Mitt Romney fought to kill the American Auto Industry.
President Obama fought to keep it alive.
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Obama claims to have saved the U.S. auto industry, what he really saved was the industry's dominant union - and weakened capitalism in the process.
Romney once said the auto industry should go bankrupt - the Obama administration claimed they found a better way. The fact is, two of the Big Three automakers did go into bankruptcy under Obama. But it was a bankruptcy with a purpose. Obama not only used taxpayer money to buy control of General Motors and Chrysler, but he also rewrote the rules on the treatment of creditors.
The administration sold its interest in Chrysler in July 2011, racking up a loss of $1.3 billion. It still holds 26% of GM and is riding the stock price down. With GM shares trading at just over $20, the taxpayer's paper losses are at least $16 billion.
The government's tweaking of bankruptcy and tax rules freed GM from the usual limits on carrying pre-bankruptcy losses forward. Curt Levey, executive director of the conservative legal group Committee for Justice, estimates that this special tax break adds $18 billion to the cost of the GM deal.
Also, the bailouts would have cost much less if not for the favored treatment given to the United Auto Workers. According to analysis by the Heritage Foundation's James Sherk and George Mason University law professor Todd Zywicky, the UAW giveaways were worth about $26 billion.
Most of this sum came in payouts - stock and notes - to settle debts owed by GM and Chrysler to a union's Voluntary Employee Beneficiary Association, an entity set up to cover retiree health care costs. VEBA fared much better than other unsecured creditors and even those (at Chrysler) with asset-backed debt.
The administration also added to taxpayers' costs by refusing to push for significant changes in compensation to current UAW employees.
Bankruptcy law gives firms the right to renegotiate union contracts. Sherk and Zywicky argue that the failure to trim GM's labor costs to something like market levels has depressed profit and taken (by their estimate) $4 billion off the company's stock value.
These are just the costs that can be identified today. In the longer run, the Obama administration has sent a chilling message about the rule of law and the sanctity of contracts - both basic to a free market.
It's telling anyone who invests in or lends to a business that, should politics dictate, it would deny it equal treatment.
Crony capitalism is getting well-deserved criticism this election year, and there was a strong element of it in the bailout of auto companies and unions.
The deliberate tilting of the scales toward the dominant auto union took cronyism to an even more destructive level, because it undermined capitalism itself.
The Obama team may claim to have saved iconic American businesses.
But taking over any company to give labor a leg up on capital - call it crony socialism if you will - sets a precedent that threatens businesses of all kinds
