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November 19, 2008

Mitt Romney on Bailing Out the Auto Companies

Hannity & Colmes

HANNITY: And this is a FOX News alert. The Senate says no to a planned vote this week on the $25 billion auto industry loan. Now Senate Majority Leader Harry Reid said that he wanted to figure out a way to help Detroit, but that efforts to do so had stalled, the news coming after CEOs of the big three U.S. automakers made their case for the bailout on Capitol Hill. Let's take a look.

(BEGIN VIDEO CLIP)

RICK WAGONER, CEO, GENERAL MOTORS: Mr. Chairman, I do not agree with those who say we are not doing enough to position GM for success.

ROBERT NARDELLI, CEO, CHRYSLER: Without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations.

ALAN MULLALY, CEO, FORD: We were profitable in the first quarter of this year, 2008, and well on our way to sustainable profitability before the current economic and credit crisis stopped us cold.

(END VIDEO CLIP)

HANNITY: Chrysler, General Motors, and Ford are all looking for loans to avoid bankruptcy, but not everyone is convinced this is the answer, including a very famous native son.

Joining us now is the man who's calling bankruptcy the only option for Detroit, the son of the former American Motors head, George Romney, and that's former Massachusetts governor, former presidential candidate Mitt Romney, is with us.

By the way, I had an AMC Hornet when I drive -- when I was a young kid. Anyway, thanks for being with us.

I am frustrated that this now, your article, which I read today, is now perhaps going to become an option, which is frightening to me. We've got three million people. When you look at the residual effect, and the suppliers and everybody else that are going to lose jobs if these companies go under.

And here's my -- I have a long question. I want to give you all the time to answer. I'm mad and I'm angry, Governor, that you know, banks were forced because of government to give risky loans. That resulted in the financial credit crisis.

If you long at the legislation that has been put on Detroit: bad trade policy, bad energy policy, CAFE standards, economy standards, safety standards, all government mandates, they've been controlling the auto industry and making them -- and the union relationship with the Democrats has hurt these companies. And now they're in a -- they've been hurt by government. Nobody wants to talk about the cause. Don't we need to go there first, Governor?

MITT ROMNEY, FORMER PRESIDENTIAL CANDIDATE; Well, I think in order to really make sure that these companies have a bright future, you're going to have to deal with the causes of the difficulties that the domestic manufacturers have had.

And the real issue, of course, is that they have enormous burdens on them. That is the domestic companies, high labor costs, difficult work rules. They have to pay people who are idle in what is called a job bank. They have massive costs associated with -- with retirees, health-care costs, real-estate costs on plants and equipment that they're no longer using. These burdens are so heavy that, while they don't kill them overnight, if they continue to suffer under these burdens, they just can't be viable long-term.

And that's why, in my view, it's going to be essential for us as part of this process. We're going to keep this industry alive. It's not going to go away. We can't afford to let it go away. It's too critical. We can't lose those jobs, but we do need to make sure that we help these companies restructure themself, either through bankruptcy or through a out- of-court settlement. And we have to make sure that we help them restructure to get rid of these costs.

HANNITY: I did like a couple of your ideas, in terms of letting the government help in moving the technology forward. They're making the progress. I've actually went to the GM plant not that long ago. And I saw the Chevy Volt that they're building. I bought an Escalade hybrid, which is an incredibly huge car with -- I doubled my gas mileage overnight by getting the hybrid.

But here's -- here's the problem for me. If we still have bad energy policy, bad trade policy, if we still have unions and card check now, which is even going to make it worse for other industries. And what happened to Detroit is going to be -- we'll have that happen, you know, around the country.

And that unholy alliance, if they're going to put CAFE standards on car companies when the technology doesn't exist.

Why doesn't government get a lot of the blame here, because government regulation hurt the banking industry, and now hurt the auto industry? Why don't we ever look at government policies? You said in your final speech government is broken. Why can't we say government caused a lot of this?

ROMNEY: Well, government did. There's no question but that the CAFE standards have put an unusual burden on the domestic automobile manufacturers. And our energy policies as a country continue to put burdens on domestic manufacturers. That's just -- that's reality.

But the question is what do we do now? And the idea of saying to the taxpayers, look, we want you to pay checks, to write a $25 billion check to the industry, no strings attached, and they're going to continue business as usual, you know, that sounds fine, except business as usual is continuing to lose market share to the Japanese and the other transplants who have come here to manufacture vehicles in the U.S. And that means continuing job loss and a bleak future. Ultimately, some day, dissolution.

My view is let's use this opportunity when the industry needs help. Let's use the opportunity to sit down with the unions, to sit down with retirees, to sit down with landlords. Did that with all the parties and say, "You know what? We're going to restructure this together. We're going to help you get through this. We're not going to let the industry disappear. But we're not going to be the only people sitting at the table. We're going to insist that you guys restructure and participate in this effort to get the industry on a level playing field."

COLMES: Governor, welcome back to our show. If your plan were to take hold, this bankruptcy, as you would be restructuring, as opposed to a liquidation, I presume...

ROMNEY: Oh, yes.

COLMES: ... what would that -- what would that look like to the workers? What would it look like to the ancillary industries? We're talking about not just the hundreds of thousands in the auto industry, but all those million-plus who work in similar industries, or industries that supply parts? What would that look like to those people? What would happen to the pensions, the things that companies promised those workers over all these years? What would happen there?

ROMNEY: Well, first of all, if we just write them a check and the companies go on the way they've been going in the past, with high retiree benefits, with high labor costs, with these other burdens laid on them, you can be assured the companies will continue to lose share, that they will continue to lose jobs, and ultimately, they become liquidated. That's -- that's where we're headed.

The right thing to do is to sit down with the parties and to work out a fair and balanced effort to get everybody to participate, not just the taxpayers, so that these companies can be competitive and can hold their own versus the Japanese.

There's no reason why the domestic manufacturers of automobiles can't be every bit as competitive as companies from offshore who come here to manufacture vehicles. And the only reason right now that that's -- that they're not competitive is the enormous burdens that have been placed on them by the UAW, by retiree costs, and all of those elements that combine to make them so cost ineffective.

COLMES: It sounds like you're blaming the unions. But where's the responsibility of the CEOs, the three who tonight -- today flew in in private jets, costing tens of thousands of dollars, the ones who made decisions about the future of their company, the ones who made decisions about cars that may not -- may be obsolete in a year or two? Where's their responsibility for this?

ROMNEY: Yes. Their probably, responsibility, is No. 1, and it's not just the current executives, but it's prior executives. It's the people who over the years signed agreements they knew couldn't possibly couldn't be carried out, couldn't be met. It's people who agreed to massive pension benefits that they knew were going to put these companies at a competitive disadvantage forever.

And that's where the blame really lies. And that's why, if we're going to go through this kind of a restructuring effort, we're going to have to see some new faces in the auto industry at the top.

And you know what? Those guys ought to say goodbye to corporate aircraft and goodbye to executive dining rooms. It's -- it's something that's resented by people across the line. And if it's going to be an effort to restructure these companies, everybody participates.

COLMES: We appreciate your coming on the show tonight. Thank you very much.

ROMNEY: Sure.

COLMES: Appreciate your time.

ROMNEY: Thank you. Good to be with you guys.

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