The Howey Report
By Brian Howey
KOKOMO – By the time Indiana Treasurer Richard Mourdock’s 15-minutes of fame ended Wednesday morning, Hoosiers in the largest cluster of Chrysler factories here were breathing a sigh of relief. Within hours, the merger with Fiat was a done deal and Kokomo’s industrial hum would be back.
Mourdock was left to express his “disappointment” that the U.S. Supreme Court took a pass on what essentially became a rule of law argument over one of the most compelling manufacturing and bankruptcy chapters in U.S. history. In one of the most peculiar twists in modern economic development, the state executive branch aligned itself against the automotive sector that defined 20th Century Indiana, perplexing thousands of Hoosier families who stood on the brink of a WorkOne experience from Kokomo to Columbus.
Or, as an emotional Gov. Mitch Daniels put it at Greensburg last November when Honda opened up its new plant there and the storm clouds gathered over Detroit, “If you build a great product and deliver value to your customers,” the economic rewards will come. “Our state should take some inspiration from that. Maybe to some extent their competitors should too.”
President Obama found himself in a situation where no matter what he did, there would be torrents of criticism following. In the wake of Chrysler, he gave the UAW and his own government ownership while cherry picking secured creditors.
With the Supreme Court final lifting of the stay on Chrysler, the White House was jubilant. “Not a single court that reviewed this matter, including the U.S. Supreme (Court), found any fault whatsoever with the handling of this matter by either Chrysler or the U.S. government,” White House spokeswoman Amy Brundage said. Chrysler is now poised to be “viable” company.
Even with Chrysler’s short-term survival, the old-line auto sector’s industrial footprint in Indiana will shrink, as will personal income after all the layoffs and UAW concessions. And raising personal income was one of Gov. Daniels top goals back in 2004. Others thought he couldn’t resist rubbing out an old GOP rival – the UAW.
Mourdock, too, was looking into the ether. “The future ramifications of the court’s decision on the capital markets remain to be seen,” he said. “From the onset of the case, I have fought for Indiana’s retired teachers, retired state policemen, and Hoosier taxpayers. I have no regret for having done so.”
And, thus, the final economic and political chapters of this amazing saga won’t be known for years, though by the end of the terms of President Obama, Gov. Daniels and Treasurer Mourdock, new trend lines will emerge.
Will Obama’s decision to use more taxpayer money and a stunningly expedited bankruptcy process create the “new” Chrysler/Fiat that, as Lee Iacocca did after Sen. Dick Lugar’s reprieve a generation ago, might bring billions of income and tax revenue to Hoosier workers and governments?
Or will Daniels’ preference to accentuate the emerging 21st Century Indiana companies like EnerDel, Bright Automotive and Electric Motors prove prescient if Chrysler and General Motors become stagnated money pits, managed by quasi-government bureaucracies, prolonging the agonizing atrophy that began shortly after the first oil shocks three and a half decades ago?
Daniels will never face voters again (if he and his top strategists are to be believed in the wake of all the “Draft Mitch” presidential-mania). Mourdock will face voters, either in a re-election bid or his own gubernatorial run.
Fate could swing both ways for Mourdock, the Chrysler-driven geologist who manages Indiana’s investments. Anyone who knows Mourdock believes he has stood on principle as opposed to political grandstanding. Yet his choices seemed to be made in the black and white of fiduciary duty over what the Detroit newspapers revealed as “risky” investments in waning Chrysler in the first place. A liquidated Chrysler would have, theoretically, created far more damage to Hoosier pensioners, governments and taxpayers than the few millions he stood up to save. How wise was that?
The fact that Mourdock spent at least $2 million to take the case to the Supreme Court leaves him open to future political attack. A stagnated Chrysler-Fiat might bring a political reprieve. If it turns out to be a successful Iaocca redux, Mourdock could be consigned to ridicule for years to come as the man who tried to kill the Ram, the Jeep.
There were also some interesting twists to Indiana’s government structure. According to the Indianapolis Star, Daniels signed off on Mourdock’s legal adventures. What if Daniels hadn’t? Hoosiers would have witnessed a divided executive branch, fueling the reform notion that state government would best run in a presidential-type administration where the buck stops with the governor. In this case, the buck stopped with a treasurer in an office Hoosier Democrats hardly ever credibly contest.
Daniels has become famous for grasping difficult, intractable problems (highway funding, stadium-building, and stadium board bailouts) and finding unique solutions (Major Moves, the eight-county food and beverage tax funding Lucas Oil Stadium). He took a pass on Chrysler and GM, presumably because his future eye sees nothing but trouble for the taxpayer even with the “new” GM and Chrysler. I kept waiting to see if Daniels could coax $5-$6 million out of the Indiana Economic Development Corporation (largely missing in action when it came to retaining GM and Chrysler plants) to refund any pension fund losses.
Instead, the governor stood mostly mute. He let the treasurer do most of the talkin’ as Republican and Democrat mayors, councilmen and commissioners shuddered at the glancing catastrophe.
The columnist publishes at www.howeypolitics.com
