Romney's Michigan Gamble

For the moment candidate Romney has ceded the airwaves to the Obama - Santorum firestorm about social issues. Charles Krautheimer has written the definitive piece on Obama's attack on the first amendment's dictate that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof", the unprecedented requirement that (insurance) companies provide free services to a favored class of people, and the unconstitutional mandate that individuals buy a service which they may not want. That will sort itself out in the courts, but within the Republican party the contraception/sterilization/abortion mandate has propelled Santorum to the top - quite likely the Obama campaign's intended outcome. In the broader public, the administration has succeeded in framing the debate as a "woman's right to choose" which seems to trump freedom of religion. Oy vey. Sorry Charles.

Meanwhile, candidate Romney takes the principled but unpopular-in-Michigan stand that traditional reorganization in bankruptcy would have been a better solution to Detroit's problems in 2008 than government ownership. What was he thinking - in his 2008 New York times op-ed, and in his recent Detroit News piece? Why double down?

On the substance:

- The $80 billion bailout, overseen by the ethically-challenged Steven Rattner, represented an unprecedented intrusion of the federal government into private industry, protecting the UAW at the expense of bondholders and the non-union staff of General Motors and Chrysler. The end result has been survival with Chrysler, now majority-owned by Italian Fiat, and General Motors, still partially owned by the US government and the UAW pension fund. GM has been slimmed down with four US brands remaining (Chevrolet, Buick, GMC, and Cadillac) and 70% of its sales outside the country. Most of the government's bailout funds have been returned - except for the remaining 27% stake in GM and a $12 billion stake in Ally Financial, the former financing arm of GM. In an extraordinary step, the IRS issued a special ruling to allow the new GM to keep $45 billion in tax losses from the pre-bankruptcy GM - a gift lost in the administration's accounting.

- On an ongoing basis the federal government is an awkward partner in the auto industry. Federal subsidies for each Chevy Volt amount to $10,000 for a vehicle with little consumer demand and a short history of battery fires, downplayed by the safety authorities. Labor negotiations have been problematic with the UAW primarily targeting Ford in the 2011 negotiations.

On the politics:

- Michigan has voted Democratic in the last five presidential elections, and has declined in population to 16 electoral votes (similar to Georgia or North Carolina.) It is not a key state in the Republican map - although Romney's roots and endorsement by Republican Governor Rick Snyder should give him an edge there.

- Michigan is also small in the Republican nomination calculus. On the numbers, Michigan will have only 30 delegates (out of 2286)to the convention due to a 50% penalty for going earlier than the Republican National Committee allowed, and those will be split proportionally. But the optics matter.

- Romney's primary opponents and much of the media have claimed that a Romney primary defeat in Michigan would spell his doom, and the volatile polls have shown a Santorum surge, particularly among the religious conservatives of western Michigan and union members. As a window into the thinking of the White House, the national Democratic party has been holding news conferences around the state and an Obama-oriented PAC is running ads to criticize Romney for his opposition to the auto bailout. (Santorum, Gingrich, and Paul also opposed the bailout, but get a pass in the Democratic anti-Romney blitz.)

- The broader calculation should reward Romney for his principled stand. Nobody understands the restructuring of the auto industry better than the son of the president of American Motors who made his fortune growing and restructuring companies. Outside of Michigan he has strong agreement within the party and is positioned to make crony capitalism a major issue in a campaign against President Obama. His Michigan stand should add some "cred", as did his refusal to follow Gingrich's pandering to the space industry in Florida.

For Romney the Santorum values surge came at a bad time in the context of the Michigan primary, and any momentum may carry over into Super Tuesday. If so, the contest becomes a grueling delegate count which may stretch until Utah's 40 delegates are selected in the final primary on June 26. In the end, Romney's money and organization should prevail as the painful process moves to the large, more moderate states of the Northeast and the West Coast. But it would be much better to allow the Republicans to unify and pivot to face President Obama well before the August 27 Tampa convention.

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This week's video of the White House press secretary claiming that Obama didn't turn down the Keystone XL pipeline calls to mind Bill Buckley's famous rejoinder "I'm not going to insult your intelligence by pretending that you believe what you just said."

bill bowen - 2/24/12

 

Comments

[Bill McCormick]

Good point , Dick. GM provides a platform for the President to protect a large block of union voters, subsidize R&D of electric cars and shore up the industry through the financial moves of GM. Who knows what this really is. I talked with one of the reporters who follows the industry and he felt that the move was an attempt by GM to find a way to stop the bleeding of their EU operations. Perhaps they are trying to gain sales volume to lower marginal costs. Or perhaps it was a payoff for French support of the Iran oil embargo. Or perhaps it was a hidden bailout for the French. It just seems strange to me that a firm that was taken over by the Feds a few years ago, bankrupted the shareholders and bond holders then issued new stock (with a large portion going to the Unions)at $32 with the current price at $26 all of a sudden has the revenue to invest in a failing French Auto company. Meanwhile Ford, who turned down the bailout money, with it's stock at $2 is trading at $12 while the President is cooing about GM returning to the world's largest car company. Who's original (and new) shareholders got the best deal? But, we bailed out the French in WWI and WWII so why not again?

