Friday, December 12, 2008

Auto Bucks Stop On President Bush's Desk

Dec 11: A late night procedural cloture motion vote requiring 60 votes, on H.R. 7005, the Alternative Minimum Tax Relief Act of 2008, to provide assistance to Ford, GM and Chrysler, was rejected in the Senate by a vote of 52-35, with 12 not voting [See WIMS 12/9/08]. The House had approved a $14 billion assistance package on December 10. President Bush, who had agreed to, and was actively supporting the House-approved bill, is now the last stop for the failing U.S. automobile industry. The President can still authorize or direct the use of already approved funds under the Troubled Assets Relief Program (TARP). In the past few days of negotiations with House Democrats, the White House has been insistent that auto industry funding must come from the so-called, Section 136 account created at the Department of Energy and intended to help automakers retool, to become more energy efficient. That option is now not available, and the only apparent source of funds for the auto industry is the TARP funds, or perhaps funding from the Federal Reserve. The White House reportedly has said it will consider the TARP funding.

Following the vote, House Speaker Nancy Pelosi (D-CA) issued a brief statement saying, “The House-passed bipartisan legislation protects taxpayers, preserves environmental standards and places tough accountability measures on the auto companies to help ensure their long term viability and competitiveness. The House-passed bill demanded deep concessions from all parties -- the executives, shareholders and the union. Senate Republicans’ refusal to support the bipartisan legislation passed by the House and negotiated in good faith with the White House, the Senate and the automakers is irresponsible, especially at a time of economic hardship. The consequences of the Senate Republicans’ failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry unless the President immediately directs Secretary Paulson to explore other short-term financial assistance options, including TARP and those available to the Federal Reserve. That is the only viable option available at this time.”

U.S. Senate Republican Leader Mitch McConnell (R-KY) issued a statement saying, “This has been a challenging exercise for everyone involved on both sides. We all remember, just a couple of months ago, we were called upon to rescue the American financial system. At the end of the day, after a few fits and starts, 74 out of 99 senators present thought it was a good idea to do that. . . Now we've moved into a very tricky and challenging area and that is a sort of industry by industry rescue. And we've had before us the whole question of the viability of the American automobile manufacturers. None of us want to see them go down but very few of us had anything to do with the dilemma that they've created for themselves. . .

“The Administration negotiated in good faith with the Democratic Majority a proposal that was simply unacceptable to the vast majority of our side because we thought it, frankly, wouldn't work. Into this breach stepped the Junior Senator from Tennessee who, I must say, has made an extraordinary impact in a very small amount of time. I’m hard-pressed to think of another member who's been here such a short period of time who's made such an impression on colleagues on both sides of the aisle by mastering an extraordinarily complicated subject and being able to explain it in a way that is understandable.

“And he has diligently pursued an agreement that could pass, that could enjoy broad support on both sides. And he has made great progress in that direction. The sticking point that we are left with is the question of whether the UAW is willing to agree to a parity pay structure with other manufacturers in this country by a date certain. And I understand their reluctance to do that. So far in the discussions that Sen. Corker [Bob Corker, R-TN] and Sen. Dodd and others have had, they have not been willing to give a date specific by which parity could be achieved. It is upon that issue that we’ve reached an impasse for the moment.”

Today (December 12) the White House issued a statement saying (complete verbatim), "It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future.

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary -- including use of the TARP program -- to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time. While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable."

Access the Senate roll call vote details (
click here). Access a White House press briefing explaining the Administration's position on the auto funding assistance (click here). Access a release from the House Speaker (click here). Access a statement from Senator McConnell (click here). Access a floor speech and video on Senator Corker's alternative legislation (click here). Access the 12/12/08 statement from the White House (click here). Access legislative details on H.R. 7005 (click here). [*Energy, *Air, *Climate]