36 Congressmen Ask Obama to Return Authority Over Auto Bailout to Congress--But White House Says Its Not Over-Reaching Its Power
May 28, 2009 - 8:05 PMThe White House is defending the work of the President's auto task force amid bipartisan criticism that the executive branch is exerting too much control over the automobile industry.
In December, Congress failed to pass a bill authorizing a bailout of Chrysler and General Motors. President Bush and now President Obama, however, proceeded with a bailout process even without legislative autority. That process has cost the taxpayers billions of dollars and given the Executive Branch unilitaral and unprecedented authority to control what happens to the two major auto companies.
“While we are mindful that time is of the essence, we are respectfully requesting that you return the Auto Task Force to its important advisory role to you and your Administration, but also return the Congress’ Constitutional legislative prerogatives before it further disrupts the lives of people who work at Chrysler or live in communities that depend on it,” says the letter.
The White House is defending the work of the President’s Auto Task Force and is insisting that the president has not seized unconstitutional authority over the matter.
The bipartisan coalition of congressmen who signed the letter to Obama are worried about the practicial economic consequences of the steps he has taken in the auto bailout as well as the constitutional implications for the role of Congress.
“We are grateful to you and your administration for the leadership demonstrated. However, decisions being made by the Auto Task Force, and in the bankruptcy proceedings in New York, are more than troubling,” the letter said, referring to the Chrysler bankruptcy proceedings.
On Thursday, General Motors reportedly reached a deal with bond holders and the Treasury Department to go into bankruptcy.
Because of decisions made by the task force, the letter says, 9,000 workers at Chrysler plants will lose their jobs and 789 Chyrsler dealers have been slated to shut down. Rep. Steven LaTourette (R-Ohio) who wrote the letter, said the GM bankruptcy could lead to 100,000 dealership-related jobs nationwide and the closing of 14 GM plants.
“The president is being ill served by the auto task force. They’re making decisions that I think are making a tough situation much worse,” LaTourette told CNSNews.com. “Now the president has off-loaded it and delegated it to this unelected and inexperienced – at least as far as the car business is concerned – automobile task force.”
“For a bunch of folks who say they don’t want to be in the day-to-day operation and don’t want to manage the old Chrysler and the new Chrysler into bankruptcy, they sure seem to be doing that – telling them how much they can spend on advertising, rejecting opportunities to avoid bankruptcy for both Chrysler and GM,” he said.
White House Press Secretary Robert Gibbs responded that the task force is not making direct decisions on employment, and said that 75 percent of auto dealerships remained open.
“These are decisions that are made by companies about what it is they believe is the best path toward renewed viability for their company,” Gibbs told reporters Wednesday. “If it weren’t for the task force on autos, and if it weren’t for the president's intervention, a hundred percent of those dealerships would be gone, a hundred percent of those plants would be closed.”
The letter states, “While we are mindful that time is of the essence, we are respectfully requesting that you return the Auto Task Force to its important advisory role to you and your administration, but also return the Congress’ constitutional legislative prerogatives before it further disrupts the lives of people who work at Chrysler or live in communities that depend on it.”
The Bush administration initiated the federal bailout of the auto industry with $17.4 billion in bridge loans going to Chrysler and GM in late 2008. Congress had rejected an auto bailout, so the Bush administration tapped the $700 billion Troubled Assets Relief Program (TARP), even though Congress had only authorized those funds to be used for financial institutions such as banks and credit unions.
Earlier this year, President Barack Obama expanded the program to include at least $1.1 billion toward covering the cost of Chrysler and GM warranties during the restructuring.
But members of Congress are concerned because the task force sets viability standards, allowing it to dictate terms to the auto industry. Rep. Thad McCotter (R-Mich.) said shutting Congress out leaves a worse deal for the taxpayers.
“In the 70s, we had the Chrysler bailout where the taxpayers were paid with interest because at the legislative level you had people representing all these interests bringing them together and forging a workable plan,” McCotter, who signed the letter, told CNSNews.com. “What you’re seeing with the Auto Task Force is what was once an advisory group is now in the process of driving the entire process, deadlines, and bankruptcies for Chrysler and with GM the increasingly likely bankruptcy. Who do they answer to? They do not directly answer to the citizens.”
McCotter is also displeased that the auto restructuring is being supervised through TARP, but said the law is so wide, he sees no legal conflict in using the TARP money. “It was wide as the Grand Canyon to allow the executive branch to do what it’s doing,” he said.
Gibbs said that the administration does have “a major role to play.”
“I think we are playing it in a way that is preserving and protecting as many jobs as possible, protecting as many communities as possible, and hopefully restructuring -- working to restructure an auto industry that has fallen on vastly hard times, and that we're doing all that we can to move that in a different direction,” Gibbs said.
Still, members of Congress faulted the president for saying that the Chrysler bankruptcy would “not disrupt the lives of people who work at Chrysler or live in communities that depend on it.”
“The White House auto task force seems to be pursuing policies that export the manufacturing base of the American economy,” Rep. Dennis Kucinich (D-Ohio) said. “Our economic strength and our national security are dependent on the automobile, steel, aerospace and shipping industries. We must protect and strengthen these vital industries.”
Further, the letter stated that employees made concessions across the country without knowing their plant would be closed.
Gibbs said Congress clearly has input in helping to revive the auto industry.
“Congress certainly is involved in auto decisions, obviously as it relates to setting fuel mileage standards that the President worked on last week, as well as proposals to create tax incentives to trade in older cars that aren’t doing as well on fuel mileage, to both increase auto sales and reduce our dependence on foreign oil,” Gibbs said.
“But I think the vast majority of members I think are appreciative of the efforts of the task force each and every day in order to keep as much as we possibly can in a viable auto industry here in America.”