Better late than never: McConnell assails auto bailout, failure subsidies; Update: Corker amendment link added
Act II of Kabuki Bailout Theater begins.
GOP Sen. Mitch McConnell finally discovers that subsidizing failure is a bad thing.
His Senate floor statement today (should I make it Duh of the Day?):
“These are turbulent times for the U.S. economy. Over the past several months, Americans have seen giant companies fail, significant job losses, and, after unprecedented problems in the credit markets, the frightening prospect of total disarray within our nation’s Main Street economy.
“The crisis in the credit markets came at us quickly. We were told that urgent government action was needed in order to shore up the broader economy — and that failure to act would lead to a complete collapse of consumer credit, the very lifeblood of our nation’s economy.
“Under ordinary circumstances, I would have opposed such a measure. Government intervention in the marketplace cuts against all my ordinary impulses. But this was not an ordinary event. I, and many others, believed that extraordinary action was needed to protect millions of ordinary Americans from the colossal and far-reaching mistakes of a few. And action was taken.
“The systemic breakdown that some envisioned has not occurred, so there is reason to believe that the medicine has had some effect. But, on the whole, the overall economy continues to struggle. Some industries have been hit harder than others. And one of them is the auto industry.
“The problems in the auto industry have been long in the making. But last month the situation grew so dire that American automakers came to Washington with an urgent appeal for federal help. Over the past few weeks, lawmakers have taken the time to examine the problems at these companies and the solutions that they have proposed. And now the American taxpayers are being asked to put their money behind a plan that is aimed at helping these companies survive.
“Republicans received that plan late yesterday morning. We reviewed it closely to see if it meets the criteria that I have laid out repeatedly for taxpayer-protections and an effective strategy for securing the long-term viability of these companies. In the end, I concluded that it does not.
“In some ways, the proposal that was worked out by the White House and Congressional Democrats appears tough. It calls on struggling auto companies and autoworkers to make the sort of sacrifices they have not been accustomed to making in the past. It also includes time limits as a way of hastening necessary reforms. But in reality, this proposal isn’t nearly tough enough.
“A primary weakness relates to the so-called ‘Car Czar,’ who has nearly unlimited power to allocate taxpayer dollars but limited ability to force the kinds of tough concessions that long-term viability would require.
“Another problem lies outside the proposal itself. And here I’m referring to the type of government action that’s being contemplated. Somewhat lost in the recent debate over the auto industry is the fundamental difference between it and the financial rescue plan that Congress approved in October. While that plan was intended to rescue the entire economy, this one is intended to save a single industry. That plan was intended to help everyone — from small business owners to college students; and every lawmaker who voted for it acted on the belief that that is what it would do.
“A failure to appreciate this distinction has caused a number of other industries and even a number of municipalities across the country to prepare their own proposals for a government rescue as all Americans weather the tough economy. It has also created the impression in some minds that the federal government is picking favorites, and that favored businesses get help while others don’t.
“A lot of struggling Americans are asking where their bailout is. They wonder why one business would get support over another. When it comes to the auto industry, many Republicans in Congress have asked these same questions.
“There are many principled reasons to oppose this bill. But the simplest one is also the best: ‘a government big enough to give us everything we want is a government big enough to take everything we have.’ This is as true for individuals as it is for business. It’s the primary principle on which American industry, including the auto industry, was built. And even in turbulent moments like this — perhaps especially at moments like this — it’s a principle well worth defending.
“Some argue that the effects of an auto industry collapse would be too acute and far-reaching for an already-struggling economy to bear. This is impossible to know. And even if we grant that these companies would fail without taxpayer help, we would still have to ask ourselves whether the proposal before us achieves the goal that everyone claims to embrace — namely, the long-term viability of ailing car companies — and, in my view, it does not.
“I have already enumerated some of the weaknesses in the plan. But in the end, its greatest single flaw is that it promises taxpayer money today for reforms that may or may not come tomorrow. And we would not be serving the American taxpayer well if we spent their hard-earned money without knowing with certainty that their investment would result in stronger, leaner auto companies that would not need additional taxpayer help just a few months or weeks down the road.
“We simply cannot ask the American taxpayer to subsidize failure.
“All Americans, including myself, are worried about the future of our nation’s automakers. These companies have a venerable place in the story of modern America. They continue to provide hundreds of thousands of jobs across the country, including nearly 50,000 auto-related jobs in my own home state of Kentucky.
“But many Americans are also worried about the prospect of the government intervening on behalf of some industries and not intervening on behalf of others — especially when there is no guarantee it that the interventions will work. They wonder when the spending stops. If I were to vote in favor of this bill, I would not have a good answer for them.
“The best route for the long-term viability of ailing car companies may be a rocky one. Government help is not the only option. It’s not even the best option. Long-term viability is still possible. But it’s only possible if these companies are forced to make the tough choices necessary for their survival.
