Published for www.online.wsj.com, May 10, 2012
President Barack Obama’s re-election organization is spending a lot of time attacking Mitt Romney over his careers in venture capital (investing in start-ups) and private equity (investing in troubled or failing businesses).
To reporters at Bloomberg Businessweek, Obama senior campaign adviser David Axelrod recently ripped Mr. Romney for “leveraging companies with debt, bankrupting companies and making money off of those bankruptcies . . . [that] cost jobs and certainly wages and benefits.”
And an Obama campaign briefing paper says “Romney closed over a thousand plants, stores and offices . . . cut employee wages, benefits and pensions . . . laid off American workers and outsourced their jobs to other countries.”
The president is guilty of the same alleged sins.
The Obama administration, after all, forced General Motors and Chrysler into Chapter 11 bankruptcy in 2009 and then capriciously ordered thousands of local dealerships closed.
The auto industry bailout cost lots of Americans their jobs. GM employed roughly 252,000 workers in 2008. Now it has 207,000, with 131,000 of them working in foreign plants. The Detroit Free Press recently noted that fewer Americans work at Chrysler than did before the bankruptcy. Based on data from the National Automobile Dealers Association, I estimate that as many as 100,000 Americans lost jobs at the companies’ dealerships.
Mr. Obama’s auto industry bailout plan imposed cuts in wages and benefits for current and future workers at both GM and Chrysler. And he loaded up both companies with debt they can never repay. The bailouts cost $80 billion; $51 billion is still outstanding and $24 billion may never be recovered, according to the Treasury Department’s latest report. As GM’s profits stall, its stock languishes at a level less than half that necessary to recoup Mr. Obama’s investment of taxpayer dollars in the company.
The president’s actions have produced big bucks for a foreign business. Last month, Fiat reported that, powered by its U.S. Chrysler subsidiary, profits were up tenfold the past year. Without Chrysler’s earnings, Fiat would have lost money.