Re: Republicans 2012
Romney Races to Defend Michigan
State Up for Grabs as Santorum Surges
Romney Races to Defend Michigan - WSJ.com
DETROIT—Amid signs Rick Santorum could win an upset victory in Michigan, Mitt Romney escalated his campaign to win the state's Republican primary by taking on the powerful auto union and reigniting the debate over the federal bailouts of two Detroit auto makers.
Mr. Romney, writing in a Detroit News editorial-page column Tuesday, attacked as "crony capitalism on a grand scale" the Obama administration's $81 billion auto-industry bailout nearly three years ago.
The salvo comes as Mr. Santorum is surging in polls nationally as well as in Michigan. A Santorum win in Michigan's Feb. 28 primary, a week before the March 6 Super Tuesday contests in 10 states, would be seen as a significant vote of no-confidence in Mr. Romney, Republican campaign analysts say.
Mr. Santorum, meanwhile, could face a renewed challenge via billionaire casino mogul Sheldon Adelson, who is considering giving more money to Newt Gingrich's presidential bid, according to people who have talked with Mr. Adelson. He could give another $10 million or more to an independent group supporting Mr. Gingrich, these people said. The goal, in addition to helping the faltering Gingrich campaign, would be to knock Mr. Santorum off his stride.
In his column, Mr. Romney said the restructurings were orchestrated to benefit "unions and the union bosses who contributed millions to Barack Obama's election campaign."
Michigan, where Mr. Romney grew up and where his father was an auto executive and three-term governor, marks the first big test of the GOP candidates' strength in the voter-rich industrial heartland. Its primary follows Mr. Santorum's unexpected sweep last week of contests in Minnesota, Missouri and Colorado. A strong showing there would position the winner well for the Super Tuesday state of Ohio, where more than twice as many delegates will be up for grabs than the 30 Michigan will send to the August convention.
Two polls in recent days showed Mr. Santorum surging to first place in Michigan, though in one the lead was within the poll's margin of error. Those came as three recent national surveys showed Mr. Santorum narrowly overtaking Mr. Romney in polling of GOP voters.
Mr. Romney's op-ed quickly drew return fire from UAW President Bob King. "When we were at our darkest hour, Mitt Romney turned his back on the industry, their workers and the people of Michigan and in other places where Americans depend on the auto industry," he said.
Mr. Romney's decision to reopen debate on the bailout marks something of a risk in a state where both General Motors Co. and Chrysler Group LLC have roared back since their near collapse after the 2008 financial crisis. GM is expected to announce this week a near-record profit for last year.
The auto bailouts are anathema to conservatives in Michigan, as elsewhere, because of the potential loss of taxpayer funds in what many see as an example of federal overreach.
The Congressional Budget Office estimated in December that the total cost to the taxpayers of the auto industry bailouts will be about $20 billion.
In June 2009, when the auto bailout was in the headlines, 53% of Americans disapproved of the U.S. providing significant financial help to GM and Chrysler, according to a Wall Street Journal/NBC News poll at the time. The bailout had an almost identical lack of support among blue-collar workers and among those who lived in union households.
Messrs. Santorum and Gingrich and Texas Rep. Ron Paul also have criticized the auto bailouts as an inappropriate use of government power. In a January C-SPAN interview, Mr. Santorum said GM and Chrysler could have gone through "a structured bankruptcy" instead of the government-led process, with the only difference being "the unions wouldn't have a big ownership share of the company."
But Mr. Romney's ties to the state have given a higher profile to his criticism. Democrats, betting like many Michigan Republicans that Mr. Romney would be the GOP nominee, have prepared for months to make his bailout opposition a central theme in the fall battle for Michigan, which hasn't backed a Republican for president since 1988.
Mr. Romney's renewed attacks on the bailout also have raised eyebrows among his Michigan supporters in Congress, who worry privately that his tough talk will alienate independents, Democrats and Republican union members whose votes could prove critical in the GOP enclaves surrounding Detroit.
In 2008, nearly a third of Michigan GOP primary votes came from independents and Democrats. Mr. Romney won the state by nine points.
The Obama administration and state Democratic leaders say without federal intervention, more than a million jobs would have been lost nationwide, many of them in Michigan at GM, Chrysler and their suppliers.
Former President George W. Bush defended the auto bailouts last week in a speech to the annual convention of the National Automobile Dealers Association in Las Vegas. "I didn't want there to be 21% unemployment," Mr. Bush said. "Sometimes circumstances get in the way of philosophy."
The Bush administration began the federal rescues of GM and Chrysler in 2008, extending loans to the companies to prevent them from collapsing as credit froze around the world.
Obama administration officials said they sought private capital to fund Chapter 11 bankruptcy reorganizations for the companies, but there was none available in the depths of the credit market panic.
"The idea that this could have been done with private capital is so completely fantastical and ludicrous as to boggle the mind," Steven Rattner, who led the Obama administration auto restructuring team said Tuesday, responding to Mr. Romney's latest comments. In his Tuesday op-ed, Mr. Romney had called Mr. Rattner "politically connected and ethically challenged.''
In the spring of 2009, GM was teetering on the brink of collapse with some $172 billion in debt. While the leaner GM that emerged is expected to report an annual profit on Thursday, a second sale of the U.S. government's GM shares now would likely result in a loss. The company's share price has sunk well below the $35 a share initial public offering price. Mr. Romney called for the government-owned shares in GM "to be sold in a responsible fashion and the proceeds turned over to the nation's taxpayers."
The Treasury would have to sell its remaining 500 million GM shares, representing a 32% stake, at $53.98 a share to recover its investment, according to a report last month by the special inspector general overseeing the government's Troubled Asset Relief Program, or TARP. GM shares closed Tuesday at $25.40, well below the $35 a share price at which the government sold its first chunk of 412.3 million shares in 2010. The government sold the last of its holdings in Chrysler to Italian auto maker Fiat SpA last year, for a $1.3 billion loss.
Mr. Rattner also took issue with Mr. Romney's accusation that the Obama administration presented the UAW with a sweetheart deal by giving the union and its health-care trusts ownership stakes in the companies and preserving UAW pensions, while giving Chrysler secured creditors "short shrift" and slashing salaried worker pensions.
The goal, he said, was to "emerge from this process…with a car company that could function; that had customers and workers and dealers." Creditors, Mr. Rattner said, were paid more than their notes were worth on the market.
In a new television ad the Romney campaign plans to air in Michigan, Mr. Romney is shown driving through what appears to be battered neighborhoods in Detroit, intercut with footage of Detroit in its mid-20th century heyday, when Mr. Romney was growing up in the city as the son of a prominent auto executive.
"How in the world did an industry and its leaders and its unions get in such a fix that they lost jobs, that they lost their future?" Mr. Romney asks in the ad. "President Obama did all these things that liberals have wanted to do for years…. Michigan has been my home and this is personal."