“Senator Corker has proposed an amendment that would go a long way toward improving this bill. In keeping with the principles I’ve outlined, the Corker Amendment does not just encourage reform, it requires it. And it does so with crucial specificity. First, participating companies would be required to reduce their outstanding debt by at least two-thirds through an equity swap with bondholders.
“The Corker Amendment also requires that labor costs at participating companies be brought on par with companies like Nissan, Toyota, and Honda — not tomorrow but immediately — because it is delusional to think that a company which spends $71 per labor hour could compete with a company in the same industry that spends $49.
“The Corker Amendment would improve the liquidity and cash-flow of automakers by requiring that a portion of the payments made to union accounts consist of company stock.
“And finally, the Corker Amendment would require participating companies to file for Chapter 11 reorganization if any of these conditions aren’t met by a fixed date.
“The Corker Amendment forces necessary reforms, holds companies accountable, and assures taxpayers that these companies won’t be back for more. If legislative action were necessary, the Corker proposal would make many much needed and dramatic improvements to the underlying bill.
“I, like all of my colleagues, want the U.S. auto industry not only to survive but to thrive. And by cutting costs, streamlining production, increasing fuel efficiency, and investing in new technologies and attractive, more competitive designs, American auto companies will once again make cars that people all over the world will want to buy. Then Americans will be able to say again with pride that our cars are the best.
“In addition protecting the taxpayer, this is a goal that Republicans have been fighting hard for in this debate. And in my view, it’s a goal that is well worth our efforts.”
***
Here’s the text of the Corker amendment McConnell backs.
See what others have said
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Trackbacks
- Grand Theft Auto Bailout: Capitol Hill « JoHNBRoDiGaNDoTCoM
- McConnell Fighting for the American Taxpayer…Finally « Trust, But Verify
- Detroit Bailout Appears Doomed, For Now | Blue Grass, Red State
- Mitch McConnell: No | Jeffrey A. Setaro
- What got into McConnell? | skewred.com
- Is Paul Ryan Irrelevant Yet? « The Forum
- The Twin Cities Daily Liberal » Republicans’ vote against auto rescue is hypocrisy, plain and simple
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Wait. Didn’t McCain get 86 million in public campaign financing?
It is this simple: What will we do with all those cars that NOBODY wants? Our politicians don’t even ask that question. Bankruptcy will.
How about the Chicago Public School?
No, the plan’s greatest single flaw is that it is unbridled COLLECTIVISM.
AIG is getting what? The big three are getting what? We are looking at trillions in bailout and our reps are blathering about a few billion to the auto makers? This is nothing but GRANDSTANDING – sorry.
chap,
really, you can do better.
I can’t believe GM is still going under after Oprah bought all those crappy G6s to give away.
Enough of this charade: do a pre-pack bankruptcy and get it over with. Yes, the short-term pain will be severe — although I’m not sure how much worse it can get — because, among other things, consumers will be wary about buying a car from a company in bankruptcy (“who will service my car and honor my warranty if the company goes out of business?”). But this problem can be minimized by making clear that the bankruptcy is to reorganize, and not go out of business. Plus, to the extent Congress feels a need to do SOMETHING, it can guarantee consumer’s warranties. Seems to me that would be far cheaper than the bottomless bailout hole they’re currently considering.
Did i miss something? Is he already filibustering? He couldn’t possibly believe this…Not Mitch “Political Windsock” McConnell.
Note to GOP – Get some NEW leadership and retire these ‘has beens’.
WAIT. Didn’t obama the fraud promise to take only public campaign financing??
chap,
of course, I have been told I am high today so, I like it after reading it a few more times!
I know. Good thing he lied, huh?
LOL @ chap.
:hands him a bottle of vodka:
You earned it!
Then why do they keep taking my tax money and pouring it into welfare, thus, subsidizing failures?
Well, Chappy, he’s just getting warmed up. If you liked that lie, you ain’t seen nuthin’ yet!
That’s it in a nut shell.
Bumper sticker for the bailout debate.
Conservatives are supposed to oppose the growth of government, so to oppose nationalizing the auto industry is consistent. if they would have grown a pair last september when they contemplated the insurance/bank bailout they would have a lot more credibility. new york is OBVIOUSLY more important than michigan/ohio.
Good to know what to expect from obama the fraud!!! If pressed, he will not keep his word.
we have been subsidizing failure in the public school system for over 50 years. we are always subsidizing failure with tax money, by definition, if it were profitable and successful, private enterprise would do it. private equity OWNS chrysler, but won’t put their money into it, they need taxpayer money, because they know it is a loser.
Better late than … I thought the point of Senate leader was to lead.
Don’t amend it, defeat it!
WrshpMzshn – You got it right. Government has no business in this. If they want to help, repeal the corporate tax, the Fuel standards, and the rest of the crap to force us into cars we don’t want.
How can Congress justify bailing out the Big 3 automakers, while not bailing out Toyota, Honda and BMW, which also build cars in this country and employ tens of thousands of American workers?
Celebrating fraud and dishonesty. It’s the liberal way.
Because the UAW doesn’t have an interest in Toyota, Honda and BMW.
