When auto shutdown loomed, Ryan backed off fiscal hawk stance

Sun Aug 19, 2012 10:23am EDT

Republican vice presidential candidate Paul Ryan speaks during a campaign event at The Villages in Lady Lake, Florida August 18, 2012. REUTERS/Scott Audette

Republican vice presidential candidate Paul Ryan speaks during a campaign event at The Villages in Lady Lake, Florida August 18, 2012.

Credit: Reuters/Scott Audette

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(Reuters) - When General Motors announced in 2008 that it would shut down its assembly plant in Janesville, Wisconsin, local Representative Paul Ryan leaped into action.

The Republican met with company executives to try to change their minds. He lobbied the Obama administration for federal retraining and economic-development funds.

He even broke with his party -- and his future presidential running mate Mitt Romney -- to vote in Congress for a $15 billion federal bailout for GM and Chrysler as they teetered on the edge of insolvency.

Criticized by President Barack Obama this week as the "ideological leader" of cost-slashing Republicans in Congress, Ryan has veered from his budget-hawk stance at crucial times.

Along with the auto bailout vote, Ryan voted for the Troubled Asset Relief Program, the $700 billion bank bailout that is anathema to Tea Party conservatives. He opposed Obama's 2009 stimulus effort, but his office sought to secure funding once it was signed into law.

Supporters say Ryan's actions during the auto bailout reveal a practical streak that will bode well for him if the Romney-Ryan ticket gets elected, as well as a willingness to take an unpopular stand if he thinks it is needed.

"The reason he's a vice presidential nominee, and the reason that I like him so much is because he takes a problem, he dissects it fully, and he makes the best possible decision based on what can get done," said Republican Representative Devin Nunes, a close ally who opposed the auto-bailout vote.

Ryan, whose extended family owns a unionized construction company, has occasionally voted against his party to support some labor union priorities. He backed a law in 2011 that prohibits federal contractors from paying lower-than-average wages, a rule that some economists say inflates the cost of federal projects. Ryan has voted against union interests on other occasions.

HOMETOWN FIGHT

When the financial crisis began to bite four years ago, Ryan's hometown was quick to feel the pinch. The GM plant had been the economic anchor of the community since 1919, and several of Ryan's friends worked there.

Working with labor and local officials, he promoted a $200 million incentive package to try to convince GM to retool the plant from producing gas-guzzling SUVs to a new line of fuel- efficient sedans.

Ryan was the lone Republican among Wisconsin lawmakers who met with GM officials to make the case.

In Congress, he took the fight even further when GM and Chrysler warned Washington that they could be forced to shut down completely without an infusion of government cash.

On December 10, 2008, Ryan voted to steer $15 billion to the automakers -- one of only 32 Republicans in the House of Representatives to do so. One-hundred-and-fifty Republicans voted against.

The money would have come from an existing government fund to help automakers boost energy efficiency. Ryan said that was a better alternative than allocating new money, or diverting money from the $700-billion bailout for banks.

The vote put him at odds with most in his party -- as well as Romney, who argued that the automakers should go through the bankruptcy process without government help and who wrote an opinion piece for The New York Times in November 2008 with the infamous headline, "Let Detroit Go Bankrupt."

"At the forefront of my mind are jobs in southern Wisconsin and the retiree commitments to workers that could be placed in jeopardy under certain bankruptcy scenarios," Ryan said after the vote.

That bailout effort died in the Senate, but then-President George W. Bush opted to tap the bank bailout fund to keep the automakers afloat.

The federal intervention did not save the Janesville plant, where several of Ryan's childhood friends worked. It was shut down two days before Christmas with the loss of 5,000 jobs.

SAFETY-NET CUTS HURT

Local officials in Janesville give Ryan high marks for working with them to keep the GM plant open. He also helped the "Forward Janesville" chamber of commerce and local officials secure a $445,000 grant from the U.S. Commerce Department for economic development and worker retraining.

But many in the town of 60,000 say his support for sharp cuts in safety-net spending has hurt their community's ability to recover from the blow.

"Those people needed help from Paul, and he failed us," said Brad Dutcher, who as head of the local autoworkers union led the fight to keep the plant open.

Enrollment at the Blackhawk Technical College in Janesville more than doubled in the wake of the GM plant's closure as workers sought to learn new skills in fields like welding, law enforcement and information technology.

Though Ryan has spoken about the importance of retraining people, he has been less eager to secure funding for the effort.

Democratic Senator Herb Kohl secured $1.95 million for Blackhawk's retraining efforts in 2009 and 2010, enabling the school to hire more faculty and cope with the sudden influx of new students.

Ryan, meanwhile, renounced the practice of "earmarking," or securing funds for specific projects, as conservatives came to see the process as an example of wasteful spending.

Ryan's office hasn't expressed much interest in getting more money for job training even after the local workforce board's budget fell by 40 percent when a federal grant expired in June, said Robert Borremans, head of the Southwest Wisconsin Workforce Development Board.

"I think his emphasis on smaller government is negatively impacting workforce services," Borremans said. Ryan's campaign declined to comment.

Ryan's federal budget proposal would scale back federal Pell Grants for college tuition -- a move that would hit Blackhawk students especially hard.

"Many of our students are disadvantaged economically, so the Pell Grant is critical to us," said Blackhawk president Thomas Eckert.

(Additional reporting by Brendan O'Brien in Janesville, Wisconsin and Gabriel Debenedetti in Washington DC; Editing by Anthony Boadle)

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