[DickG]

GM/PEUGEOT; Say it ain't so 'O'. This isn't a first. If 'memory serves'; shortly after the 'crash'and at the wonderment of the French Government, we bailed out a French Financial Institution.

[Bill McCormick]

OBAMA BAILOUT OF FRENCH AUTOS?

Interesting announcement today of GM buying 7% of the French auto producer Peugeot and forming a partnership to cut costs together. Peugeot's unions are resisting pressure from the French President to cut 6800 jobs after their sales dropped 8% this year and dropped for the 5th straight year. Their debt is skyrocketing. Along comes GM who likewise is suffering huge losses ($15B) in Europe and invests in the struggling company. So now you can look at it this way: either American taxpayers are indirectly bailing out the French auto industry through GM or the GM Unions who own a large share of GM stock are now bailing out their brothers in Europe. No matter what the true logic is in this move by GM it is one of the problems of government ownership of industry and their motives. Somehow this has troublesome similarities to the beginning of nationalization of industries under Fascist,communist and socialist states. I hope it is straight forward and not another smoke and mirrors play by the administration dressed in GM sheepskin.

[Bill McCormick]

ROMNEY TOUGHS IT OUT---A TOUGH CHOICE FOR GINGRICH.

Romney showed once again how tough he is to beat. Easily winning Arizona--another American looking state like Florida with plenty of seniors fom all over. Then after trailing in the polls in a state where he openly opposed Obama's bailout for the auto industry he came back to win by more than 50,000 votes. In the exit polls Romney dominated the senior vote, the women vote, the best to fix the economy vote and most important has a 61% edge in the beat Obama vote. Ironically in the final desperate days for Santorum who called for independents and Democrats to cross over and vote for him Romney split the Democratic vote 50/50 and won the independent vote. Romney's personality, his focus on the economy and his deep pockets continue to make him the odds on favorite to be the nominee despite the rise and fall of challengers. With Paul and Gingrich remaining in the race Romney will continue to pile up wins and electoral votes.

Paul is clearly on Romney's side as it is likely his desire to defeat Obama overrides his conservative values. Gingrich is more of an interesting case. He claims to be the true conservative leader and yet he knowingly hangs on drawing votes away from Santorum to Romney's favor. He now faces a tough choice: drop out and hope that Santorum will win or stay in and virtually guarantee a Romney nomination? Ego versus conservative principles? Or does Gingrich too, like Paul, actually believe Romney has the better chance to defeat Obama?

[Bill McCormick]

ROMNEY----

--Get's it. Michigan is one state. Likely to Democratic anyway. Not really his home state. He was never Governor of Michigan. He is not going to agree with Obama's approach to the auto bailout even if it costs him Michigan tonight and in November. Obama's approach has worked so far and it should be acknowledged. It was the best approach for the labor unions and Obama is a labor union man. So are Biden and Reid. He took the road that allowed him to minimize their losses. That is why they elected him. Can't fault him for that. It's just an example of why and how the American system works for special interest groups--voting blocks and why they are pandered too and sought out for contributions/votes. No different than Wall Street, immigrants, blacks (96% Democratic), farmers,small businesses, Silican Valley, Hollywood,Mormons,Catholics,hispanics, etc.

Never has the opportunity to be different than a President ever existed than exists for the Republican candidates today. Romney knows it. Gingrich knows it. Santorum knows it. Paul knows it. Palin knows it. Trump knows it. The public knows it. In the end they will all take similar approaches and stand with the nominee. But, to get there they have to satisfy segments of the Republican clan that they best represent their views. And, that leads them to fight over issues that are way down the ranks of priority for a President. So, as much as it seems they are ignoring the major issues for petty fights--it is necessary for them to win the nomination. It becomes very territorial and one makes a case to a segment along the way and shoots to the top. But across the board in states with American like voter bases, like Florida, Romney wins. Paul to his credit--gets it. And, he sticks to his agenda which is Obama and Republican fiscal policy. He in his way supports Romney and by staying in the race helps in both ways defining the fiscal issues and pulling votes from Santorum and Gingrich.

[harrycat]

By saying that Kennedy's separation of church and state pronouncements made him nausous, does that mean that Santorum WOULD take direction in the political arena from the Pope?

[harrycat]

So far I believe that Santorum is the strangest of politicians - a man who says exactly what he thinks without regard to who may be offended.

So far I believe that Romney is a technocrat - he sees his job the same way he has seen all his jobs. Say and do what it takes to get to the objective without being emotionally involved.

Is it possible that a politician in 2012 can believe:

- All contraception is wrong, sex is only for procreation
- Concern for the environment is a false god because God gave man dominion over the earth.
- Man has hegemony over women
- Gays are to be reviled

[DickG]

NEVER BETTER; finally he took a position requiring other than political motives and the time to explain it. His usual response was always;"read my book,it's all there". You could see the benefit of 'speaking from the heart' in other comments he made; leading to a successful evening. The only 'PASS' he took was the opportunity to explain the differences between 'Obamacare' & 'Romneycare'.
Following the DEBATE, TRUMP made the statement on FOX that the POLE following the DEBATE replaced Romney as the Front-Runner in Mich.