It was a lie told in the critical state of Ohio in the final days of a close campaign -- that Jeep was moving its U.S. production to China. It originated with a conservative blogger, who twisted an accurate news story into a falsehood. Then it picked up steam when the Drudge Report ran with it. Even though Jeep's parent company gave a quick and clear denial, Mitt Romney repeated it and his campaign turned it into a TV ad.



And they stood by the claim, even as the media and the public expressed collective outrage against something so obviously false.



People often say that politicians don’t pay a price for deception, but this time was different: A flood of negative press coverage rained down on the Romney campaign, and he failed to turn the tide in Ohio, the most important state in the presidential election.



PolitiFact has selected Romney's claim that Barack Obama "sold Chrysler to Italians who are going to build Jeeps in China" at the cost of American jobs as the 2012 Lie of the Year.



It is the fourth year PolitiFact has looked back over a year’s worth of political mendacity and selected the most significant falsehood. Last year, it was the claim that Republicans voted to end Medicare. In 2010, it was the claim that the federal health care law was a government takeover of health care. In 2009, it was the claim that the same health law included "death panels."



This marks the first year that the Lie of the Year is not about health care -- a reflection of the importance of the economy in the 2012 election.



It’s not that President Obama and his campaign team were above falsehoods, either. Their TV ads distorted Romney’s positions on abortion and immigration to make them seem more extreme than they actually were. A pro-Obama super PAC even created an ad suggesting Romney was responsible for a woman’s death when her husband lost his job at a Bain-controlled company.



But the Jeep ad was brazenly false.



It started as a line in a speech about where an American brand of car would be made. It blew up into a lie heard by voters well beyond Ohio.



A campaign rally in Defiance



Like many political distortions, Romney’s claim contained a grain of truth.



Chrysler was one of the companies that received billions in loans from the federal government. The government ended up forcing Chrysler into bankruptcy in 2009 when its debtholders couldn’t reach an agreement. Since Chrysler emerged from bankruptcy, the Italian car company Fiat has held a controlling interest.



By 2012, Chrysler and other automakers were doing much better -- a fact that confounded Romney. In Ohio, a major expansion of its Toledo plant was in the works for the Jeep Liberty. In Detroit, the company was hiring workers to build the Jeep Grand Cherokee.



But Chrysler was thinking of reviving the Jeep brand in key foreign markets, and like other American automakers, Chrysler preferred to build cars in the countries where it intended to sell them -- a common strategy to reduce tariffs and transport costs.



Bloomberg reported on Oct. 22 that the company was planning to restart production of Jeeps in China. The entirety of the Bloomberg report made it clear that Chrysler was considering expansion in China, not shuttering American production.



But one conservative news outlet seized on the report’s opening lines. The Washington Examiner’s Paul Bedard blogged on Oct. 25 about the Bloomberg story and incorrectly wrote that Jeep was "considering giving up on the United States and shifting production to China," a move that would "crash the economy in towns like Toledo, Ohio … ." The conservative Drudge Report then linked to Bedard’s post under the headline, "Jeep eyes shifting production to China."



Within hours, Chrysler spokesman Gualberto Ranieri responded on Chrysler’s company blog.



"Let’s set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China," Ranieri wrote, adding, "A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments."



But later that night at a campaign stop in Defiance, Ohio, Romney added a new line to his stump speech:



"I saw a story today, that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China," he said, to boos from the audience. "I will fight for every good job in America. I’m going to fight to make sure trade is fair, and if it’s fair, America will win."



Reporters mentioned the mistake in their stories the next day, it lit up the Internet, and the liberal cable channel MSNBC attacked Romney for not knowing the facts.



"His lie is embarrassing, frankly, and it should be unsettling for the rest of the world," said MSNBC’s Rachel Maddow. "Imagine Romney waking up in the Lincoln bedroom or whatever, checking his conservative Twitter feed and running with whatever he finds there."



Romney’s campaign didn’t retreat, though. It doubled down with a TV ad for Ohio voters that weekend:



"Who will do more for the auto industry? Not Barack Obama," the ad began, adding, "Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China. Mitt Romney will fight for every American job." A similar radio ad soon followed.



