Ultimately, both Chrysler (April 2009) and General Motors (June 2009) filed for Chapter 11 bankruptcy, as Romney had suggested they should. But that was only after the government had infused them with about 39 billion dollars. The two bailouts prevented Chrysler and General Motors from being liquidated at bankruptcy. And that is the key issue for us when we look back at what happened at the time and judge Romney's recommendations.
Without getting into the intricacies of bankruptcy law, the problem in November 2008 was that the financial sector of the economy had collapsed and there was no one to step in and make private sector investments in the auto industry. To pay their creditors, Chrysler and GM would have had to shut down their companies entirely and started selling off their assets as scrap. Estimates at the time were that this would cause the loss of at least three million jobs. It would have destroyed the auto parts industry and taken Ford down in the process.
If you read Mitt Romney's column, you'll see that he didn't anticipate this problem. He talks about restructuring labor contracts and firing the management, but he doesn't seem to realize that the businesses were not going to survive the bankruptcy process at all. Without the government money, there would be no businesses to manage and no need for unions because there would be no jobs.
People remember the headline, and they know that the industry was saved from extinction, and so they think Romney advocated letting the industry go extinct. He didn't advocate that. But he did advocate something that would have had that result. [My emphasis]
Remember, folks, Willard's first instincts are to see a business stripped of its assets, its unions broken, and its workers shafted. What he recommended for the auto industry would have FAILED.
ROMNEY HAS NO RIGHT TO TAKE CREDIT FOR ANYTHING RELATED TO THE AUTO BAIL-OUT. HE WAS PART OF THE PROBLEM--NOT THE SOLUTION.