Before Indiana Treasurer Richard Mourdock pulled off a historic upset in this year's Republican Senate primary, he was best known to most political observers as the man who tried to stop Chrysler's government-brokered bankruptcy.

Mourdock, who toppled six-term incumbent Sen. Richard Lugar by 21 percentage points in the May primary, sued the federal government in 2009 on behalf of the Major Moves Construction Fund and state police and teacher pension funds that held investments in the automaker.

The lawsuit made Mourdock an icon for people who saw it as a principled stand against government bailouts and the favored treatment of certain businesses and industries. Conversely, he became a lightning rod for criticism from people who saw the lawsuit as a waste of money that, had it been successful, would have led to liquidation for Chrysler and devastation for Indiana's economy.

For Mourdock, the lawsuit wasn't just about the philosophical question of whether the bailout was an appropriate government action. He said those retired police officers and teachers he represented were secured creditors and should have been first in line to be paid during the bankruptcy.

"It's been that way for over 200 years of American law and arbitrarily they said not this time," he said.

Instead, Mourdock said some unsecured creditors, such as the United Auto Workers, were prioritized over the Indiana pensioners.

"The oath of office I keep on my wall says I will support the laws of the state of Indiana, the Constitution of Indiana and the Constitution of the United States," he said. "Those retirees deserved to have somebody stand up and argue their case, and I did."

While Mourdock beat Lugar convincingly in the primary, several polls have shown him in a neck-and-neck race with U.S. Rep. Joe Donnelly, D-Granger, for the general election.

There are many issues that separate the two candidates, but Democrats see the Chrysler lawsuit as one of the points that favor Donnelly.

The three-term congressman supported federal measures to rescue Chrysler and General Motors, and -- in trying to attract independent voters -- has noted in advertisements that Lugar supported those measures as well.

State party officials have also published a 55-page book online about Mourdock's Chrysler decisions. It's titled, "My Way or the Highway: The true story of Richard Mourdock's job-killing quest against the American auto industry and how it launched a tea party hero."

Donnelly said the automakers had structural problems but also were victims of a recession that was pushing down demand for new vehicles.

He said allowing the companies to fall apart would have wiped out not just assembly plants but component factories and dealerships from one end of Indiana to the other. The Center for Automotive Research estimated in 2009 that the nation would have lost more than a million jobs -- including more than 120,000 in Indiana -- if Chrysler and GM had gone through slow, disorderly bankruptcies.

"There are thousands and thousands and thousands of people who have a chance to go to work because of this. It wasn't something that was an enjoyable vote, but my job is to make tough decisions that benefit Hoosiers and benefit our country, and that's what I did," Donnelly said of giving the automakers a lifeline.

"Some of us put our state and the workers of our state first," he said. "Richard Mourdock put his political career first, because his actions are what launched him with the tea party."

In the end, the judge presiding over the bankruptcy case ruled that the Indiana pensioners were getting a better deal in the government-brokered proceeding than they would in liquidation and, therefore, weren't being harmed. Still, the three state funds lost a total of about $6 million because of the bankruptcy, and the treasurer's office spent $2 million on legal fees.

Mourdock has never wavered in his conviction that he did the right thing, and he highlights that a lower court ruled the Chrysler bankruptcy should not be considered a legal precedent.

"My personal vehicle is a Chrysler. My last several vehicles have been Chryslers," Mourdock said. "I have nothing opposed to Chrysler whatsoever. I hope they are successful, but that case wasn't about whether Chrysler was going to be successful or not."

The Wall Street Journal reported earlier this month that the federal government spent a total of $85 billion to save the U.S. auto industry.

Chrysler has repaid what it owes the government, according to the article, while GM has repaid about $23 billion of the $50 billion it received. The government could recoup some of that remainder by selling GM stock -- it owns more than a quarter of the company -- but the price of those shares would have to double to close the full $27 billion gap.

Donnelly said he's hopeful the government will be made whole for its investment, but he also emphasizes the economic impact the auto industry has had in places like Kokomo -- a city of 45,000 at the southern end of his district where both Chrysler and GM are major employers. The unemployment rate in Howard County, which includes Kokomo, has declined from 20 percent in June 2009 to about 9 percent now.

But, even in Kokomo, supporting the auto rescue hasn't guaranteed Election Day success. Other political issues, such as the health care law or the national debt, might weigh more heavily on voters' minds.

Donnelly beat Republican Jackie Walorski, who opposed the bailout, by just 15 votes in Howard County when he was re-elected in 2010. The Libertarian, Mark Vogel, who ran against Donnelly and Walorski -- and also criticized the bailout -- drew another 527 votes that year in Howard County.

Mourdock, meanwhile, garnered 62 percent of the Howard County vote when he was re-elected treasurer in 2010, and he beat Lugar, 61 percent to 39 percent, there in the May primary.

Staff writer Kevin Allen:
kallen@sbtinfo.com
574-235-6244