Osburn: Romney’s anti-bailout ad hits the airwavesWritten by Ben Osburn | | firstname.lastname@example.org
In an attempt to curtail President Obama’s television ad war, the Romney campaign released an ad Wednesday attacking President Obama’s auto bailout plan, claiming that it caused car dealerships to close their doors.
The ad comes at a time when the national polls are at a statistical tie. In Ohio however, the latest CBS poll has President Obama leading Romney by 6 points.
The 30-second ad, titled “Dream,” depicts auto dealership owner Al Zarzour of Lyndhurst, Ohio, in a vacant auto lot. Mr. Zarzou, an auto dealer since 1972, was forced to close his dealership in 2009 when General Motors would not extend his credit line. The ad claims that under Obama’s leadership, General Motors dealerships throughout Ohio were forced to close their doors due to the failed bailout.
Although it remains unclear from the ad how the bailout caused the dealership to close, it is clear that it was a risky move by the Romney campaign to release it. This is because the bailout has proven to be popular in Ohio, a state that Romney must win, and in which the second largest number of auto workers in the country resides.
On a local level, in May Toledo native Brian Slagle was featured in an Obama ad in which he thanked the administration for saving his job and the auto industry. “Obama stuck his neck out for us. … He wasn’t going to let it just die, and I’m driving in this morning because of that, because of him,” Slagle states.
The Chrysler Group, owners of the locally operated Jeep plant, extended its streak of U.S. sales gains to 28 straight months in July. The group’s net revenue of $16.8 billion for the second quarter of 2012 represents a 23 percent increase over the second quarter in 2011. The $85 billion dollar bailout is believed to be the driving force behind the success of Chrysler’s and General Motors’ increases in sales numbers.
The Obama campaign was quick to address the ad. While the president was visiting Mansfield attacking Romney’s tax plan, Obama for America spokesman Frank Benenati called the ad a “new low.” “While the president was busy saving the U.S. auto industry — which has 1 in 8 Ohio jobs tied to it — Mitt Romney was busy arguing that we should turn our backs on an iconic industry and the workers in Ohio,” Benanati wrote in a statement.
Although a bit extravagant, Benanati certainly does have a point that Romney’s plan to save the auto industry would have been less intervening. Romney does not support an all-out bankruptcy like many on the left assert, but instead advocated for a structured bankruptcy. Under Romney’s plan, the auto companies would first have to file for bankruptcy, and then be awarded government-guaranteed financing and new car warranties. The government loan and warranties would have cost taxpayers much less than $85 billion, but its effect on the total number of jobs saved was predicted to have been less as well. Additionally, there is skepticism that the approach would work due to the chaos of lending institutions at the time.
The real dispute lies with the degree to which the federal government should be involved in the bailout. While both Romney and Obama agree that government action needed to be taken, Obama advocated for more intervention than Romney. According to the Center for Automotive Research, under Romney’s plan, 365,000 jobs would have been lost. Had the Bush and Obama administrations not have interned the way they did, 1.8 million jobs would have disappeared. Romney’s ad essentially chastises Obama for a measure that GM had been trying to do for years: cut its dealerships to boost profitability.
A product of a post-World War II world, GM dealerships became saturated in big cities and inner suburbs. Cities began to decline in population and buyers began to play one dealer off another to get discounts, both resulting in lost money for the dealers. As the population began to move to the suburbs, so did competitors like Toyota. There were fewer dealerships, making it so that Toyota had more money to contribute to advertising and move into modern buildings. GM’s intention was to close the old dealerships to focus on making the remaining ones profitable, while being under government-mandated restructuring guidelines the whole time. One would assume such a move would be understood by someone like Romney, who spent much of life restructuring struggling businesses at Bain Capital.