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In Michigan, presidential politics is all about the bailout

When it opened in 1956, Life magazine hailed the General Motors Technology Center, an exemplar of futuristic architecture nestled in the woods near Detroit, as the "Versailles of Industry."

Half a century later, the woods around Warren have been replaced by a sea of strip malls. But the future feels bright again as the tech centre and nearby GM transmission factory add jobs. And Mayor Jim Fouts, normally no fan of Washington, knows who to thank.

"I welcomed the government's involvement in GM and Chrysler because they were saving companies that produce wealth," Mr. Fouts explains. "Without them, we would have had gaping holes we could not have filled."

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While all the Republican presidential candidates are on the record as opposing the bailouts, that stand may prove most problematic for Michigan native son Mitt Romney, still President Barack Obama's most likely rival in November. Most voters in the state are grateful for the more than $60-billion (U.S.) the Obama administration pumped into the auto makers to save them from the scrap heap in 2009 and Mr. Romney knows it.

Even Michigan's Republican Governor, who has endorsed Mr. Romney in the state's Tuesday GOP primary, disagrees with him on the bailout issue. And the Obama campaign released a new ad in Michigan on Thursday, taking credit for an auto-sector resurgence and reminding voters of a 2008 op-ed by Mr. Romney titled "Let Detroit Go Bankrupt."

The auto bailouts provide another example of the fine line Mr. Romney must walk as he attempts to woo a Republican base that is hostile to government intervention without alienating the centrist voters whose support he will need to win in the fall.

If the bailouts remain hugely unpopular with Republicans nationally, and even among the GOP base in Michigan, Mr. Romney can no longer afford to be categorically against them. His career as a private-equity chief has already hurt his image among blue-collar voters, making him seem indifferent to the impact of corporate restructurings on workers.

Mr. Romney began to make the delicate pivot toward a more accommodating stand on the bailouts during Wednesday night's Republican debate. He is likely to return to that theme on Friday, when he is to deliver a major economic address at Detroit's Ford Field, the stadium that bears the name of the only Big Three auto maker that spurned a bailout.

"No way would we allow the auto industry in America to totally implode and disappear. That was my view," Mr. Romney said on Wednesday, noting that he called early on for the "managed bankruptcy" process for GM and Chrysler that the Obama administration eventually adopted. "Then if they need help coming out of bankruptcy, the government can provide guarantees."

If Mr. Romney is fighting so hard in Michigan, it is because he has far more at stake than proving he can beat Rick Santorum on Tuesday in the state where he grew up and his father served as a three-term governor. He also needs to prove he can win swing Rust Belt states such as Michigan if he has any chance of beating Mr. Obama in November.

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Likewise, Mr. Obama must hold on to Michigan and neighbouring industrial states if he is to remain in the White House for a second term. And his campaign is keenly aware that Michigan is far from a sure thing at the moment.

"I'm not ready to say I'm committed to voting for Obama," conceded Mr. Fouts, the Warren mayor who praises the bailouts. "This is a winnable state, and a winnable city, for the right kind of Republican."

Indeed, Warren is located in Macomb County, home to the original Reagan Democrats, blue-collar and middle-class voters who drifted from the Democratic fold under Ronald Reagan. They and their progeny are now more likely to identify with the tax-cutting ethos of the Republican Party than line up with Democrats for more government.

They also helped fuel a GOP resurgence in Michigan that saw Republicans sweep the state's 2010 legislative elections and install a millionaire venture capitalist as governor. Many in the state now credit Rick Snyder's subsequent corporate tax cuts as much as the newly vibrant auto sector for the current economic optimism in Michigan, where the unemployment rate is down five percentage points from a 2009 peak of 14.1 per cent.

Macomb County Chamber of Commerce head Grace Shore is representative of many conflicted Michigan voters as they weigh their likely choices in November.

While she praises the auto bailouts, she is also worried about the ballooning federal debt, which Mr. Obama and Congress have yet to tackle. And she fears the negative economic impact of the President's health-care legislation, which Mr. Romney vows to repeal.

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"ObamaCare is a huge cost to business and that is one thing the President has against him," Ms. Shore said. "I also don't think the economy is too fragile to start cutting [federal spending] I just don't think there's a political will in Congress to do it."

For his part, Paul Spring agrees with Mr. Romney and other Republican candidates who contend that the terms of the auto bailouts favoured Mr. Obama's supporters in the United Auto Workers union at taxpayers' expense.

"The whole bailout thing left a bad taste in my mouth," said the 36-year-old Macomb County resident, who recently started his own business helping companies manage their social media strategies.

Michigan's 16 electoral votes will be critical in November. And neither Mr. Romney, the native son, nor Mr. Obama, an architect of its recovery, can yet count on them.

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About the Author

Columnist Konrad Yakabuski writes on politics, policy and business for The Globe and Mail’s Comment section and Report on Business. More

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