Senate Republicans Could Block Auto Bailout Compromise
December 8, 2008 - 6:51 PMWhile the Republican White House and the Democratic-controlled Congress are pushing hard for a bailout of the Big Three automakers, Senate Republicans are erecting numerous legislative roadblocks that could stall the $15 billion package for Ford, Chrysler and General Motors.
Sen. Richard Shelby (R-Ala.), ranking Republican on the Senate Banking, Housing and Urban Affairs Committee, said Sunday he would filibuster the makeshift proposal designed to keep the auto companies running at least until early next year before a more permanent proposal is in place.
“I think this is a bridge loan to nowhere,” Shelby said on Fox News Sunday. “This is a down payment on many billions to come. … We would like to save them. But they've got to save themselves. And I don't believe they’re willing to save themselves because they could be restructured the right way. And they don’t want to do that.”
When host Chris Wallace asked Shelby if Republicans would filibuster, Shelby said, “Well, I would — I think we need to debate it. And that’s what filibuster is about. And this week would be a good time to do it. I hope that we will be able to have an extended debate on it. We’ll see what happens.”
Other Republican senators stopped short of a filibuster pledge but have expressed skepticism, meaning it could be President George W. Bush’s own party that would lead the effort to block what could be his last major initiative before leaving office next month.
Sen. Jim Bunning (R-Ky.), also a member of the Senate Banking Committee, has expressed opposition to giving the automakers what he called a blank check in previous proposals. Bunning called on the Big Three to “reduce capacity, shrink the dealer network, eliminate some brands and produce cars Americans want to buy.”
In a statement late last month, he said, “I could support those federal loan guarantees so long as restructuring put the companies back on a path to long-term stability.”
“We haven’t seen the new language yet,” Bunning’s spokesman Mike Reynard told CNSNews.com. “Sen. Bunning had serious concerns about the initial $25 billion package.”
Sen. Bob Corker (R-Tenn.), also a member of the Banking Committee, said he was “disappointed in the plan that is being developed between House Democrats and the White House.”
Corker, in a statement on Saturday, said nothing about supporting a filibuster.
However, he said any plan should include bringing wages for America’s highly paid autoworkers in line with companies such as Nissan and Volkswagen and that the United Auto Workers must agree to do away with payments to workers who are still getting full compensation up to four years after their jobs have ended.
“These are the same types of conditions a bankruptcy judge might require to ensure that these companies become viable and sustainable into the future, and if they will agree to these terms then we have something to talk about,” Corker said.
“The process I have suggested would allow them to avoid the problems and stigma that accompany a formal bankruptcy, while forcing them to do the things they need to do to be successful companies,” he added.
Sen. James Inhofe (R-Okla.) would have to see the actual legislation before he would support a filibuster, Inhofe spokesman Matthew Dempsey told CNSNews.com. But Dempsey added that the senator has consistently opposed bailouts in the past.
“He is likely opposed,” Dempsey said. “Sen. Inhofe will wait and see what is in the package.”
White House Press Secretary Dana Perino said Monday it is very likely the White House and congressional leaders would have an agreement by the end of the day.
The auto companies had asked for $34 billion for long-term sustainability. The temporary funding plan is similar to what a Government Accountability Office (GAO) report issued Friday suggested.
The report said, “Given the significant financial risk the federal government may assume, the structure Congress sets up to administer assistance should provide for appropriate mechanisms, such as concessions by all parties, controls over management, compensation for risks and a strong independent board.”
The GAO report specifically said that if Congress proceeds with a bailout, it should “authorize immediate but temporary financial assistance to the auto manufacturing industry and concurrently establish a board to approve federal funds and continued oversight. This board could oversee any structural reforms of the companies.”
The White House won a victory over Democratic congressional leaders on how to fund the bailout.
Democrats gave up their fight to fund the automakers from funds out of the $700 billion financial bailout and agreed to the White House proposal of taking the loans to the auto companies from a $25 billion pot of money in a Department of Energy program initially designed for fuel-efficient cars.
“Indications are that the legislation is moving more towards what the president could support and if we're going to help the automakers, it's going to have to have a presidential signature,” Perino said. “We can't say for certain whether the legislation fully meets those principles, but we certainly are a lot farther along than we were last week.”
Specifically, she said Bush required that loans come from funds already appropriated, which would be the case with the Department of Energy money.
The House hoped to have a government panel established to oversee the automakers. Meanwhile, the White House wanted to install a financial viability advisor (FVA), a single person, to supervise the restructuring that would require a viability plan in exchange for the taxpayer money.
“This is a person who would be named by the president with the authority to negotiate a credible viability plan with automakers seeking assistance,” Perino said. “So, for example, if an automaker comes to the government seeking assistance, we will make short-term financing available, providing that the automakers and the stakeholders, like the UAW, agree to negotiate with the advisor in good faith and on a credible plan for long-term viability.”
“Near the end of that short-term period, the FVA will report on whether the automaker is executing a credible plan for long-term viability,” Perino continued. “If he or she determines that they are indeed – and progress is being made in negotiations – then additional assistance could be made available at that time.
“If the talks, however, are not headed in that direction and if that fails, then the FVA will submit an alternative viability plan that would involve restructuring through Chapter 11, and require automakers to repay the government the amount of their short-term bridge financing,” she added.