama leads Romney by 47-38, according to the most recent Quinnipiac University poll. The president was set to make campaign speeches in Sandusky and Parma, Ohio, before going to Pennsylvania on Friday.
“That Chrysler plant up the road, bringing on another 1,100 employees to make the cars the world wants to buy,” Obama continued in the Maumee speech, a day before unemployment figures – currently standing at 8.2 percent – are set to be released.
“The Wrangler, built right here in Toledo just set an all-time sales record. What’s happening in Toledo is happening in cities like Cleveland. It happened in Pittsburgh. It can happen in other industries. That’s why I’m running for a second term as president, because I’m going to make sure that it does. I want it happening all across this country,” the president said.
Romney, whose father George Romney was the one-time CEO of American Motors, wrote an op-ed for The New York Times on Nov. 19, 2008 opposing a bailout for the auto companies.
“But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management, and they lost,” Romney wrote. “The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs.
"It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk. In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.
The Bush administration shortly thereafter agreed to make a $13.4 billion loan to Chrysler and General Motors out of the $700 billion bank bailout money, requiring automakers to produce a long-term business plan by March 31, 2009. On Feb. 17, 2009, the Obama administration provided another $4 billion to GM.
On March 31, 2009, Obama delivered remarks from the White House about the changes, giving a description that sounded similar to Romney’s New York Times op-ed.
“Now, while Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plan they develop,” Obama said. “That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger. Now, I want everybody to be clear about this. I know that when people hear the word ‘bankruptcy’ it can be unsettling, so let me explain exactly what I mean.
"What I'm talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so that they can get back on their feet and onto a path to success; a tool that we can use, even as workers staying on the job building cars that are being sold,” he added.
Obama rejected the automakers' restructuring plans and announced a bankruptcy plan for Chrysler on April 30, 2009.
“I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices,” Obama said that day. “And that's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success. No one should be confused about what a bankruptcy process means. This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler's revival.”
The president added, “I know that there are some who will insist that bankruptcy, even for these limited purposes, is a step that should not have been taken. But it was unsustainable to let enormous liabilities remain on Chrysler's books, and it was unacceptable to let a small group of speculators endanger Chrysler's future by refusing to sacrifice like everyone else.”
Then, on June 1, 2009, he announced the GM bankruptcy.
“Exiting a restructuring of this scale, however, requires not only new investments, it also requires giving GM a chance to start anew by clearing away the massive past debts that are weighing the company down,” Obama said on June 1, 2009. “And that's why earlier today GM did what Chrysler has successfully done, and filed for a Chapter 11 bankruptcy, with the support of its key stakeholders and the United States government.
"In all likelihood, this process will take more time for GM than it did for Chrysler, because GM is a bigger, more complex company. But Chrysler's extraordinary success reaffirms my confidence that GM will emerge from its bankruptcy process quickly and as a stronger and more competitive company,” he added.
As Factcheck.org said in a March 21 article, “Obama used the viability plans required by Bush to force the automakers to go into bankruptcy and reorganize — successfully completing a process that Bush started.”
The White House and the Obama reelection campaign have heralded the auto policy as a success and have referred to bankruptcy.
A post on the White House website titled, “Rescuing the American Auto Industry,” says, “All told, since GM and Chrysler emerged from bankruptcy in June 2009, they have announced investments totaling over $8 billion in their U.S. facilities, creating or saving nearly 20,000 jobs. Chrysler has repaid every dime that it drew under the Obama Administration. And the industry overall has added back more than 130,000 jobs since June of 2009, its strongest period of job growth since the late 1990s.”
The term “bankruptcy” is used three times in a White House web site post titled, “Obama Administration Auto Restructuring Initiative General Motors Restructuring.”
In an April 21, 2010 White House blog post by then National Economic Council Lawrence H. Summers, he wrote, “over the past nine months since GM and Chrysler emerged from bankruptcy, the industry has actually added 45,000 jobs – the strongest pace of job growth in the auto industry in nearly a decade.”
An Oct. 10, 2010 White House blog post by Jared Bernstein, then the chief economic advisor to Vice President Joe Biden, said, “That is why today’s announcement of an agreement between the Old General Motors and federal and state governments to establish a trust to clean up and repurpose 89 properties left behind in the GM bankruptcy is so significant.”
In another White House blog, Katelyn Sabochik, director of online engagement for the office of digital strategy, wrote on June 3, 2011, “Today, President Obama will travel to Toledo, Ohio where he will visit the Chrysler Group’s Toledo Supplier Park – an operation that employs more than 1,700 workers producing Jeep Wranglers, Jeep Liberties, and Dodge Nitros. Just two years ago, Chrysler was filing for bankruptcy, and President Obama made the tough decision to support the restructuring of the company rather than allow it to fail – which would have cost tens of thousands of American jobs.”