Mitt rewrites auto bailout history

In Romney's parallel universe, Obama has convinced Chrysler to move all of its Jeep production to China

Topics: Jeep, Auto Bailout, 2012 Elections, On the Economy, Jared Bernstein, Elections 2012, Chrysler, Business, Mitt Romney, Bloomberg, ,

Mitt rewrites auto bailout history (Credit: AP/Al Behrman)
This originally appeared on Jared Bernstein's blog, On the Economy.

One of the most deceptive jujitsu moves in modern campaign is known as swiftboating: trying to turn one of your opponent’s strengths into a weakness.  Given the centrality of Ohio to electoral success less than a week from today (!), it should be no surprise that the Romney team is going after the success of the President’s auto rescue.

Full disclosure: as a member of the President’s economics team I strongly advocated for the rescue, as per both my principal (the Vice-President) and the view held by myself and others that the employment costs would be particularly steep in communities that comprised the relevant supply chains.  When you think about auto jobs, don’t just think about the factory at the end of the line where they assemble the cars and trucks.  Think about all the small and medium size manufacturers that make those parts.

That’s where many of the new jobs in Ohio are coming from and it’s an important piece of evidence for the bailout’s success.  Which makes it catnip for the Romney swiftboaters.

Dana Milbank takes this apart in this AM’s WaPo, but the gist is that Chrysler recently announced that they’d be expanding production of Jeeps—adding new plants—in China to help sell into that market.  Note that they’re not talking about shifting US production overseas.  They’re talking about tapping a trend that I’ve written about before here at OTE: producing closer to your target markets.

But in Romney-world, this became an attack on the President auto rescue because according to the campaign, Chrysler was planning to move all of their US production of Jeeps to China.  Romney:  “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.”

Milbank prints the response from an aghast Chrysler exec:

Romney’s fiction was apparently based on a misreading of a Bloomberg News report a few days earlier, which said that Chrysler would resume production in China for the first time since parent Fiat SpA bought the company — in addition to Chrysler’s production in Michigan, Illinois and Ohio.

Let’s set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China,” Chrysler executive Gualberto Ranieri wrote in a statement, using italics for emphasis.  “A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments.” Ranieri said the conclusion that it was moving all production to China was “a leap that would be difficult even for professional circus acrobats.”

You Might Also Like

But what’s particularly ridiculous here is that Romney is criticizing Chrysler’s global expansion.   Since when do conservatives object to that?  Is there anyone who believes for a nanosecond that expansion abroad by US multinational’s would be viewed critically by a Romney administration?

Back here in reality what we should be debating right about now is the relative positions of the candidates on policies that really matter to both auto production here and investment abroad.  Gov. Romney opposed the government’s role in GM and Chrysler’s managed bankruptcy.  Given the absence of private financing at the time, had he been in charge, these companies would have been facing liquidation.  Instead, as the chart shows, the American auto industry has added 250,000 just since its turnaround (and not that this chart is a few months old; autos employment is up to 250K and sales are on track for 15 million this year).

Moreover, on international tax policy there are big, important differences that haven’t gotten enough emphasis so far.  Gov. Romney’s plan is to allow multinationals to avoid paying any American taxes on their overseas earnings, a clear incentive to outsource, and one according to economist Kim Clausing would lead to 800,000 jobs shifted overseas.

Note the difference between this and the Jeep case.  The Chrysler executive cited above explicitly denounced shifting production overseas.  Clausing’s analysis, however, suggest that Romney “territorial” tax plan would incentivize precisely such shifts.

The President’s plan is to increase the tax incentives for producing here, not abroad.  These include a lower corporate tax rate with benefits for manufacturers and for onshoring formerly offshored work, paid for in part by closing loopholes that currently make it cheaper to produce abroad.  Given my view of the most relevant elasticities in play here, the most potentially helpful proposals in this space are President’s minimum tax on foreign earnings (a whack at tax havens) and an end to deferral (where foreign earnings can be endlessly held abroad).

Look, neither candidate should pretend to be against globalization.  It’s deeply woven into the fabric of our economy and our lives and that’s not going to change.  And if successful American companies want to expand abroad to sell more directly in those markets, good for them–they’re not displacing workers here.  It’s especially silly for Romney to take a position against this, and even more so given that his position has nothing to do with the reality of the Jeep case.

But public policies should not increase the incentives to produce abroad.  If anything, they should go the other way.  Obama’s do, Romney’s do not.

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden. Follow his work via Twitter at @econjared and @centeronbudget.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 13
  • Close
  • Fullscreen
  • Thumbnails

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    DAYA  
    Young Daya has yet to become entirely jaded, but she has the character's trademark skeptical pout down pat. And with a piece-of-work mother like Aleida -- who oscillates between jealousy and scorn for her creatively gifted daughter, chucking out the artwork she brings home from summer camp -- who can blame her?

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    MORELLO   
    With her marriage to prison penpal Vince Muccio, Lorna finally got to wear the white veil she has fantasized about since childhood (even if it was made of toilet paper).

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    CINDY   
    Cindy's embrace of Judaism makes sense when we see her childhood, lived under the fist of a terrifying father who preached a fire-and-brimstone version of Christianity. As she put it: "I was raised in a church where I was told to believe and pray. And if I was bad, I’d go to hell."

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    CAPUTO   
    Joey Caputo has always tried to be a good guy, whether it's offering to fight a disabled wrestler at a high school wrestling event or giving up his musical ambitions to raise another man's child. But trying to be a nice guy never exactly worked out for him -- which might explain why he decides to take the selfish route in the Season 3 finale.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    BOO   
    In one of the season's more moving flashbacks, we see a young Boo -- who rejected the traditional trappings of femininity from a young age -- clashing with her mother over what to wear. Later, she makes the decision not to visit her mother on her deathbed if it means pretending to be something she's not. As she puts it, "I refuse to be invisible, Daddy. Not for you, not for Mom, not for anybody.”

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    SOSO
    We still don't know what landed Brooke Soso in the slammer, but a late-season flashback suggests that some seriously overbearing parenting may have been the impetus for her downward spiral.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    POUSSEY
    We already know a little about Poussey's relationship with her military father, but this season we saw a softer side of the spunky fan-favorite, who still pines for the loving mom that she lost too young.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    PENNSATUCKY
    Pennsatucky had something of a redemption arc this season, and glimpses of her childhood only serve to increase viewer sympathy for the character, whose mother forced her to chug Mountain Dew outside the Social Security Administration office and stripped her of her sexual agency before she was even old enough to comprehend it.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    CHANG
    This season, we got an intense look at the teenage life of one of Litchfield's most isolated and underexplored inmates. Rebuffed and scorned by her suitor at an arranged marriage, the young Chinese immigrant stored up a grudge, and ultimately exacted a merciless revenge.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    HEALY
    It's difficult to sympathize with the racist, misogynist CO Sam Healy, but the snippets we get of his childhood -- raised by a mentally ill mother, vomited on by a homeless man he mistakes for Jesus when he runs to the church for help -- certainly help us understand him better.

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    NORMA
    This season, we learned a lot about one of Litchfield's biggest enigmas, as we saw the roots of Norma's silence (a childhood stutter) and the reason for her incarceration (killing the oppressive cult leader she followed for decades).

    The 12 most incredible pint-size look-alikes in "Orange Is the New Black" season 3

    NICKI
    While Nicki's mother certainly isn't entirely to blame for her daughter's struggles with addiction, an early childhood flashback -- of an adorable young Nicki being rebuffed on Mother's Day -- certainly helps us understand the roots of Nicki's scarred psyche.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>