Automobile Industry Crisis

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Mr. McCONNELL. Mr. President, these are, indeed, turbulent times for the U.S. economy. Over the past several months, Americans have seen giant companies fail, significant job losses, and, after unprecedented problems in the credit markets, the frightening prospect of total disarray within our Nation's mainstream economy.

The crisis in the credit markets came at us quickly. We were told that urgent Government action was needed in order to shore up the broader economy and that failure to act would lead to a complete collapse of consumer credit, the very lifeblood of our Nation's economy. Under ordinary circumstances, I would have opposed such a measure. Government intervention in the marketplace, frankly, cuts against all my ordinary impulses. But this was not an ordinary event. I and many others believed that extraordinary action was needed to protect millions of ordinary Americans from the colossal and far-reaching mistakes of a few. And action was taken. The systemic breakdown some envisioned has not occurred. So there is reason to believe the medicine has had some effect. But on the whole, the overall economy continues to struggle. Some industries have been hit harder than others, and one of them certainly is the auto industry.

The problems in the auto industry have been long in the making. But last month the situation grew so dire that American automobile makers came to Washington with an urgent appeal for Federal help. Over the past few weeks, lawmakers have taken the time to examine the problems of these companies and the solutions that have been proposed. Now the American taxpayers are being asked to put their money behind a plan that is aimed at helping these companies survive.

Republicans received that plan late yesterday morning, about this time yesterday. We reviewed it closely to see if it meets the criteria I have laid out repeatedly for taxpayer protections and for an effective strategy for securing the long-term viability of these companies. In the end, I concluded that it does not.

In some ways, the proposal that was worked out by the White House and congressional Democrats appears tough. It calls on struggling auto companies and auto workers to make the sort of sacrifices they have not been accustomed to making in the past. It also includes time limits as a way of hastening necessary reforms. But in reality, this proposal is not nearly tough enough. A primary weakness relates to the so-called car czar who has nearly unlimited power to allocate taxpayer dollars but limited ability to force the kinds of tough concessions long-term viability would require. Another problem lies outside the proposal itself, and here I am referring to the type of Government action that is being contemplated.

Somewhat lost in the recent debate over the auto industry is the fundamental difference between it and the financial rescue plan Congress approved in October. While that plan was intended to rescue the entire economy, this one is intended to save a single industry. That plan was intended to help everyone from small business owners to college students, and every lawmaker who voted for it acted in the belief that is exactly what it would do. A failure to appreciate this distinction has caused a number of other industries and even a number of municipalities across the country to prepare their own proposals for Government rescue, as all Americans weather the tough economy. It has also created the impression in some minds that the Federal Government is picking favorites and that favorite businesses get help while others do not. A lot of struggling Americans are asking where their bailout is. They wonder why one business would get support over another.

When it comes to the auto industry, many Republicans in Congress have asked these same questions.

There are many principled reasons to oppose this bill. But the simplest one is also the best--a government big enough to give us everything we want is a government big enough to take everything we have. This is as true for individuals as it is for business. It is the primary principle upon which American industry, including the auto industry, was built. Even in turbulent moments such as this--perhaps especially at moments such as this--it is a principle worth defending.

Now, some argue the effects of the auto industry collapse would be too acute and far-reaching for an already struggling economy to bear. This is impossible to know. Even if we grant that these companies would fail without taxpayer help, we would still have to ask ourselves whether the proposal before us achieves the goal everyone claims to embrace; namely, the long-term viability of ailing car companies. In my view, it does not.

I have already enumerated some of the weaknesses in the plan. But in the end, its greatest single flaw is it promises taxpayer money today for reforms that may or may not come tomorrow. We would not be serving the American taxpayer well if we spent their hard-earned money without knowing with certainty that their investment would result in stronger, leaner automobile companies that would not need additional taxpayer help a few months or weeks down the road. We simply cannot ask the American taxpayer to subsidize failure.

Now, all Americans, including myself, are worried about the future of our Nation's automakers. These companies have a venerable place in the story of modern America. They continue to provide hundreds of thousands of jobs across the country, including 50,000 auto-related jobs in my home State of Kentucky. But many Americans are also worried about the prospect of the Government intervening on behalf of some industries and not intervening on behalf of others, especially when there is no guarantee--no guarantee--that the interventions will work. They wonder when the spending stops. If I were to vote in favor of this bill, I would not have a very good answer for them.

The best route for the long-term viability of ailing car companies may be a rocky one. Government help is not the only option. It is not even the best option. Long-term viability is still possible, but it is only possible if these companies are forced to make the tough choices necessary for their survival.

My colleague, Senator Corker, has proposed an amendment that would go a long way toward improving this bill. In keeping with the principles I have outlined before in these comments this morning, the Corker amendment does not just encourage reform--it doesn't just encourage reform--it requires reform. It does so with crucial specificity. First, participating companies would be required to reduce their outstanding debt by at least two-thirds through an equity swap with bondholders. The Corker amendment also requires that labor cost at participating companies be brought on par with companies such as Nissan, Toyota--which I also have in my State--and Honda, not tomorrow but immediately because it is delusional to think a company which spends $71 per labor hour could compete with a company in the same industry that spends $49 per labor hour.

The Corker amendment would improve the liquidity and cash flow of automakers by requiring that a portion of the payments made to the union accounts consist of company stock. Finally, the Corker amendment would require participating companies to file for chapter 11 reorganization if any of these conditions--if any of these conditions--aren't met by a fixed date.

The Corker amendment forces necessary reforms, holds companies accountable, and assures taxpayers that these companies will not be back for more. If legislative action were necessary, the Corker proposal would make many much needed and dramatic improvements to the underlying bill.

I, similar to all my colleagues, want the U.S. auto industry not only to survive but to thrive. By cutting costs, streamlining production, increasing fuel efficiency, and investing in new technologies and attractive, more competitive designs, American auto companies will once again make cars people all over the world will want to buy. Then, Americans would be able to say, again, with pride that our cars are the best.

In addition, protecting the taxpayer is a goal Republicans have been fighting hard for in this debate, and in my view it is a goal that is well worth our efforts.

I yield the floor.

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