Thursday, December 11, 2008

Simpson Votes Against Auto Bailout

Washington– Idaho Congressman Mike Simpson voted against H.R. 7321, the Auto Industry Financing and Restructuring Act. During a time of economic crisis, supporting this flawed proposal, which showed no signs of allowing the domestic auto manufacturing industry to operate on its own merits long term, was irresponsible.

Fundamental restructuring is necessary for the Big Three domestic auto companies to be competitive and relevant in the future, and on December 2, they presented to Congress their plans for restructuring and stated that without a large amount of government financial assistance they would not survive through the end of the year. While the plans included laudable goals, too few details were provided as to how the companies will actually achieve the restructuring and the savings they have promised.

“We’ve been down this road before—in the early 1980’s Chrysler came to Congress requesting federal assistance and promising to change they way they did business,” Simpson said. “While Chrysler repaid their loan within three years, they never carried out the required restructuring. A generation later, Congress has apparently not learned its lesson, passing legislation that provides funding without ensuring real results.”

Instead of allowing the companies to be restructured through the processes outlined in law and emerge more competitive, H.R. 7321 would put government bureaucrats in charge of determining how these companies would operate in the future. In addition, the bill does not require any concessions by labor groups, even though high labor costs are a significant factor contributing to the Big Three’s financial woes.

“Like many Idahoans, I am very concerned about the sharp increase in unemployment that we’ve experienced in recent weeks,” Simpson said. “To help auto workers and their families, as well as those employed by companies that support the auto industry, the Big Three must become competitive again. But this bill does nothing to guarantee that the necessary restructuring will occur. Instead, it essentially nationalizes these private companies. This is a move I cannot support.”

Instead, Congressman Simpson supports the GOP Alternative for the Auto Industry, which allows the Big Three to become competitive again without risking taxpayer dollars. Under the GOP Plan, which provides temporary government insurance instead of a taxpayer-funded bailout, the Big Three must lock in the restructuring they have promised in a matter of weeks, not months or years. Congress should instead establish firm benchmarks and a tight timeline for restructuring. For example, such benchmarks will require that by March 31, 2009 each company should reach an agreement whereby:

The companies’ creditors agree to a framework to reduce each company’s indebtedness by at least 1/3.

The UAW holds to concessions already made and further:
Concedes the elimination of Supplemental Unemployment Benefits;
Concedes elimination of the Jobs Bank Program;
Agrees to either reduce company retiree health care obligations or otherwise convert a portion of such obligations into equity; and
Agrees to reduce wages and benefits to the levels paid by non-Big Three manufacturers.

“The challenges facing working families in Idaho are very sobering,” Simpson said. “In the midst of economic anxieties that our country has not faced for generations, they are struggling to pay their bills and worried about their job security, and employers are faced with laying off people right before the holidays or going out of business.

Congress must stop throwing taxpayer money at these problems, choosing a short-term political fix instead of long-term solutions. Instead, we must work to fix problems so that the free market can work and remove the barriers that make it difficult for American families to prosper.”

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