Warren’s U-Turn

Elizabeth Warren Trades Moccasins for Flip-Flops on Auto Bailout

May 25, 2012

Democratic Massachusetts Senate candidate Elizabeth Warren appears to have changed her position on President Obama’s 2009 auto bailout, records show, and experts believe national Democrats are to blame.

Warren strongly supported the auto bailout in Obama’s re-election campaign film The Road We’ve Traveled, saying that "blood" would have been on the president’s hands had he not bailed out auto manufacturers GM and Chrysler.

But Warren previously suggested that bankruptcy of auto manufacturers would not matter and that the auto bailout would be a bad idea.

Warren said that companies should build cars people want during a December 2008 roundtable discussion with newly elected members of Congress at the Harvard University Institute of Politics.

"Spending money to prop up markets, at least in my view, is a losers game," Warren said.

Government cannot be the "softest chump" when it comes to lending money, Warren said. She also criticized the ideas behind Obama’s stimulus package, saying that stimulus in the form of cash to people is mostly spent to pay off debt and not create jobs.

"Warren, as a smart politician, probably knew that the path of least resistance was for her to change her tune," said elections expert Jay Cost.

"In all likelihood, this is what happened: the pro-bailout position is what the Dem establishment has indicated it supports; Warren wants to tap into its money and resources, so she flipped with little to no arm-twisting," Cost said.

A February 2012 Gallup poll showed that 63 percent of Democrats continue to support the auto bailout, while only 44 percent of registered voters approve.

"The auto bailout was marked by obvious pay-to-play with the United Auto Workers Union," said Marc Scribner, transportation policy analyst at the Competitive Enterprise Institute.

The UAW is a stalwart Democratic ally. The union has spent more than $26 million since the 2008 election cycle. Almost all of that money has gone to Democrats.

The UAW received an ownership stake in Chrysler and became one of General Motors’ largest shareholders as a result of the auto bailout.

Obama’s bailout of Detroit automakers GM and Chrysler cost taxpayers $81.8 billion in addition to "many other costs," according to the Wall Street Journal.

The Obama administration gave more than $50 billion to GM during the auto bailout, as well as a special tax break that allowed GM to pay no taxes in 2011.

GM stockholders have complained that they received "absolutely nothing" for their shares of GM stock due to the auto bailout.

The union endorsed Warren in February 2012.

Warren’s flip on the auto bailout may become an issue in the Senate campaign.

"Warren became a figurehead of the left-wing anti-crony capitalist movement and distinguished herself with that narrative, so I think this policy reversal really hurts her image," Scribner said.

Warren had already begun to change her position on the auto bailout by September 2009. Then chairwoman of the Congressional Oversight Panel on TARP, she asked why banks bailed out by the federal government were apparently treated better during the bailout process than automakers.

"I think the problem has been all the way throughout this crisis, that the banks have been treated gently and everyone else has been treated really pretty tough," Warren said at the time.

"This just shows that Elizabeth Warren is not some kind of ‘Mrs. Smith Goes to Washington’ type. Massachusetts voters would be deluding themselves if they think Elizabeth Warren is going to be some kind of game-changer in Washington and represent transparency and honesty. Her position on the auto bailout has been molded by the White House and the DNC," Scribner said. "I wish we could see more of 2008 Elizabeth Warren."

The Warren campaign did not return a request for comment.