[Congressional Record Volume 154, Number 176 (Wednesday, November 19, 2008)]
[Senate]
[Pages S10608-S10609]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AUTO INDUSTRY BAILOUT PROPOSALS
Mr. VITTER. Mr. President, I rise to express my grave concerns about
all of the auto industry bailout proposals. I do that for two
fundamental reasons. First of all, I am very concerned of this ever-
widening bailout fever, bailout mania. We are now going well beyond the
financial industry. We are crossing what was supposed to be a bright
line and going to other sectors of major manufacturing, starting with
the auto companies, but I am convinced it certainly will not end there.
The second reason I am very concerned is for the sake and future of
the auto companies and those workers themselves, because I am convinced
that if we pass this type of bailout proposal, it will not save the
auto companies, it will absolutely ensure their demise. That is because
it is a bailout that is not coupled in any way with fundamental
restructuring and fundamental reform.
Let me go back to the original financial industry bailout proposal.
On September 29, I announced my strong opposition to that, based on
many reasons which I articulated here on the Senate floor. One of them
was that I thought it would invite many more bailouts to come. As I
said, it was ``an unprecedented government bailout that will almost
certainly pave the way for even more, maybe sooner rather than later.''
Even as I spoke then on September 29, quite frankly I never would
have guessed that we would be at that point now, so soon, a few weeks
later. But we are. Again, what started as an idea about the banking
industry--don't let it fail; only about financial services industries--
is now ever widening.
First of all, it has been widened within the TARP program itself,
because while Treasury Secretary Paulson came to Congress, came to
Capitol Hill with a very clear message of what that program was about--
buying bad assets, taking them off the books of financial companies--
even within that program we have already moved on to plan B, which is
infusing money directly into banks. And now we are moving on to plan C,
infusing money into other sectors such as consumer credit cards,
student loans, and other ventures. So even within that TARP bailout
structure we have expanded the bailouts and moved on from plan A, which
was the entire premise on which Congress passed the legislation, to
plan B and to plan C.
Now we are about to cross a much brighter line and we are potentially
expanding this bailout fever much more by going well beyond the
financial industry, by going well beyond the banking system, well
beyond the promise we simply need to stabilize the banking system, to
now saving companies because they are big, because they are, in a word,
too big to allow to fail.
I think that is a fundamental mistake. But as I said, the other
reason I think it is a fundamental mistake has to do with the
companies' futures and the workers' futures themselves. I think this
auto industry bailout proposal is a fundamental mistake because I
believe it will not only not save those companies, but I believe it
will absolutely doom them to eventual failure--yes, a few months later
rather than now, but will absolutely doom them to eventual failure.
Why do I say that? For a simple reason; because these proposals are
not coupled in any way with the fundamental restructuring that the
American auto companies need to become competitive and to survive.
A few weeks ago when we talked about the financial crisis, we were
focused on just that, a financial crisis within the banking industry,
within financial institutions. That was about credit freezing up and
impacting the economy in an overall way. But of course auto companies'
problems and challenges predate that by years and years. Certainly the
financial crisis made their immediate situation worse, made their
immediate straits more challenging, but their ultimate challenge and
their ultimate troubles have nothing to do with this immediate
financial crisis. They have to do with the legacy costs and very high
labor and other costs that those companies are burdened by, which makes
them fundamentally uncompetitive with their worldwide competitors
today.
What am I talking about? That extra burden brought on by legacy costs
and union obligations is estimated to be about $2,000 per car for the
big three auto manufacturers--$2,000 per car. What does that mean? What
it means is Ford, for example, needs to cut $2,000 worth of features
out of its Taurus to compete with, say, Toyota's Avalon. It is no
surprise that the Avalon feels like a better product. It is a better
product. It has $2,000 more features, in terms of comparable sales
prices, when it goes to the lot. Of course it is going to be a better
product.
Another example is the U.S. auto companies and their unions admit
that union demands have driven up labor costs at the big three U.S.
auto manufacturers to $30 per hour more than their foreign-owned
competitors, including competitors such as Toyota that employ Americans
and produce cars in America right here and now.
How can the big three possibly remain competitive in a worldwide
economy with that sort of disadvantage? And throw on top of that the
fact that the CEO of GM managed to get a 64-percent pay raise recently
despite his company's shares dropping more than 90 percent over the
past 52 weeks. That is not a recipe to stay or become competitive, that
is a recipe for failure.
The reason the auto companies will be doomed to that failure if we
pass this bailout is because we are giving them plenty of taxpayer
dollars without demanding the fundamental restructuring, the
fundamental revisiting of those additional costs, these extraordinary
labor costs, those burdensome legacy costs that it will take to make
them competitive on a worldwide stage.
My argument is very simple: Let's not cross that bright line. Let's
not expand in a fundamental way bailout fever for the good of our free
market
[[Page S10609]]
system. But also, for the good of the auto industry in the United
States, for the good of those workers, let's not doom them to failure.
Let's demand, whatever we do, that they go into a period of fundamental
restructuring--the type of fundamental restructuring that is necessary,
for instance, in a bankruptcy. It does not have to be done in the
context of an actual bankruptcy. Many people say that would kill auto
sales; that it is not practical, they cannot survive that.
I do not particularly agree with that argument, but that same
fundamental restructuring can be done in other ways without that
bankruptcy title looming over the companies' heads. That is what they
need to survive. That is what those workers need to keep their jobs.
Let's not pass this auto industry bailout and deny them the possibility
of a survivable and brighter future.
These remarks apply equally to not only the Democratic leader's
proposal, under which the $25 billion would come directly out of the
TARP program, but my remarks and my concerns are fundamental. They
apply equally to President Bush's proposal, which is essentially the
same, simply taking the money out of a different pot, simply using the
$25 billion of low-interest loans we have already authorized, against
my objections, to do the same thing.
Again, my concerns are not superficial--use this pot of money and not
that pot--my concerns are much more fundamental. They go to the center
of the future of our economy. But they also go to the core of what is
needed for the U.S. auto industry to remain competitive, to become more
competitive, and to save those American jobs.
I yield the floor, and I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Ms. MIKULSKI. I ask unanimous consent that the order for the quorum
call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
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