Washington has been abuzz lately with debate over possible federal action to save the American auto industry from financial collapse. American autoworkers and taxpayers deserve better than a taxpayer-funded bailout of the auto industry that simply guarantees failure. They deserve a plan that removes barriers and gives the industry a chance to be competitive again. I and some of my colleagues recently put forth a plan that would do this.
I opposed the recent bailout plan put forth by the Democrats who control Congress because I believe it is unworthy of American auto workers and unworthy of American taxpayers. It guarantees failure at taxpayer expense. If enacted, it would keep the American auto industry dependent on taxpayer money instead of giving auto workers the security of a viable industry that is back on its feet and ready to compete. It offers no guarantee that taxpayers will get their money back; instead it simply sets the industry up for further taxpayer-funded bailouts down the road. It would also put Washington politicians and bureaucrats in charge of the American auto industry – the same politicians and bureaucrats who racked up a $455 billion budget deficit last year.
American autoworkers and their families deserve better. A responsible plan should protect taxpayers and help auto workers and their families by allowing the Big Three to become competitive again. The plan I offered with my Republican colleagues would do this.
Our proposal, the American Automotive Reorganization & Recovery Plan, establishes firm benchmarks and a tight timeline for the companies’ restructuring. The Big Three automakers presented their plans for restructuring to Congress on December 2. Their plans included some worthy objectives, but no real details were provided with respect to how the companies would actually be restructured, or what the companies would do to ensure taxpayers get their money back. Our plan addresses this problem through benchmarks designed to ensure real changes are made that will allow the companies to get back on the path to prosperity.
Our plan also contains a process for reaching expedited agreements instead of nationalizing America’s auto companies. Because of the many legal and contractual hurdles to restructuring, the companies are urged to accomplish their restructuring through the use of a pre-packaged bankruptcy or another mechanism to bring all stakeholders to the table for an agreed-upon determination of their future. It is important that these stakeholders reach reasonable compromises amongst themselves. Creating a government bureaucracy or “car czar” to arbitrarily pass judgment on the thousands of details involved with a restructuring would effectively nationalize the auto companies.
Most importantly, our plan emphasizes the use of government-backed insurance, rather than relying on a taxpayer-funded government bailout that replaces private investment. We propose that the government provide insurance, funded by the participants with a modest FDIC-like fee, that would expire on March 31, 2009. This would help to unlock immediate private investment in the auto companies while protecting taxpayers and providing a strong incentive for the Big Three to move quickly with their restructuring.
Washington also needs to take responsibility for the wounds it has inflicted on the American auto industry and learn from its mistakes. Washington has contributed to the industry’s woes by imposing extreme environmental mandates, turning a blind eye to abuses that sparked a global financial meltdown, and failing to end our country’s dangerous dependence on foreign oil, leaving Americans vulnerable to the sort of wild price spikes that wiped out thousands of American jobs this year. Even now, some in Congress, including the new chairman of the powerful House Energy & Commerce Committee, are advocating legislation that would allow states to set their own auto emissions standards on top of the federal standards already in place. Such new standards would effectively bar American automakers from competing in states like California, destroying thousands of American jobs and hurting the industry at a time when the same lawmakers want to inject it with billions of taxpayer dollars. I hope President-elect Obama will stop such legislation from moving forward in the year to come.
Spending billions of additional federal tax dollars with no promises to reform the root causes crippling the industry’s competitiveness is neither fair to taxpayers nor fair to the millions of American families who depend on the industry for their economic well-being. Taxpayers and autoworkers deserve better than Washington’s flawed bailout. They deserve reforms that will let the industry compete again, without the heavy hand of government standing in the way.