Why Mitt Romney Has Turned to Lying About the Auto Bailout

The 2009 rescue of the auto industry is broadly popular in Ohio -- and Republicans never came up with a coherent argument against it.

The latest round of the Auto Bailout Wars began on Friday, when Mitt Romney, campaigning in Defiance, Ohio, told the crowd, "I saw a story today that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China."

It wasn't true, according to Chrysler, the company that owns Jeep and is majority-owned by the Italian automaker Fiat: Romney had apparently misread a confusingly written Bloomberg report (or read an inaccurate summary of it), in which the company talked about making Jeeps in China in addition to the current U.S. operation.

That didn't stop the Romney campaign from making an ad based on the claim and airing it in Ohio, starting Sunday.

Obama, the ad says, "sold Chrysler to Italians who are going to build Jeeps in China." That's technically accurate, but highly misleading, especially given the following line, "Mitt Romney will fight for every American job." That strongly implies that Obama's actions allowed something to happen to American jobs, when, in fact, no U.S. workers would be affected by adding capacity in China and Jeep is in the process of adding more than 1,000 workers in Ohio. That Romney campaign put the ad on the air without issuing a press release about it, and mostly declined to defend it to reporters, implied a certain degree of sheepishness about its claims.

The Obama campaign quickly worked itself into a froth of outrage over the ad. "Flat. Out. False," campaign manager Jim Messina said Monday. "It reeks of desperation because that's what it is." By Monday afternoon, the Obama campaign was out with its own ad responding to Romney's.

The back-and-forth over the ad wasn't just the petty fracas of a late-stage campaign. It illustrated a deeper truth: The auto bailout is helping Obama in Ohio, and Romney has never managed to blunt the president's edge on the issue.

The bailout -- accomplished via executive action in 2009 using funds from the Troubled Asset Relief Program -- was unpopular at the time. But now that the auto companies are thriving, the president often touts it as an example not just of a resurgent economy but of tough decision-making. One poll earlier this month found that 54 percent of Ohioans approved of the auto rescue, while just 37 percent did not -- and 79 percent thought the auto industry was an important issue.

The most obvious evidence that Obama is winning on the auto bailout comes in the way Republicans have fumbled around for a response. As they campaign in Ohio, Romney and his allies have trotted out a variety of counter-arguments, but none has stuck. The result is a hash of convoluted explanations and excuses:

* The bailout wasn't necessary. This is basically Romney's line. Though he famously wrote an op-ed headlined "Let Detroit Go Bankrupt," he was not, as Obama claims, advocating letting the industry fail; he called for the auto companies to be taken through a managed bankruptcy with the aid of private capital. (Even the most dedicated free-marketeers don't generally dare to argue that the auto companies were failing because they couldn't compete and deserved to die.) The major problem with this argument is that there was no such private capital to be had at the time; that's why the companies were begging for federal help.

* The bailout wasn't a big deal. That's the claim made by Ohio's Republican governor, John Kasich, who says it only created 400 new jobs. Kasich gives his own efforts to recruit business to the state more credit for the improving economy in Ohio, whose unemployment rate of 7 percent is below the national average. Democrats put the number of bailout-linked jobs as high as 850,000. The discrepancy comes from the fact that Kasich is using the narrowest possible definition -- jobs on the manufacturing line in auto plants -- whereas Democrats are using a more expansive metric, including jobs at industry suppliers and related businesses supported by the industry, such as stores where auto workers shop. Romney's campaign has also argued that Ohio voters are getting tired of Obama's pounding away at the bailout issue.

* The bailout was a good idea. Some Republicans' attempt to argue against the bailout is muddled by the fact that other Republicans supported it. A December 2008 precursor bill that died in the Senate was supported by 32 Republican House members, including eight Michigan Republicans, two Ohio Republicans, and Wisconsin Rep. Paul Ryan -- now Romney's running mate. Nine Republican senators also supported the measure, including then-Ohio Sen. George Voinovich.

* The bailout wasn't fair. Many Republicans argue that the auto rescue was little more than a giveaway to Democrats' union allies and note that the bailout had both winners and losers. Ryan points to a plant in his hometown of Janesville that the bailout failed to save; Josh Mandel, the Republican candidate challenging Ohio Sen. Sherrod Brown, points to an Ohio stamping plant that shut down (he also won't say what he would have done instead). Mandel and other Republicans have tried to make an issue of the fact that the parts supplier Delphi's hourly workers had their pensions saved under the bailout, but salaried workers did not. (The spurned Delphi retirees can be seen protesting outside many of Obama's Ohio events.) And then there are the dealerships that were downsized in the bailout. Ohio Rep. Jim Renacci, a Republican, was inspired to run for Congress in 2010 when his northeast Ohio Chrysler dealership was shuttered as part of the rescue effort. But even Renacci, who is now in a tough reelection battle with another incumbent, Democrat Betty Sutton, doesn't argue the bailout shouldn't have happened. He just says it should have been administered differently.

The auto rescue may or may not have been good policy. But Ohioans seem to think it worked, and they give Obama credit for it. Having cycled through so many arguments against it, all of them unsuccessful, Romney appears to have concluded the only way to win on the issue is to mislead voters about its effects.