Hoyer Claims Congress ‘Specifically Authorized’ Obama to Bail Out Auto Companies—Even Though Congress Specifically Declined to Pass Auto Bailout Bill

June 3, 2009 - 11:17 PM
House Majority Leader Steny Hoyer (D.-Md.) said at his weekly press briefing yesterday that Congress "specifically authorized" the Obama administration to bail out the auto industry.

House Majority Leader Steny Hoyer (D-Md.)

(CNSNews.com) - House Majority Leader Steny Hoyer (D.-Md.) said at his press briefing yesterday that Congress “specifically authorized” the Obama administration to bail out the auto industry—thus legally justifying the government takeover of General Motors--even though the highly publicized and hotly debated auto bailout bill that Congress considered in December was defeated when it could not overcome a filibuster in the Senate.

Hoyer’s explanation of the legal authority for President Obama’s takeover of General Motors differed significantly from what Hoyer said at a press briefing on March 31, when he was asked by CNSNews.com where the administration got the authority to take money out of the fund set up to bailout the financial industry and give it to auto makers such as Chrysler and General Motors.  At that time, Hoyer said: “I don’t know technically where that authority would be.”
 
Hoyer contended Wednesday that Congress gave the president the power to buy a 60-percent interest in General Motors in the $700 billion Troubled Asset Relief Program (TARP) that Congress passed in October for the specific purpose of buying troubled assets from “financial institutions,” which are defined in the law as banks, savings and loans, credit unions, insurance companies, brokerages and similar organizations.
 
“Well, Congress gave broad authority to the administration to use TARP funds and specifically authorized them to be used with respect to the automobile companies, as you know,” Hoyer said at the Wednesday briefing when asked by CNSNews.com where the administration got the authority to take 60 percent ownership in General Motors without direct congressional action to authorize that act.
 
In October, Congress passed the Emergency Economic Stabilization Act of 2008, which created the Troubled Asset Relief Program (TARP), providing $700 billion for the Treasury Department to buy assets from “financial institutions.”  The law said nothing about purchasing anything, let alone ownership interests, from manufacturing companies such as General Motors.
 
What it did say was that the treasury secretary was “authorized to establish the Troubled Asset Relief Program (or ‘TARP’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution.”
 
Two months after TARP was enacted, Congress considered separate legislation to authorize the administration to bail out the auto industry.  This bill, sponsored by House Financial Services Chairman Barney Frank (D-Mass.), was entitled the “Auto Industry Financing and Restructuring Act.” It was presented as a necessary piece of legislation to authorize the government to provide funding to distressed U.S. auto manufacturers while they planned the restructuring of their operations.  The bill was hotly debated in both the House and Senate and also in the national media. It passed the House, but was blocked in the Senate by a filibuster and never became law.
 
After it failed, President Bush unilaterally took $17.4 billion out of the TARP funds appropriated for “financial institutions” and used it to make “bridge loans” to Chrysler and General Motors. The move was criticized at the time by observers on both the right and the left, who called it illegal and unconstitutional because the funds were not appropriated by Congress for the purpose that Bush used them for.
 
At his Wednesday briefing, CNSNews.com asked Hoyer how the Obama administration was able to spend additional tax dollars now in order to take a 60 percent ownership stake in General Motors without first getting direct congressional authorization to do so.
 
“Well, Congress gave broad authority to the administration to use TARP funds and specifically authorized them to be used with respect to the automobile companies, as you know,” said Hoyer.
 
“I think the Congress’s view on both sides of the aisle is that this is not something that the Congress would have chosen to do,” Hoyer continued. “Congress and the administration were confronted in the latter part of last year and the beginning of this year with a financial crisis and with a crisis in automobile industry and with a crisis in the economy overall. You know, what we’ve done in financial, AIG, obviously very, very substantial and other financial institutions. With respect to the automobile companies I would reiterate that every member of Congress would a) hope that this is a short-lived position that we find ourselves in, that the automobile companies will rebound, save the jobs that they have—and, in fact, grow additional jobs, save suppliers.  We’re concerned about the dealers, I might add, and that we would get out of the business of having a substantial equity ownership.”
 
CNSNews.com followed up by asking Hoyer if members of Congress envisioned when they were voting for TARP that the administration would use the program to buy a 60 percent ownership stake in an auto company.
 
“I can’t speak for everybody in Congress as to exactly what they envisioned,” said Hoyer, “but there is no doubt that Congress, both under President Bush and under President Obama, knew that it was giving to the Bush administration and the Obama administration broad discretion to try to meet the economic crisis that confronts us, to try to stanch the hemorrhaging of jobs, to try to get our economy stable and growing. So I think there’s no doubt that there was an expectation that it would be a broad exercise of that authority.”
 
At his March 31 briefing, Hoyer did not express the belief—as he did Wednesday--that Congress “specifically authorized” TARP funds “to be used with respect to the automobile companies.”
 
Then Hoyer said that the Obama administration believed it had the power to use TARP funds on the auto companies, but that he did not know where that authority came from.
 
“The administration clearly believes it does have the authority to use some of the remaining TARP funds for the automobile industry,” Hoyer said March 31. 
 
“I don't know, technically. I would be kidding you to mouth some words on that, because I don't know technically where that authority would be,” he added. “But my own view is that if it is perceived they don't have that authority and it is perceived by the Congress they need to have that authority, the Congress would probably be willing to give that authority. But I don't know technically the answer to that question.”
 
Enacting new legislation, of course, would require gathering the 60 votes in the Senate necessary to overcome a filibuster that the auto industry bailout bill in December failed to do.
 
At the White House on Tuesday, presidential spokesman Robert Gibbs told CNSNews.com that the administration believes that the purchase of a 60 percent ownership stake in General Motors is justified by the TARP financial industry bailout bill.
 
“Well, I think the money is based on the Troubled Asset Relief [Program], and is related to money that was approved in the prior administration through that program to deal with, as they had in the past administration, they were dealing with loans to cover--basically to bridge the operating costs,” said Gibbs.