Detroit to Romney: Get Real on Auto Bailout

But Romney's renewed criticism of the bailouts that saved General Motors and Chrysler also has become personal, and polarizing, for Detroit executives, dealers, and others who lived through the industry's near-death experience and revival.

That includes a number of Republican "car guys" who say Romney got it wrong on an issue close to home.

Bob Lutz, a former vice chairman at GM who remains an adviser, said he was "infuriated" about Romney's charge this week that the 2009 government-funded bankruptcies of GM and Chrysler represented "crony capitalism on a grand scale."

"It's once again the fiction that 'Ah, we didn't need the government and this could have been a privately run bankruptcy with the normal Chapter 11,'" said Lutz, a Republican. "What these people always deliberately forget is there was no money. Nobody had any money."

In an opinion piece in the Detroit News published on Tuesday, Romney said he supported a "managed bankruptcy" for both GM and Chrysler.

But he said the Obama administration's funding of their bankruptcies amounted to a "sweetheart deal disguised as a rescue plan," because a healthcare trust run for union retirees was given a major ownership stake in both.

"The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better," Romney wrote.

The comments extended a position the former Massachusetts governor first staked out in 2008 when he wrote a piece for the New York Times titled "Let Detroit Go Bankrupt."

It was the second time this month that the auto bailout has become a political flashpoint. Republicans, including strategist Karl Rove, blasted a Chrysler ad that aired during the Super Bowl as an endorsement of the Obama White House's auto bailout.

In an unusual editorial-page response to Romney, the Detroit News said Romney was wrong to suggest there was a private-sector alternative to the government-funded rescue that began with $17 billion in bridge loans extended by then-President George Bush.

Industry executives also challenged Romney's claim there was a private alternative to government funding at the depth of the credit crisis.

"This is the lie that gets told again and again and again — government intervention wasn't necessary, that this was creeping socialism, that Obama wants to take over or give a sweetheart deal to the unions," Lutz told Reuters.

Mike Jackson, chief executive of the auto dealership group AutoNation, called Romney's opinion piece "reckless, detached from reality and dishonest."

"It was Bush that stepped in with the bailout," said Jackson, also a Republican, told Reuters. "Mitt's assertion that private financing was available in fall of 2008 into 2009 is fantasy."

The Center for Automotive Research, an Ann Arbor, Michigan-based think-tank supported by the auto industry, estimated more than 1 million jobs would have been lost if GM and Chrysler had been allowed to fail.

David Cole, the now-retired head of the center, said he believed then that the failure of government intervention would have been catastrophic. "Had a company like GM shut down, it would have shut the entire industry down," said Cole, who describes himself as a conservative.

One Detroit-based auto industry adviser who asked not to be named said he had been inclined to vote for Romney before the most recent controversy. "But for me, this just calls into question his judgment," he said.

Steve Rattner, a Democrat and the former head of the Obama administration's auto task force, called the idea of a privately funded restructuring of GM and Chrysler "utterly fantastical."

"No one — I repeat, no one — had the slightest interest in funding these companies on any terms," Rattner said in a blog.

But Rattner said Romney may have succeeded in winning over hard-line conservatives with his opposition to a bailout, a more important political goal than winning an argument over how bankruptcy law was treated by the Obama administration.

"I think he was simply trying to pander to people who think the government should stay out of this stuff and who think Obama is in the pocket of unions and I'm in the pocket of Wall Street," he said.

The U.S. government provided $85 billion in emergency loans to prop up the auto industry.

As part of a restructuring of GM in bankruptcy, the Obama administration took a nearly 61 percent stake in the automaker in exchange for a $50 billion bailout. The Treasury also took a small equity stake in Chrysler, which was put under the management control of Italian automaker Fiat SpA.

The Treasury's stake in GM has been whittled down to nearly one-third after a stock offering in November 2010 that sold the automaker to investors on the view it had been remade by slashing debt, closing plants and cutting jobs.

Last May, Chrysler repaid $5.9 billion in loans owed to the U.S. Treasury as part of a refinancing, followed quickly by Fiat's purchase of the U.S. Treasury's stake in Chrysler.

Romney won the 2008 Michigan Republican primary and grew up outside Detroit as the son of an auto executive and former Michigan governor. He began running ads in the state this week ahead of the Feb. 28 primary where he faces a challenge from conservative rival Rick Santorum.

Romney's first television commercial juxtaposes images of him driving with shots of riverfront GM's headquarters and a decaying house in Detroit.

"How did an industry and its leaders and its unions get in such a fix that they lost jobs and they lost their future," he asks in the ad. He adds, "Michigan has been my home and this is personal."

A Romney campaign spokesman was not immediately available to comment on the reaction to his comments on the bailout.