The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“CRISIS IN AUTO INDUSTRY” mentioning the U.S. Dept. of Commerce was published in the Senate section on pages S10790-S10791 on Dec. 8, 2008.
The publication is reproduced in full below:
CRISIS IN AUTO INDUSTRY
Mr. BOND. Mr. President, I rise today to speak on the issues facing the crisis in the auto industry as well as the Department of the Treasury's Troubled Asset Relief Program or TARP.
As the economy continues its severe downturn, American families across the country face challenges on a level not experienced for decades. With hundreds of thousands of jobs being lost each month, small businesses and millions of Americans struggling to meet everyday needs, the Federal Government is being challenged to come up with new solutions. We are clearly in a unique time as we are experiencing an economic downturn unparalleled since the Great Depression.
Our Government has already taken a number of emergency actions to prevent an economic calamity but new crises continue to develop. The latest and, of course, we think right now the most noticeable crisis is the potential collapse of the domestic auto industry.
Unlike many other industries, the auto industry touches millions of jobs and many manufacturing and service industries throughout the Nation. We are not talking only about autoworkers in assembly plants, we are also talking about auto suppliers, dealerships, repair shops, steel, glass, and plastic industries.
These auto-related jobs are not just in big cities such as Detroit and Cleveland, St. Louis, or Kansas City, those jobs support families in small- and medium-sized communities across rural America in places in my home State such as Dexter, Fenton, Mexico, Riverside, Maryville, Moberly, Versailles, and Joplin. I have been meeting with many of these people in the last few weeks.
But despite the real need for temporary emergency assistance to save jobs in Missouri and across the country, I do not support a taxpayer-
funded blank check that will prop up failed business models without getting the changes that are vitally needed.
It is a disservice to the American taxpayer to throw good money after bad, when these big businesses contributed to their problems. I share and understand the ``bailout fatigue'' of most taxpayers, a lot of folks in my State, and we are troubled by the Government intervention in the private market. But I think it is important to note the failures of the auto companies, like the financial markets, are more than just a failure of the markets and the industry. It also occurred due to Government actions, some of which were pushed by the Congress.
Congress helped bring about $4-a-gallon gasoline that pushed car sales down before the credit crisis--in which we also had a hand--shut off car loans.
Our country, however, is facing a unique economic emergency and now is not the time to point fingers of blame.
It is a time to examine carefully all policy options, including the option of doing nothing. But doing nothing for the auto industry would mean allowing them to go into bankruptcy. Unfortunately, bankruptcy takes several years, and many consumers would not purchase a car or a truck from a company in bankruptcy. In fact, recent research studies suggest that 20 to 30 percent of shoppers avoided purchasing domestic autos in October due to the speculation of bankruptcy. In other words, bankruptcy would likely lead to the end of the auto industry. If they were to go into chapter 11, debtor in possession financing is required to get out of chapter 11, but with the credit markets frozen, where would they get that money? That is what we are talking about today.
The collapse of the auto industry would not be without cost to the taxpayers. The loss of hundreds of thousands--if not millions--of jobs would severely strain our social safety net, as taxpayer funds would have to be used for unemployment benefits, health care, and other necessary social services.
For these reasons, I decided I would not turn my back on families, small businesses, and communities in Missouri and across the Nation, but I would also not turn my back on taxpayers and simply throw money after the problem. Facing an economic crisis that is only going to get worse, I believe--I have believed, as I do now--action is necessary. This is why I worked to craft a bipartisan bill with my colleagues: Senators Levin, Voinovich, Stabenow, Brown, Specter, and Casey. This bipartisan bill, called the Auto Industry Emergency Bridge Loan Act, would provide temporary emergency assistance to the auto industry but hold the companies accountable by requiring specific plans with real and significant cost-control measures and cuts. Specifically, the Levin-Bond bill includes three key principles. First, the bill must have strong taxpayer protection. This means taxpayers will be repaid for the emergency assistance, and taxpayers would share in the turnaround profits of participating automakers. Second, the bill includes executive accountability so that failed executives will not be rewarded for poor management. Third, and most important, the bill includes significant financial reform so that recipients of taxpayer funds must demonstrate they have a plan to ensure long-term competitiveness, health, and profitability by bringing their costs under control.
This bill would require all stakeholders--including management, labor, creditors, and shareholders--to make sacrifices. The companies must take real restructuring reform measures that address unproductive and duplicative lines and legacy costs that are burdensome. Our original bill said we must have the Secretary of Commerce make that decision because that is not a decision we in this body can sit down and make with stacks of plans in front of us. We want experts in the Department of Commerce and those they bring in from the outside to determine whether these plans are workable, whether they meet the criteria. One of the ideas that has been floated is to have a car czar to bring together interested stakeholders, including management, unions, and creditors, to negotiate long-term financial viability plans for participating auto manufacturers and component suppliers, or we need an oversight board to oversee the use of emergency loan funds and implementation of any completed financial viability plans to make sure the fundamental reforms are made. If there is a czar to be appointed, I strongly suggest and I am sure the current administration would consult closely with the Obama transition team to make sure they had somebody who was mutually acceptable who would work in the Commerce Department with the resources there to advise the Secretary, the President, and the President-elect that these plans are, in fact, viable.
It is important to note that the plan we understand is being discussed--and our bill--does not provide any new taxpayer funds. Instead, it uses previously appropriated funds to provide the emergency bridge loans under the program. These funds are then to be repaid to that fund to be used for the original clean car retooling program. Similarly, using these new funds will not be allowed to change any of the clean car efficiency requirements originally imposed on automakers.
It is encouraging for me and my colleagues to hear in the media that many of the people working on it--the leadership--have stated publicly their support for the general approach and principles outlined in the Levin-Bond bill. While the news has been generally encouraging, we have not seen any details of the bill being developed by the Democratic leadership. I have been unable to find out from the White House if they have seen the details or the wording. It is absolutely important, to secure the votes to pass this bill in the Senate, that it contain these key principles: taxpayer protection, executive accountability, and a viable long-term plan specifically laid out so that we know where they are going. Without that, I do not believe the Senate can or should pass that bill. There must be strong powers to ensure that restructuring measures will be enforced. The czar should be appointed, if we get one, by the administration, in cooperation with the President-elect. Providing even a short-term bridge loan without a real enforceable plan is not a responsible approach. Funds must be conditioned on a strong restructuring strategy so that the taxpayers have confidence that it is a bridge loan to somewhere that will lead to long-term financial viability, competitiveness, health, and profitability.
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