Thursday, December 11, 2008

U.S. House Passes HR 7321, The Auto Industry Bailout Bill, 237-170; Alaska Congressman Don Young Voted Yes, Lisa Murkowski Still Opposed

The $14 billion auto industry bailout bill finally came up for a vote on December 10th, 2008, and the U.S. House passed it by a 237-170 vote, with one member voting "Present". Among the Yeas - Alaska Congressman Don Young. Since this post was first published, the Anchorage Daily News has reported that Don Young issued a press release in which he said that he felt it was the right thing to do, and that a collapse of the auto industry could imperil 3,600 jobs in Alaska (car dealers and parts outlets). Young also asserts that the automaker loan will not benefit extravagant CEOs.

Click HERE for a complete list on how all U.S. House members voted. Media stories from CNN Money, the New York Times, the Washington Post, and the Detroit Free Press.

The 37-page bill is designated HR 7321 and entitled "The Auto Industry Financing & Restructuring Act". Under the legislation, the federal government would provide emergency low-cost bridge loans to two of the Big 3 U.S. auto makers - General Motors Corp (GM) and Chrysler LLP. The third car maker - Ford Motor Co. is not asking for a bridge loan, but it is supporting the other two. In exchange for the funding, the companies would be obliged to come forward with a thorough restructuring plan by the end of March 2009.

The bill would create a "car czar" tasked with overseeing the restructuring of the car companies. This person would have authority to dictate terms if the auto manufacturers are unable to reach agreement with their labor unions, part suppliers, dealers, investors and debt holders. On December 11th, CNN Money published a categorical explanation of this bill in paragraph format.

The House voted to attach an amendment to the auto loan bill mandating that financial firms borrowing new money from the federal government through the Troubled Asset Relief Program would have to account for how much of that money was lent out to companies and individuals.

But passage in the U.S. Senate is problematic. Several Republicans criticized the pact for not forcing deeper changes at the automakers, especially in union contracts, and some questioned the auto industry’s repeated claims that bankruptcy would force their liquidation rather than a sustainable reworking of their business.

Senate Minority Leader Mitch McConnell (R-KY) said he hadn’t made a decision yet whether to back the proposal unveiled Wednesday and “couldn’t handicap” its level of support. A number of Republicans already were opposed to the idea of a rescue, and pledged to filibuster any plan following a meeting with Vice President Dick Cheney and White House chief of staff Josh Bolton.

Sen. Bob Corker (R-TN) also panned the bill. “This bill is an incredibly weak bill, it’s the product of an administration that wants to kick the can down the road, and I think it has minimal, very little support in our caucus,” said Corker. Corker and other Republicans said they would introduce an alternative Thursday that would require proof of cuts up front by automakers and unions or seek to amend the deal unveiledWednesday by Democrats and the White House. It was not clear when or whether the Senate might act; delays in the Senate could take several days to resolve, with backers needing 60 votes to succeed, including up to 20 Republicans.

Corker said he believed the bill has “less than a handful of votes” among Republicans. A key Senate Republican backer of the plan, George Voinovich of Ohio, urged his colleagues to vote for the plan, but admitted changes would be necessary. “I don’t think the votes are there on our side of the aisle,” he said.

But Sen. Debbie Stabenow (D-MI), representing a state extensively dependent upon the auto industry, urged Congress to act. “We cannot sit idly by and allow our manufacturing base to be decimated by the credit crisis,” she said. “In order to stay competitive in a global economy and preserve our middle class, we must make things in this country.”

How would Alaska's Senators vote? Lisa Murkowski has previously been on record as opposing a bailout of the auto industry, but her opposition may be softening. Ted Stevens hasn't committed himself publicly yet.

This would actually be the second bailout of the auto industry in three months. On September 30th, 2008, a $25 billion bailout package for the industry was passed. If we grant them another bailout, it'll be like giving an alcoholic another bottle of gin - they'll be back for more.

I say no bailout. In the past companies confronted with huge red ink threatening shutdown have worked with their unions to save the business, but because we are in this new era of bailing everyone out the manufacturers and the unions are looking to the American taxpayer to support this failing business model. It is not right.

Congress should not bail out Detroit this time. Bankruptcy is the answer. It will allow the manufacturers to restructure their labor agreements so they can make a profitable car. If instead they get another bailout, UAW will be held harmless and Detroit will continue to make cars that cannot compete in this market. It will ultimately result in more bailouts.

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