INHOFE CALLS ON CONGRESS TO REJECT $14 BILLION BAILOUT

“I cannot and will not support Congress using taxpayer dollars to bailout yet another industry”

WASHINGTON, D.C. – Today, U.S. Senator Jim Inhofe (R-Okla.) gave a speech on the Senate Floor calling on Congress to learn from its own mistakes and reject another major bailout that gives unfettered power to an unelected Washington bureaucrat, in the form of a ‘car czar’ to oversee a $14 billion bailout of the Big Three automakers.  Senator Inhofe has also been an outspoken critic of the $700 billion bailout and its administration by Treasury Secretary Hank Paulson, and will continue working to represent the majority of Americans who oppose this near-nationalization of industry. Senator Inhofe has introduced legislation, S.3683 and S.3697, to freeze unexpended expenditures of the first $350 billion installment of the $700 billion and require an affirmative vote of Congress to access the remaining $350 billion.  The following are excerpts of Senator Inhofe’s speech:

 “In Congress, we are currently considering an irresponsible $14 billion bailout of the Big Three auto manufacturers,” Senator Inhofe.  “This legislation empowers one unelected bureaucrat, which has come to be known as the ‘car czar,’ to spend money how he sees fit to keep the auto companies afloat and make the U.S. government part owners of the companies.   

“There are no provisions in the language that specifically direct the car czar to take any specific restructuring actions, such as renegotiating union contracts which has led to nearly a doubling of the cost per worker for the Big Three auto makers compared to their foreign competitors here in the U.S.  The ‘car czar’ will also be empowered to dictate how these companies are to structure and run their business.  This is a bureaucratic, command and control approach to industrial policy in lieu of market forces and Chapter 11.  I believe it only delays critical business restructuring decisions. 

“Why do we now believe that government bailouts and government ownership of shares of these companies without a clear idea of what these companies will do to significantly alter their business models, at least until well into next year, is going to be a successful venture?  The history of even the last couple decades clearly shows that the approach we are considering in this legislation has a track record of waste and failure.  We need to ask ourselves:  Are we not simply throwing good money after bad?  More importantly, are we not simply throwing taxpayer dollars down the drain? 

“I cannot and will not support Congress using taxpayer dollars to bailout yet another industry, and I think we were in this same situation not too long ago with the massive $700 billion financial bailout legislation.  This Congress has set an extremely dangerous precedent. 

“This has been and will continue to be a difficult time for all Americans.  The unwinding of past mistakes is never a pleasant process.  These auto companies have very difficult decisions to make, but no one can argue these circumstances and subsequent tough decisions have been a long time in the making.  However, many of us believe additional government attempts to only patch the situation for the moment will not only be futile, but will also move this country further from those first principles that have made us the great nation we are today.” 

Full Remarks as Prepared for Delivery: 

Mr. President, we are now considering a $14 billion bailout of the Big 3 auto manufacturers.  This legislation empowers one unelected bureaucrat, which has come to be known as the “car czar” to spend money how he sees fit to keep the auto companies afloat and make the U.S. government part owners of the companies. 

 

However, this bill simply makes the U.S. government and U.S. taxpayers part owners of these companies.  There are no provisions in the language that specifically direct the car czar to take any specific restructuring actions, such as renegotiating union contracts which has led to nearly a doubling of the cost per worker for the Big 3 auto makers compared to their foreign competitors here in the U.S.

 

The car czar will also be empowered to dictate how these companies are to structure and run their business.  This is a bureaucratic, command and control approach to industrial policy in lieu of market forces and Chapter 11.  I believe it only delays critical business restructuring decisions.

 

I read an article from the New York Times from mid-November.  It was titled “A British Lesson on Auto Bailouts.”  It briefly discussed the British treatment of the Leyland automobile in the 1970’s and 1980’s.  The article reported that the British government ultimately spent $16.5 billion (in U.S. currency equivalent) to bailout the British Leyland.  The article quoted a top official of the Thatcher government which reluctantly but ultimately backed the bailout.  He said, “I’m not telling the U.S. what to do, but the lessons of the British experience is don’t throw good money after bad.  British Leyland carried on for a few more years, but they’re not there now, are they?”  No, Mr. President, they are not.  They are bankrupt after burning through all their taxpayer bailout dollars.

