What If Romney Had Backed Auto Bailouts?

TOLEDO, OHIO ( TheStreet) -- Poor Mitt Romney. Getting on the wrong side of the auto industry bailout debate may have kept this son of Detroit from the presidency.

We have heard so often in these last few months that Ohio is the key to Tuesday's election. We will likely hear it even more tonight. Ohio, Ohio, Ohio. Sick of it, yes, but sometimes I wish I had never left The Toledo Blade. It's always fun to be right in the middle of a big story.

It seems that Romney is destined to lose Ohio, an auto industry state, by a small enough number of votes that he might have won if he had backed the obviously successful Chrysler and GM ( GM) bailouts. If Romney ends up close to Obama in Michigan, than the same logic applies there.

Among the advantages of supporting the bailout, Romney might never have been forced into his widely disparaged misstatements that Chrysler considered moving Jeep production from Toledo to China. This was a lie in which Romney got caught. It seemed to underscore his desperation to gain support in an auto industry state.

A far better course would have been to back the bailout. As a self-professed "car guy," a Detroit native and the son of an auto executive, this would not have been a big reach. Obviously, Romney had renounced many past positions in order to gain right-wing Republican support, then moved to the middle once the primaries ended. Perhaps the Tea party would have given him a pass on this single issue had he made the point that he didn't like everything about the way the bailouts were structured, but that in the end America's pride in its auto industry is something that unifies all of us.

Perhaps, to separate himself from Obama, Romney might have made the case that in the GM bankruptcy the Obama administration had to rewrite long-standing bankruptcy practices on repaying secured bondholders and offering tax-loss carry-forwards to successor companies. In the past, tax losses were passed on only to companies whose owners controlled at least 50% of the predecessor company, said Jeffrey Coyne, senior lecturing fellow at the Duke University School of Law and a management consultant who specializes in reorganizing troubled companies.

To look back at Romney's New York Times November op-ed piece famously headlined, "Let Detroit Go Bankrupt," is to make Romney-backers wonder what might have been.

Based on the headline, Romney was prescient. When he wrote his piece, many in the auto industry believed bankruptcy would scare off so many buyers that any automaker that filed would destroy itself. Yet within five months after Romney's column appeared, Chrysler filed for bankruptcy, and within seven months, GM filed. These bankruptcies saved both companies,

Not only did Romney correctly advocate for auto industry bankruptcies, but also he expertly summarized the Detroit Three's problems, including: "The suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses." His prescription: "their huge cost disadvantage in costs relative to foreign brands must be eliminated;" "management must go;" "new management must work with labor leaders to see that the enmity between labor and management comes to an end;" and "investments must be made for the future."

All four of these things have, in fact, occurred. At Ford ( F) , the process began when Alan Mulally arrived as CEO in 2006. At GM and Chrysler, the work also began before the 2009 bankruptcies, which sped things up.

In fact, it seems that the main thing separating Romney from Obama on the bailout is that Obama gave automakers debtor-inpossession financing while they were still in bankruptcy, while Romney said he would have given them the money when they came out of bankruptcy. His concept, he said, was that "the federal government should provide guarantees for post-bankruptcy financing."

Somewhere in the Romney campaign is a person who decided to take this Detroit guy and turn him into an anti-Detroit guy. Too bad they didn't look at the electoral map first.

-- Written by Ted Reed in Charlotte, N.C.

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