How The Detroit Three Could Give Romney’s Michigan Hopes A Flat

by Susan J. Aluise | February 16, 2012 7:12 pm

investorpoliticsletters2 How The Detroit Three Could Give Romney’s Michigan Hopes A Flat[1]The Feb. 28 Michigan primary should have been a quick spin around the block for favorite son Mitt Romney. He was born in Detroit to an auto industry executive who eventually would turn around the struggling American Motors Corp. and become governor of Michigan. Instead, the former GOP frontrunner is in the race of his political life, trailing former Pennsylvania Sen. Rick Santorum by as much as 10 points in two polls released on Wednesday[2].

But the former Massachusetts governor’s toughest primary opponent in Michigan may not be the surging Santorum, but resurgent Detroit automakers. Romney, who famously urged lawmakers to “Let Detroit Go Bankrupt” in a 2008 New York Times op-ed piece [3], can chalk up his flagging fortunes in part to the rising tide at General Motors (NYSE: GM[4]), Ford (NYSE: F[5]) and Fiat SpA’s Chrysler. And with that tide starting to lift the ships of Michigan’s small businesses and “working families,” Romney’s vigorous defense of his position sounds oddly out of touch to voters.

“All politics is local,” the late House Speaker Thomas “Tip” O’Neill once said. That, better than anything, explains why GOP voters who, in principle, oppose massive government bailouts of private industry are poised to punish Romney for arguing that automakers should have been allowed to sink four years ago.

Romney’s stubborn insistence that he was right about the bailouts has failed to gain traction with voters, in part because he beat Sen. John McCain, R-Ariz., in the 2008 Michigan primary by vowing to be the “one man” who would “transform” the auto industry and “save those jobs.” A few months later, he decried emergency loans to the Detroit Three, predicting that a bailout would virtually guarantee the U.S. auto industry’s demise.

With the companies at Detroit’s economic core circling the drain, many locals felt betrayed by Romney’s flip-flop and apparent disregard of the pain the industry’s collapse would cause. If the bailouts — initiated by President George W. Bush and continued by President Barack Obama — had resulted in a meltdown of the domestic auto industry, Romney would win the “I told you so” straw poll hands down.

But the Detroit Three staged an improbable comeback instead. GM took back the lead in U.S. auto sales and last year tallied its biggest profit ever[6]. Ford last month posted its best annual profit since 1998 (although that was largely due to a tax break). And Chrysler made money for the first time since 2005. Vehicles manufactured by the Detroit Three made up more than 47% of U.S. sales last year – the highest share since 2008.

That good news is starting to trickle down. In manufacturing-heavy Michigan, the revved-up auto industry has helped drive unemployment down from 16.6% in 2009 to 9.3% today. Between December 2010 and December 2011, 66,500 jobs were added in the state, according to the Bureau of Labor Statistics[7].

That’s giving automakers reason to take a victory lap. “It’s halftime in America,” the gravelly voice of Clint Eastwood intoned over file footage of Detroit just before the second half kickoff of Super Bowl XLVI. Chrysler’s controversial spot — more campaign ad than car commercial — raised the spectre of out of work, hurting people trying to make a comeback. “Detroit’s showing us it can be done,” Eastwood said. “And what’s true about them is true about all of us.”

Voting is not a left-brain activity, as much as political scientists would have it be otherwise. Voters choose candidates by passion rather than policy; image trumps issues. So if Michigan voters feel good about the rebounding auto industry, Romney’s continual refrain of “the bailout was still wrong” won’t change those perceptions. In fact, the subtext of his argument — that voters just don’t understand that the government rescue was a bad thing — is only likely to annoy people.

Politicians annoy voters at their own peril. President Jimmy Carter started down the road of his landslide loss to Ronald Reagan in July 1979. As public anger grew over a stalled economy and OPEC-fueled gasoline lines, Carter took his 25% approval rating on the road, prodding Americans to cast off their “worship” of “self-indulgence and consumption” and try to conquer “this crisis of the American spirit.”

Carter basically told the American people their weaknesses of character were to blame for the fix the country was in — not his leadership. Reagan would counter that charge with one simple question in the final presidential debate: “Are you better off now than you were four years ago?”

Telling voters that they’re weak or wrong on the issues seldom ends well. By contrast, telling voters that “Happy days are here again,” or agreeing that they know what’s good for them and what’s not and it’s the “other guy that just doesn’t get it” tends to turn out better.

On the campaign trail with Ronald Reagan in 1980, I watched “The Great Communicator” capitalize on Carter’s misstep every day. “Recession is when your neighbor loses his job,” Reagan said at every campaign stop. “Depression is when you lose your job. Recovery is when Jimmy Carter loses his job.”

In Michigan, jobs are a big issue. And had GM and Chrysler been allowed to fail, more than 1 million jobs wold have been lost, according to the Center for Automotive Research[8]. That renders Romney’s argument moot — at least in the view of many primary voters.

To be fair, Santorum also opposed the auto industry bailout, but among Michigan Republicans that seems almost beside the point for now. And the Detroit Three are a long way from a return to prosperity, and face serious headwinds in 2012 and beyond.

But Romney’s continued harping on the bailout issue isn’t helping him. After all, he didn’t simply write an anti-bailout op ed four years ago, he wrote another one in the Detroit News on Tuesday[9].

By stubbornly advancing the argument that he was right on the bailout, Romney fails to engage voters on why he would be right for the country. With the Feb. 28 primary fast approaching, Romney is running out of time to fix this flat tire and get his campaign back on the road.

Susan J. Aluise is a former White House correspondent who has covered several presidential campaigns.

The opinions contained in this column are solely those of the writer.

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Endnotes:
  1. [Image]: mailto:letters@investorplace.com
  2. in two polls released on Wednesday: http://www.azcentral.com/news/articles/2012/02/16/20120216santorum-leads-in-new-michigan-poll.html
  3. 2008 New York Times op-ed piece : http://www.nytimes.com/2008/11/19/opinion/19romney.html
  4. GM: http://studio-5.financialcontent.com/investplace/quote?Symbol=GM
  5. F: http://studio-5.financialcontent.com/investplace/quote?Symbol=F
  6. last year tallied its biggest profit ever: http://investorplace.com/2012/02/general-motors-earnings-gm-taxpayers-automakers
  7. according to the Bureau of Labor Statistics: http://www.bls.gov/news.release/laus.nr0.htm
  8. according to the Center for Automotive Research: http://www.cargroup.org/pdfs/association_paper.pdf
  9. wrote another one in the Detroit News on Tuesday: http://www.detroitnews.com/article/20120214/OPINION01/202140336/1008/opinion01/Romney-op-ed-Taxpayers-should-get-GM-shares-proceeds

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