 

Why do we now believe that government bailouts and government ownership of shares of these companies without a clear idea of what these companies will do to significantly alter their business models, at least until well into next year, is going to be a successful venture?  The history of even the last couple decades clearly shows that the approach we are considering in this legislation has a track record of waste and failure.  We need to ask ourselves:  Are we not simply throwing good money after bad?  More importantly, are we not simply throwing taxpayer dollars down the drain?

 

In the New York Times, just a few days ago, Jeffrey Garten, who served as undersecretary of commerce during the Clinton Administration and now is a professor at the Yale School of Management was quoted saying, “We’re at this moment in history, in which the Chinese are touting that their system is better than ours with their mix of capitalism and state control and our response, it looks like, is to begin replicating what they’ve been doing.”  That is something that should concern us all, and I know concerns the American people.

 

Mr. President, I cannot and will not support Congress using taxpayer dollars to bailout yet another industry, and I think we were in this same situation not too long ago.

 

One unelected bureaucrat administering a massive new government program with taxpayer dollars buying ownership into an industry.  I think we have all heard this one before, and I know the American people have heard this one before and have spoken loud and clear against it.

 

Of course, I’m talking about the massive $700 billion financial bailout legislation.  Treasury Secretary Paulson came before Congress and said that if he wasn't immediately empowered with his plan to buy $700 billion worth of troubled assets we would all be held responsible for the cataclysmic consequences of not "doing something."

 

But then the plan changed.  The plan not longer focused on troubled assets anymore. The new plan was taking positions in major banks.

 

Then we learned that the plan to buy troubled assets had been entirely abandoned and that we should stay tuned for the new plan involving consumer credit markets.

 

Then we learned that the new plan is no plan for the remaining $350 billion of the original $700 billion. 

 

We now know that Secretary Paulson is debating whether to ask Congress for the second $350 billion, but the Government Accountability Office released a report pointing to a number of problems in the administration of the program.  

 

Congress gave Secretary Paulson the $700 billion in two installments of $350 billion. The first has largely been used (perhaps $15 billion remains now) and the second has not. If the financial markets, though still troubled in many ways, are much more stable as the U.S. Treasury and specifically Secretary Paulson claims, Congress needs to remove the authority for the second $350 billion dollar installment or at least vote again given the massive changes in the program and debate about even the need for the second $350 billion.  At the very least, we need to ensure that any plans for accessing the remaining $350 billion needs to be fully debated in Congress and subject to an affirmative vote in both houses. 

 

I have authored two bills, S.3683 sponsored by Senators Sanders, Barrasso, Wicker, DeMint, Roberts, and Vitter to freeze unexpended expenditures of the original $350 billion and require an affirmative vote of Congress to access the remaining $350 billion.  I have also authored S. 3697, sponsored by Senators Barrasso and Coburn which does the same thing on the remaining $350 billion – requiring an affirmative vote of Congress to access those funds.  Currently, the financial bailout legislation states that unless Congress disapproves within 15 days, the Secretary may use the additional $350 billion.  We need to shift that burden.  Congress must reconsider whether granting an additional $350 billion is appropriate given the changes in the program and how the funding is to be used.

 

This Congress has set an extremely dangerous precedent, but as I have said before it also has a chance for redemption.  Doing so just might help the American people have a little more confidence in the integrity of our institutions and the common sense of our leaders.  I believe that by far the greatest threat to economic growth and prosperity in the years to come is the extent to which the government has recently entangled itself in the marketplace.  The government must immediately begin the process of extricating itself from the financial sector of our economy.

 

This has been and will continue to be a difficult time for all Americans.  The unwinding of past mistakes is never a pleasant process.  These auto companies have very difficult decisions to make, but no one can argue these circumstances and subsequent tough decisions have been a long time in the making.  However, many of us believe additional government attempts to only patch the situation for the moment will not only be futile, but will also move this country further from those first principles that have made us the great nation we are today.

 

 Related Links: 

INHOFE OUTLINES CONCERNS ON AUTO BAILOUT BILL

Hostile Green Takeover: The Auto Industry Faces Environmental Thuggery

Senator Inhofe Delivers Floor Speech on Halting Handout of Bailout Funds

 Inhofe National Review Online Op-Ed: Take It Back   

###