Friday, January 13, 2012

The Auto Bailout - Venture Capitalism in Action?

Mitt Romney's position on the auto industry bailout has been anything but consistent, but his latest spin is to try to compare the process of the bailout to the actions of a venture capitalist. Paul Krugman points out that Romney is now trying to claim a form of "credit for the very policy he trashed when it hung in the balance",
So what the story of Romney and the auto bailout actually shows is something we already knew from health care: he’s a smart guy who is also a moral coward. His original proposal for the auto industry, like his health reform, bore considerable resemblance to what Obama actually did. But when the deed took place, Romney — rather than having the courage to say that the president was actually doing something reasonable — joined the rest of his party in whining and denouncing the plan.
But there's something else we need to recall: at the time of the bailout, Chrysler was not a publicly traded company. It had been acquired and mismanaged by a private equity firm.

I don't want to overstate Obama's role in the bailout, as I don't think President Bush would have done things much differently, but here's the thing: President Obama pushed Chrysler through a managed bankruptcy after the private equity process failed. You can't say "It's the same thing a private equity firm would have done" because we know what the private equity firm actually did before the government had to take over and clean up its mess.


How to Make Rush Limbaugh's Head Explode

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