December 10, 2008
WASHINGTON, D.C. – U.S. Senator Jim Inhofe (R-Okla.) today outlined his concerns with the Senate package to bailout the Big Three automakers.
“The Democratic majority seems to believe D.C. politicians and bureaucrats are the best suited to build the car industry of the future,” Senator Inhofe said. “A political solution to a business crisis is the wrong approach. Nationalizing industries in an attempt to save them has been tried before. The track record is abysmal.
“The legislation before us creates a ‘car czar’ to provide $14 billion in bailout funds to the Detroit Three automakers and oversee the long-term restructuring of the entire industry. 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 some type of Chapter 11 process. In meetings with associations that represent auto dealerships in Oklahoma, it was clear that they did not support the idea of a ‘car czar,’ because the prospect of a Washington bureaucrat telling the car manufacturers how to run their businesses and what kind of cars to make did not give them confidence in the future efficiency and viability of the industry. I am extremely pessimistic, to say the least, that having Washington get itself into the business of restructuring industries is going to be a successful experiment.
“Additionally, it seems to me that we are again making the mistake we made on the $700 billion bailout of the financial system by giving a single bureaucrat the ability to administer taxpayer bailout dollars more or less as he sees fit with only a nod and wink to ‘oversight.’ Therefore, just as I opposed the massive $700 billion bailout in October, I will be opposing the massive $14 billion auto bailout when it comes to the Senate floor.
“If Congress is going to provide bridge financing to the auto industry to keep it afloat, it seems to me that the right approach would be to have these companies make the hard decisions about long-term restructuring up front in return for a helping hand. This bill only extracts the promise of future long-term reform in return for taxpayer funding. Furthermore, if the ‘car czar’ does not stringently administer his duties under this bill, the assistance granted in it will quickly become a substitute for making the long-term restructuring decisions that are absolutely essential for the success of these auto companies. For example, there are no provisions in the language that specifically direct the ‘car czar’ to take any specific restructuring actions, such as renegotiating union contracts or debt obligations. You don’t need a crystal ball to know that this is merely a down payment on future, more expensive bailouts of the car industry.”