That in turn prompted another unqualified denial, this time from Chrysler Chairman and CEO Sergio Marchionne, who said Jeep assembly lines "will remain in operation in the United States and will constitute the backbone of the brand. It is inaccurate to suggest anything different."



PolitiFact and other fact-checkers weighed in and said the ad was inaccurate. PolitiFact rated it Pants on Fire because it "strings together facts in a way that presents an wholly inaccurate picture."



Factcheck.org said Romney’s speech was "flat wrong" and the ad was misleading. The Washington Post’s Fact Checker gave the ad four Pinocchios, saying, "This ad shows that we have entered the final, desperate week of the campaign."



When pinned down with questions on the ad, the Romney team either dodged or defended the ad as literally accurate. Stuart Stevens, a senior adviser to Romney, told the New York Times, "It would be better if they expanded production in the U.S. instead of expanding in China." The automakers said that ignored common global trade practices.



There was no give from Romney. Maybe that wasn't surprising.



At the Republican National Convention in Tampa, journalists had challenged the Romney campaign team about an ad that falsely claimed Obama was ending work requirements for welfare. Romney pollster Neil Newhouse responded by saying, "We're not going to let our campaign be dictated by fact-checkers."



Obama campaign responds



If the Jeep ad was intended to confound the Obama campaign, the reaction was the opposite: gleeful outrage.



Obama’s campaign fired back with its own ad, which crowed that "Chrysler itself has refuted Romney's lie. The truth? Jeep is adding jobs in Ohio." Surrogates on the campaign trail, notably former President Bill Clinton and Vice President Joe Biden, mocked the ad as audiences roared with laughter.



For the Obama camp, it was a twofer: They got to remind voters in Ohio and all over the country that Romney had opposed the auto bailouts and also portray him as desperate.



Obama himself brought it up in a campaign appearance in Cincinnati the Sunday before the election, casting it as a character issue.



"And so when you’re thinking about this choice, or you’re talking to your friends and neighbors about this choice, you’ve got to remind them it’s not just about policy, it’s also about trust. Who do you trust?"



On the weekend before the election, Chris Wallace of Fox News interviewed Romney political director Richard Beeson and asked him if the ad was a mistake.



"Well, I found it interesting that President Obama would attack Mitt Romney on that when they put up an ad saying that Gov. Romney says ‘Let Detroit Go Bankrupt’ when that’s a headline from the New York Times op-ed," Beeson said. "And the second thing is President Obama talking about scaring people when yesterday he’s out there saying ‘voting is the best revenge.’"



The problem for Romney was that his opposition to the bailout was out of step with most Ohio voters, said William Binning, a professor of political science at Youngstown State University.



"I think the Romney people just couldn’t figure out how to handle this, or mitigate its effect," Binning said. "So they came up with this ad. And this ad didn’t get them anywhere."



PolitiFact tried many times to reach Romney's top staff but received no response. In a post-election panel discussion conducted with both campaigns at Harvard University, Romney’s team insisted the ad had worked, that it had reassured voters in key Ohio markets.



"If you look in those markets, we did better in those markets for having run that," Stevens said.



But Democrats didn’t see it that way.



In Ohio, Democrats used Romney’s Jeep ad to attack Republicans for not being supportive enough of the American auto industry. Chris Redfern, chairman of the state party, said he intends to use it again against Republicans who "remained silent" while Chrysler’s top brass were refuting the ad.



"If you come from northwest Ohio, and you’re not defending Jeep, you’re part of the problem," Redfern said.



In an interview with PolitiFact, Obama strategist David Axelrod said the so-called "earned media" -- news coverage -- can easily outweigh the points made by paid political ads, especially when a campaign is in the final stretch.



"The controversy surrounding the ad became a focus of news coverage," he said. "At the end of the campaign, when everybody is watching everything closely. … They just weren’t going to get away with it. It was a very high-risk strategy, and it backfired."

More coverage of the Lie of the Year: