Former Governor Mitt Romney of Massachusetts has declared that the government should let the domestic auto industry–General Motors, Ford, and Chrysler–go bankrupt because of bad management and their failure to adapt to the changing nature of the industry with the competition from Toyota, Honda and other foreign auto companies. He sees a bailout as rewarding bad behavior and promoting awards for incompetence.
Certainly, there is much to condemn in the direction the domestic auto industry has taken in the past twenty years. It is not an issue, however, that should determine the future of our economy, and Governor Romney, whose own dad, Governor George Romney of Michigan, was involved in the auto industry, is totally wrong in his assessment of what should be done. How can a past presidential candidate, who shows ambition to try again for the GOP nomination in 2012, call for such a policy which would totally devastate the Midwest, and particularly his home state of Michigan, and cause the loss over a short period of time of more than three million jobs, not only directly in auto production, but also in auto sales, auto parts, and other related industries? It would increase the unemployment rate by two and a half percent, putting us close to double digit unemployment, and would trigger the loss of millions of other jobs because the economy would be so detrimentally affected, and it would lead the nation into another Great Depression.
If we are willing to bail out banks and financial institutions which have been horribly irresponsible in their policies, then we owe the auto industry and its workers the same consideration. If we fail to come to their aid with what is really a loan, not a giveaway, we will pay a far greater price over the long haul. One must remember that the Carter Administration granted loans to Chrysler in the late 1970s, and it was paid back with interest within a few years and the company survived and prospered for a long time after this difficult moment of crisis. Also, Herbert Hoover, in the height of the Great Depression, initiated the Reconstruction Finance Corporation, which provided low interest loans to help companies in trouble. The only problem is Hoover’s action was too little, too late. We could be facing the same situation today if no action is taken very soon!
One thing is certain in my mind. Mitt Romney has forfeited any legitimacy he has to compete for the Republican presidential nomination, and he should not be given any serious consideration for the Presidency. He has already alienated his fellow Republican competitors of 2008–including Rudy Guiliani, John McCain, and Mike Huckabee–by what they correctly perceived as his phony conservatism, after a clearly liberal stint as the Governor of Massachusetts from 2002-2006. Governor Romney, you have lost all credibility and the best thing you could do is stay out of suggesting economic policy as you have failed the test of leadership!