CNSNews.com - Auto Industry Bailout Might Be ‘Another Bridge to Nowhere,’ GOP Congressman Says

CNSNews.com

Auto Industry Bailout Might Be ‘Another Bridge to Nowhere,’ GOP Congressman Says
Monday, December 08, 2008
By Josiah Ryan, Staff Writer

House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., speaks during a hearing on the bailout of American automakers, Friday, Dec. 5, 2008, on Capitol Hill in Washington. (AP Photo/Susan Walsh)

(CNSNews.com) - Giving the Big Three automakers $34 billion in tax dollars could end up being “another bridge to nowhere,” Rep. Scott Garrett (R-N.J.) said at a congressional hearing Friday that featured testimony from General Motors CEO Rich Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli.

The automakers appeared before the House Financial Services Committee a day after appearing in a Senate committee to plead for $34 billion in taxpayer money which they say they need to prevent their companies from going bankrupt.

House Financial Services Chairman Barney Frank (D-N.Y.) opened Friday’s hearing by saying there would be a “disaster” if the government failed to bailout the auto industry.

But Garrett was not so sure.

“I think all we are really doing is kicking the can down the road and delaying the day of reckoning at the expense of the taxpayer,” said Garrett. “My concern is to make sure this is not another bridge to nowhere.”

Frank cited the 6.7 percent unemployment rate for November that was announced on Friday as evidence for his own argument in favor of the bailout.

“For us to do nothing, in the midst of the worst credit crisis and worst unemployment crisis in decades would be a disaster," said Frank.

Rep. Jeb Hensarling (R-Texas) argued that the national economic crisis would not be solved by federal bailouts.

“Every industry in America is hurting,” said Hensarling. “Show me one that isn’t. Show me one that wouldn’t become more viable and more profitable with an extra $34 billion.”

Rep. Brad Sherman (D-Calif.) said lawmakers should forget “pristine capitalism” and instead follow the lead of other countries and use the federal government to prop up the auto industry.

“There are some who are concerned that this [bailout] is a departure from pristine capitalism,” Sherman. “But we don’t live in a world of pristine capitalists. We don’t live in a world of pristine capitalism. We look at the subsidies provided by Japan, Germany, Korea and France to their auto industries, and we realize how insane it would be for us to go forward without a U.S.-based auto industry.”

Republican Policy Committee Chairman Thaddeus McCotter (R-Mich.), whose state would be hit the hardest by the collapse of the American auto industry, proposed an alternative plan that would prop up the automakers.

Under McCotter’s plan, the federal government would give the automakers a $25 billion bridge loan that would come from unspent Troubled Assets Relief Program (TARP) money and from the Department of Energy Section 136 (DOE) green energy innovation loan program.

President-elect Barack Obama, meanwhile, said on Wednesday that he is for a “viable auto industry” but that any government help should be “based on realistic assessments of what the auto market is going to be and a realistic plan for how we're going to make these companies viable over the long term."

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Bob5247 (1 years ago)

The new administration wants to target the middle class for government help. The average UAW employee for the Big 3 automakers gets in the neighborhood of $150,000 annually. And if laid off, they are paid 90% of that $150K!! I don't know about you, but that doesn't sound like the middle class workers I know. Yet, Obama's crew wants to bail out these incompetent CEO's and their overpaid workers. If that happens, these 'middle class' workers will continue to receive their inflated salaries, the industries supporting automakers will still pay their employees peanuts, and we will still have cars which get, at most, 30 MPG. The Big 3 will go through that 34 billion and be back with their hands out within a year. Let these scoundrels declare bankruptcy, reorganize sensibly, use already-proven technology to build fuel-efficient cars, and force the UAW to accept wages more inline with 'real' middle class workers.

paytheprice (1 years ago)

Sorry it is Ford $68 Billion unfunded healthcare retirements fund VEBA being managed by the UAW. GM and UAW negotiated a $35 billion dollar retirement fund from GM for special agreements to fund the other $15 billion.

paytheprice (1 years ago)

Why force more concessions from the unions. The Big 3 automakers has cut union memberships by 60% GM, with its $50 billion dollar unfunded pension liability accumalated over two decades has been given to the UAW to fund so the unions saved GM over $50 billion dollars in pension payments while the Fat Cats receive their full and fraudently earned and outrageous pensions and bonuses. LEARN accounting, finance and economics. THE FATCATS built auto manufacturing plants in MEXICO but WHY has over 30 million mexicans illegally emigrated to the US for better paying jobs. WE NEED THOSE JOBS RETURNED TO THE UNITED STATES. Ford has over $35 billion in unfunded pension liabilites and Chysler has over $20 billion in unfunded pension liabilities. UAW workers might need their full pensions anyway and YOU EANT to give the FATCATS federal money and more concessions from the UAW. REMEMBER ENRON!! The pension fund gauranty trust does not pay full retirement benefits maybe 50%

tridog (1 years ago)

Unless they force BIG concessions out of the unions - this bailout is only a bandaid. Chapter 11, as painful as it is in the short-run, is the better solution.

Elblogo (1 years ago)

House Financial Services Chairman Barney Frank (D-N.Y.) opened Friday’s hearing by saying there would be a “disaster” if the government failed to bailout the auto industry. Remember folks this is the man that said Fannie Mae/Freddie Mac were sound. The CEO's of these companies are coming to our so called CEO's (Congress) and asking for help and getting advice. This is not a disaster in the making it is a disater already made.Maybe we need to seek Hugo Chavez input while we are at it. Where is Forest Gump when you need him.

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