Mr. President, what is the order? Mr. President, I ask unanimous consent to speak for 20 minutes. Mr. President, I have to say we are now here, approaching Christmas, in a deepening recession. On December 1, the National Bureau of Economic…
Mr. President, what is the order?
Mr. President, I ask unanimous consent to speak for 20 minutes.
Mr. President, I have to say we are now here, approaching Christmas, in a deepening recession. On December 1, the National Bureau of Economic Research said that, in fact, the recession had begun in December 2007.
How many jobs have been lost in the last year? Almost 2 million jobs have been lost in the last year. So we are here today on the heels of a loss of 2 million jobs. The unemployment rate stands at 6.7 percent, and it is growing. In my State, it is 8.2 percent. Today, the Labor Department reported that initial applications for jobless benefits rose to 573,000, the highest number in 26 years.
So when I hear someone come to the floor and say: Gee, I didn't get all the language until a couple days ago and this is a problem; you know, sit down and read the language. We cannot afford to say we are not going to do something and act to turn around this recession because somebody didn't have the time to read the bill.
Consumer confidence has plunged to its lowest level since the survey began in 1967. Gross domestic product has dipped, personal spending decreased 3.7 percent in the third quarter, and according to the CBO-- the Congressional Budget Office--American workers lost more than $2 trillion over 15 months as the stock market decline devastated retirement accounts. Let me say that again. American workers lost more than $2 trillion over 15 months as the stock market decline devastated retirement savings accounts. So we are dealing with a crisis.
Compared to a year ago, U.S. foreclosure filings increased 71 percent in the third quarter. The Institute for Supply Management Index, which is a key gauge of U.S. manufacturing activity, fell to a 26-year low in November. Manufacturing activity fell to a 26-year low in November. Home prices, tracked by S&P's 20-city housing index, dropped 17.4 percent in September. That is a record--the fastest decline on record. Do you hear what I am saying? The job losses, the jobless claims, the foreclosures, the stock market, everything is going in the wrong direction. For people who don't know what the fundamentals of the economy mean, that is the fundamentals of the economy. That is the fundamentals--unemployment, housing prices, stock market, retirement incomes.
Construction spending fell by 1.2 percent in October, much more than what was expected--another fundamental of the economy. Construction of single-family homes plunged 4.6 percent from September. Sales at the wholesale level plunged by 4.1 percent in October. That is nationwide.
My State of California trails only Michigan in the total number of auto-related jobs. In fact, there are nearly 200,000 Californians employed by auto dealers, manufacturers, and wholesalers whose livelihoods are at stake.
At the Vehicle Accessory Center in Rancho Cucamonga, CA, 50 workers manufacture auto parts for GM cars.
The general manager, Russell Hoyt, writes that without a bridge loan to the Big Three, ``we run the risk of losing all of the gains we've made over the years to make our company more competitive and to build new technologies and cars that will benefit consumers and improve our nation's energy security.''
Gina Underwood, the controller of a Saturn dealership that employs 48 people in Ontario, CA, wrote to me about the impact the credit market is having on her business.
She says ``the potential trickle down into my community borders on catastrophic.'' She adds that ``helping our industry in the short-term will have a much lower cost than addressing the effects of a failed industry in the midst of an economic turnaround.''
The Los Angeles Federation of Labor says the decline in the auto industry is ``responsible for nearly 11 percent of California's job loss in the past year. It has also robbed millions of dollars from state and local treasuries that are responsible for funding some of our most crucial public services.''
The California chapter of the United Auto Workers writes that ``these loans will enable domestic auto companies to continue operations and will avoid putting thousands of people out of work.''
Mr. President, I ask unanimous consent to have printed in the Record the California recession figures.
Suffice it to say that 1.5 million Californians are out of work, and in the third quarter we had 79,000 foreclosures, more than triple last year's numbers. We have a State budget crisis, some of it emanating from this downturn, and we have to step up to the plate and do our part. Whether we live in a city, whether we live in a county, whether we work for the people as a member of a city council, whether we work as a county supervisor, whether we work as a mayor or a House Member or a Senator, all of us who work for the people have to step up to the plate.
