Mitt Romney is talking about the auto industry rescue again. But his latest argument is even more convoluted, and misleading, than his previous ones. 

Romney makes the argument in an op-ed that appears in Tuesday’s edition of the Detroit News. (You may have seen it; Greg Sargent flagged it this morning). Romney starts by reminding readers of his connection to the state (he was born and grew up here) and to the auto industry (his father, George Romney, ran the American Motors Company before becoming governor). “Cars got in my bones early,” Romney writes. “And not just any cars, American cars.”

Then Romney turns to the industry’s recently strong performance, which has always been a tricky subject for him. Romney has criticized the Obama Administration for rescuing the industry in early 2009, but the industry is clearly on the rebound – making profits, selling cars, and hiring back workers. So doesn’t Obama deserve credit for that?

No way, says Romney. As he sees it, Chrysler and GM are succeeding because they did what Romney had advised all along: They went through structured bankruptcies, shedding unsustainable contracts and assets. But like all companies attempting to reorganize through bankruptcy, Chrysler and GM needed loans in order to keep their operations going. Romney says he would have told the companies to get money from the private sector. Obama allowed the companies to get financing directly from the government, which meant that  “The U.S. Department of Treasury – American taxpayers – was asked to become a majority stockholder of GM.”

Romney is correct: The U.S. did become GM's majority stockholder. And there was a very good reason for that, as many of us have noted before.

In late 2008 and early 2009, when Chrysler and GM ran out of money, private financing was not available. Remember, this was not long after Lehman had collapsed and the entire financial industry was on the brink of collapse. Had the car companies attempted to reorganize through bankruptcy on their own, it’s quite likely they could not have found the money to continue operations. That would have meant liquidation and mass layoffs. Chrysler and GM would be gone, sending an economic shockwave through the entire Midwest and possibly the whole country. Every company connected to the domestic auto industry would have suffered, which is why Ford, although healthy enough to survive without federal assistance in 2009, supported the Obama rescue.

Of course, Romney has made that claim before. The new twist is his portrayal of the rescue as a form of “crony capitalism.” He has used the description before, but this is the first time I’ve seen him flesh out its meaning so specifically:

A labor union that had contributed millions to Democrats and his election campaign was granted an ownership share of Chrysler and a major stake in GM, two flagships of the industry ... the outcome of the managed bankruptcy proceedings was dictated by the terms of the bailout. 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.
The pensions of union workers and retirees at Delphi, GM’s parts supplier, were left untouched, while some 21,000 non-union salaried employees saw their pensions slashed and lost their life and health insurance. And so on and so forth across the industry.
While a lot of workers and investors got the short end of the stick, Obama’s union allies – and his major campaign contributors – reaped reward upon reward, all on the taxpayer’s dime.

That’s a pretty skewed version of the truth. As Kristin Dziczek of the Center for Automotive Research reminds me, the unions had by 2009 already made major concessions in order to help the companies restructure: Among other things, they agreed to a two-tier pay scale, changes to retiree health benefits, and changing work rules that had protected union jobs. Those changes helped the automakers reduce their hourly labor costs by nearly a third.

Then, during the bankruptcy, the unions agreed to further concessions still, on pay, vacations, job security, health benefits, and work rules. As a result, traditional Chrysler and GM hourly employees have seen no annual raises since 2003 and will see no raises until at least 2015, when they bargain the next contract.

The concessions on retiree health benefits concession were particularly significant. With health costs crippling the companies, the unions had agreed in 2007 to let the auto companies hand responsibility for benefits off to a union-managed trust fund. The idea was that the companies would put money into them – albeit at a discount of less than 70 cents on the dollar (in other words, about two-thirds or less of what the auto companies would have owed to retirees otherwise). The unions, in turn, would shoulder the risk of increasing health care costs, investment returns and benefit portfolios.

But by 2009, Chrysler and GM had no money to put into the trust funds. The only way to make the trust funds whole was to deposit company stock instead. That’s why the union trust funds ended up with so many shares in the two companies. And while Romney may consider that a perk, the workers were, and still are, taking a risk: If the companies don’t perform well, the stock won’t be worth much and the funds will have to pare back health benefits even more than they already have.

You can argue that the concessions were necessary, given what the competition was paying their workers. You can argue that the union should have structured the concessions differently. But to call the rescue a “sweetheart deal” or example of “crony capitalism” is way off the mark.

The other part of Romneys’ argument, that the unions made out better than creditors, is debatable: My recollection is that creditors got about as much money, relative to their investment, as those health care trusts got relative to their promised contributions. (The issue of salaried workers is more complicated.) But leave that aside and suppose the unions did get a somewhat better deal. So what? Another way to say that the unions got a better deal is to say that the unions got a better deal for their workers.  

Prioritizing workers over investors may seem strange to the co-founder of Bain Capital. That doesn’t mean it’s wrong.

Update: More from David Dayen and Marcy Wheeler.

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