This is not a big 3 bailout, it’s a UAW bail out. Chapter 11 would force major concessions by the UAW.
The amendment is good, but defeat and the immediate path to Chapter 11 would be better; Senator Corker should watch his back; UAW President Ron Middlefinger and his union thugs will surely want to set up a meeting with him to “talk” some sense into him!
Basicly we can give them our money willingly and drive home in a car, or be forced to give them our money and get nothing.
http://thelibertyzone.com/2008/12/10/awesome-gm-advertising.aspx
Har Har Har….
Yes he did Chapoutier ..and just look at how successful he was during the 2008 election…this is why I always check NO on that insipid question on whether or not to finance the presidential election.
Far better, can’t wait to hear from the UAW.
Don’t people voluntarily check the box on their tax form?
As a memeber of the UAW, I hope Corker should tell Ron middlefinger to f%&k off…
How did I get to be a member of the UAW? Some genius decided that students who work in laboratories and machine shops on UW campus should be unionized…Let’s see… you are protecting a job that is really an educational internship which does not provide benefits by nature but you get to pay dues to the union while you struggle to make ends meet…and help someone else get paid $30 or so to sit on their butt when no one wants your product…only a liberal could agree that he above is a rational idea.
The only thing propping up that floating piece of waste called Detroit is the auto industry. I say get off the toilet and finally flush!
The Corker amendment would add needed ketchup to the Crap Sandwich 3.0, but it would still be a crap sandwich. Furthermore, does anyone here think that the Dem majority will approve an amendment that takes dead-aim at the UAW? I’m not holding my breath.
I believe the box is a placebo, doesn’t really affect whether or how much a candidate gets.
**Breaking News**
Lindsey Grahamnesty is AGAINST this bailout!
Could DeMint be right? Could the bailout fever generate riots?
LOL. No wait. If that happens, they will disperse across the nation. Especially those in that rathole detroit, who will inevitably bring their entitelment mentality across the country once the remaining workers leave in search for new jobs (ie their municipal sugar daddy is bankrupt). Much like the california refugees inundating AZ, NV, CO, and Texas.
Juan must have given him the ok, ya know Lacey Grahamnesty can’t think and act on his own.
Saddest part for me is that my senators, Kay Bailey Hutchison and John Cornyn, haven’t had their “duh” moments yet. They are still “undecided” and “leaning”. Milquetoast makes my stomach turn.
I fear that the bailout will pass. If so one set of conditions that would make it somewhat OK for me would be a requirement that around 90% of the parts and materials used to make those parts must be American made and from American produced resources. And the workers must be US citizens.
Yah, a pie in the sky dream,I know.
Chap, the fact that you believe that (not disagreeing with you) underscores the fact that the government does not manage taxpayer money the way we might expect of them.
If we can’t trust how they manage public financing of campaigns, how can we trust them to make the right decisions on these bailouts.
Also, by your very example, they funded a process in which there would be at least one winning candidate. It’s not as though the funding was only for McCain.
Can the government guarantee one winning industry with these bailouts?
…didn’t think so.
They need to put a restriction on anyone (CEOs and Unions) receiving taxpayer bailouts is barred from making political contributions until they’ve fully repaid the taxpayers for the bailout costs.
Otherwise, this is just a scam to get taxpayers to pay for bailouts, of which a portion is kicked back as political contributions in support of more and bigger handouts.
Fox is reporting that “Senate Democrats sit down with Republicans in bid to salvage $14 billion auto bailout.”
More reaching across the aisle. I’m sorry but I don’t have any faith that Republicans will “stick to their guns.”
BOHICA.
#1 chap – that was funny I laughed. Here’s one for you..
“Wait, didn’t ACORN get public financing, too?”
Excellent point Dr. Fred!
To be fair, they were more successful than McCain.
The Corker ammendment is a joke. All this is about is finding a way to GIVE the UAW money. Once they get their hands on the money, the UAW will simply push it into their retirement funds and thumb their noses at congress and whomever the ‘car czar’ is. The next congress, and Obama, will come into power in January and hand them many more billions, like 200+, to buy those union votes Chicago style!
#47 — Exactly!!
Where are the penalties in this bill / amendment? Howzabout a little time in the pokey if the execs can’t meet their objectives? Think they (the Big 3) would agree to it then?
Didn’t think so…
“Submitted” too soon. As far as I’m concerned, the legislators and the executives (corporate and UAW) need to have a little skin in the game. Nothing that our legislators pass will have enough teeth in it to produce REAL change.
If I were a betting person – I’d bet that this week-end – the -Rs-will see the ‘light’ —as beamed from the R leadership – and vote FOR the auto Bail…..
Any takers…..?!
Forgive the length, but here’s the response I received from my Senator (Sen Mike Enzi) to my request that he support the filibuster and vote no on the bailout.
Incidentally, Mike is one of the few (if not the only) accountant in the Senate.
Give every taxpayer the same cash…10,000 plus dollars and, we will reignite the economy.