I did something interesting, and it might be of interest to you. I worked with my staff. We have 58 counties in California and we got on the phone and we talked to the leaders of each of those counties and the 10 major cities in our State. We do have 38 million people in our State. They told us what is happening on the ground there, and it is not a pretty picture. Now, some of them are doing better than others. A lot of them are facing unemployment rates in their cities of 13 percent, 12 percent, and 9 percent. In the inland empire area, which is just east of Los Angeles, we have the highest unemployment rate in the Nation, about 9.1 percent.
So the point of my setting the stage for my remarks by giving a broad look at what is happening is to make sure people understand we are not taking up this auto rescue plan in normal times. If it was normal times, that would be one thing. I wouldn't be that sympathetic to the big three in normal times. I have had my arguments with them since the 1980s. I think their fighting California and the 19 other States that want better fuel economy is a huge mistake on their part, and I don't want to reward them for that. But I have to tell you, when you look at the times we are in, you recognize we need to bridge these troubled times right now, bridge these troubled times with a loan so we can take a look at this when we have a new President, a new Congress, and, frankly, when we begin to see a light at the end of this tunnel, which I believe is going to come when our new President comes to us in January and we start to put together a plan for economic recovery.
How tragic would it be if we lost this manufacturing base at this point in this recession, just as I do believe we are going to pull ourselves out of this mess we are in. We need a bridge to better times for the auto industry. By the way, other countries around the globe are doing the same for their auto industries. Because there are two things happening here. Detroit got in trouble because, in my view, they built those big cars, they didn't diversify their fleet, and they fought us on fuel economy. Believe me, I was in that fight against them every step of the way. They won that fight. But now they are losing at the end of the day because they made a mistake in fighting us.
But we don't want to lose this manufacturing base at this time. We would be the only industrialized nation in the world not to have a domestic auto industry.
When I hear my colleagues say I don't like this little sentence here or that sentence there, I understand that. Believe me, there are a lot of things in
these bills I do not like at all. But we have to step back and say, in these troubled times, unparalleled since the Great Depression, do we want to leave here and risk the chance that we could wake up without a manufacturing base in our great Nation? I say the answer is no.
I have three reasons for voting for this rescue package: Jobs, jobs and jobs. When we were hit with foreclosures, the first round of them, they had to do with predatory lending. They had to do with some things that were outrageous--people put in these subprime loans who could have been in prime loans. They woke up one day when they were paying $400 a month and suddenly it is $1,000 a month. They couldn't do it. We hope those loans could be restructured. That is one set of difficult circumstances for going into foreclosures. The far worse set of circumstances is when you lose your job and your family cannot make it. That is the thing I wish to avoid.
My focus is on this economy and making sure we are doing everything to save, preserve, and create jobs. With each passing day, we realize what a crisis we are in. Again, today we found out more people filed for unemployment compensation, a bigger number than we have seen in 26 years. When I heard we lost 533,000 jobs last month, it sent shivers up and down my spine. If we don't act, we risk seeing another 2 to 3 million jobs that could be at risk. We know even the collapse of one of the big three could cause that.
In my home State, we have 200,000 auto-related jobs, second only to Michigan.
At the Vehicle Accessory Center at Rancho Cucamonga, our general manager there writes that without a bridge loan to the big three:
We run the risk of losing all the gains we've made over the
years to make our company more competitive and to build new
technologies and cars that will benefit consumers and improve
our nation's energy security.
Gina Underwood, a controller at Saturn of Ontario, employing 48 people in Ontario, CA, wrote to me about the impact of the credit crisis. She says:
The potential trickle down into my community borders on
catastrophic.
She adds:
Helping our industry in the short-term will have a much
lower cost than addressing the effects of a failed industry
in the midst of an economic turnaround.
The Los Angeles County Federation of Labor says the decline in the auto industry:
. . . is responsible for nearly 11 percent of California's
job loss in the past year.
The California chapter of the United Auto Workers writes:
These loans will enable domestic auto companies to continue
operations and will avoid putting thousands of people out of
work.
I ask unanimous consent to have these letters printed in the Record.
Mr. President, the unemployment rate in my State, again, is 8.2 percent in California; 8.2 percent. It is rising. Losing another 200,000 jobs at this time is catastrophic. If we leave and we risk that, then it is our fault. The people who vote this way will have to answer to their own consciences. Failure to act is not an option.
Here's the thing, there is a huge cost of inaction. I understand my colleagues are very concerned about the cost to taxpayers. I share that concern. I never heard them talk about that when their States were giving all kinds of incentives to foreign car companies to come in. I will get to that later. But here is what happens in addition to the massive job losses if the big three fail. The burden on taxpayers to pick up the pieces would be much more costly than these loans. Losing GM, Ford or Chrysler would add billions of dollars in costs to the already depleted Pension Benefit Guaranty Corporation. Taxpayers would have to provide health care, unemployment benefits, and other related services. Unfunded health care liabilities would be forced into Medicare and Medicaid with costs reaching $50 billion. If the automakers file for bankruptcy, it could lead to a $108 billion loss to the Treasury because of reduced individual income.
My colleagues say let them go bankrupt, as if it is a magic solution. It is not a magic solution because the polls tell us 80 percent of the people will not buy a car from a bankrupt automaker because of obvious reasons. If you want to keep your car 3, 4, 5 years--I keep mine 9 or 10 years--you want to make sure you have the parts available to fix your car. You want to make sure you have someone who understands the car and can service the car.
This is not similar to a dress company going out of business and declaring bankruptcy. That is sad and it is tough but, you know, you are not going to worry about it. If you have a dress by someone and the company goes out of business, you are not going to be dealing with that manufacturer. You are if you buy a car. By providing $14 billion in loan authority now with requirements that the money be paid back, we are taking steps to protect taxpayers from at least $150 billion in future liabilities, should the auto companies shut down.
Then there are people who say isn't this the first of what could be many interventions? I can't predict that. I am just saying at this time, now, with what we know about the state of this economy, with what we know about the state of the lost equity in the market, with what we know about the state of housing, of construction, of the number of people filing--this the Christmas season. My goodness, let's take a chance on this. Let's take a chance on this.
The administration gave $150 billion to an insurance company. I never heard anybody at that time say: Well, the workers in that insurance company make too much money. That is the problem. You never heard a word about that from my Republican friends. Blaming the workers for this is outrageous. They have given back and they have given back and they have given back.
What would happen to the thousands of other associated businesses that rely on GM, Ford, and Chrysler if they went belly up? The big three share 80 percent of the supplier base in this country. If one of the companies goes bankrupt, these small- and medium-size businesses could lose significant revenue and be forced to make layoffs or close their doors.
I wish to talk about other countries taking significant steps to support their domestic auto manufacturing base. Countries throughout Europe and Asia are providing assistance to their auto manufacturers during this time of crisis. You take all the auto companies now--take Toyota. Their sales are way down. Everybody is hit by this recession. The question is, Do we abandon this manufacturing base? Credit markets are still frozen. For that, I have to say, and let me be clear--I don't understand what Mr. Paulson has done since we gave him that authority for $350 billion. Why are the credit markets still as frozen as they are?
The answer comes back: It could have been worse. I believe that. It could have been worse. But we need to do a better job there. Let me be clear, I am not voting--if I have to vote today, tomorrow, next week-- to release the next $350 billion to this administration. So let me put that on the line.
Other countries are recognizing that, with the credit markets frozen, they need to maintain their strong manufacturing base. We are the greatest country in the world. How could we ever continue our leadership if we lose that manufacturing base? I know Senator Stabenow has been quite eloquent on the point, about how integrated the manufacturing base is with our military and national defense infrastructure. The big three automakers are the biggest customers for many of the major suppliers of parts and technology for the armed services. From onboard computer devices to tires to engine machinery, these suppliers often rely on the big three to sustain their businesses.
I say to my colleagues on the other side who are taking the lead against this: Think about it. We all stand for a strong defense. If you lose this manufacturing base, whom are you going to rely on if we have more national emergencies, international emergencies? We know we cannot afford to lose this base.
I mentioned before that some of my colleagues on the other side--the Senator from Alabama, the Senator from Tennessee--they have been very outspoken against helping the auto companies. Where were they when Alabama provided $258 million in taxpayer-funded incentives to the foreign automaker Mercedes-Benz to build an auto manufacturing plant in the State of Alabama? I never heard them speak up. Do they only speak out against American workers who work for American companies here? They support the foreign companies, not the American companies.
Tennessee offered at least $200 million in incentives to Toyota to build an assembly plant in Chattanooga. Instead, they landed in Mississippi. Mississippi provided Toyota $296 million in taxpayer- funded initiatives. Why don't I hear my colleagues from Tennessee or Mississippi out here saying: Oh, that was a mistake. Taxpayers should not have been on the hook.
Something is wrong. Is this about not helping these workers because they are tough and they joined a union? Is that it? What is this? It doesn't smell right. You can't support giving money to lure foreign manufacturers into your State, foreign auto companies into your State, and then suddenly turn on folks who are trying to save the domestic automobile industry.
It is not that I am against what those States did. I am just talking about being consistent. If you didn't oppose giving money to foreign car companies, why do you oppose giving a bridge loan to our own domestic manufacturing base at a time of great economic peril?
We will live to fight another day on this, that is for sure. As I said, if this were a different time, if this were a different place, if the economy were thriving and one of those companies had problems due to their own ineptitude, I would not be here now. This is a worldwide recession. Other countries are moving forward. I hope the American people understand this.
If we are to add 2 to 3 million more unemployed people onto the list, we are going to be in a downward spiral. It is going to be very hard for us to recover in the near term.
Again, the big three have made a lot of mistakes. I met with them in the 1980s. I will never forget it. I was over in the House and I was on a committee that was dealing with fuel economy. I said: Why don't you make more of these fuel-efficient cars? At that time, I said: My kids are in college. I see their friends are all buying these smaller cars. They want to buy American, but they cannot. They cannot afford the gas. That was after we had this crisis in the 1970s.
They said: You don't know what you are talking about. Those small cars, you don't make enough money on
them, they are no good. People want big cars. That is good. We make more money. They said to me: We are giving up those small cars to other companies, to foreign companies.
I believed that was wrong. I said you need to have diversity.
They decided to go their way.
I don't have a great deal of sympathy for the management over there responsible for this. They didn't take the lead in research and development of advanced technology vehicles. They put too many of their resources into gas guzzlers.
Mr. President, I ask unanimous consent for another 10 minutes.
They ignored signs that their future success would depend on an ability to adapt to a changing business climate with innovation and new technologies. When I learned of the financial problems facing GM, Ford, and Chrysler, I viewed a possible rescue plan as an opportunity to help Detroit embrace new technologies that could lead them toward a strong and prosperous future. I still think, because of the White House's objection, the bill before us is making a big mistake because I wanted to make sure we could say in this bridge loan the funds could not be used to pursue litigation related to the California waiver.
Well, the administration will not go for that. We know where they stand on energy independence, we know where they stand on fighting global warming, on clean cars. They stand nowhere--or I should say they stand somewhere in a bad place. If the big three would embrace the California waiver, understanding that 19 other States are with us, and produce cars to meet the goals, the very clean-air goals we have there, I think we would be a leader in the world. I see that in our future. I really do.
I know in your State, Mr. President, we are seeing a whole new range of manufacturing dealing with solar panels. It is very exciting. This is the future. This is the future. Our big three should be leading the way. I hope they got the message in this last runup of gas prices. I hope they get the message that there is global warming and that we are going to have to deal with it if our planet is to survive.
I am confident that President-elect Obama is going to approve the waiver. I am confident that when he does that, it is going to be a big help to the big three because they will really buckle down.
By the way, we are going to reimburse this technology fund, they are going to move ahead and they are going to meet the requirements with the cleanest cars possible, and it will be a new day. Now, if all three of them do it and two of them survive in the future, that may be the way. We do not know. But what we do know is that today, this day, December 11, so close to Christmas, we do know that to walk away without helping this important industry could lead--could lead--to a far deeper recession and even toward a depression.
With this auto retooling program from which these funds are being borrowed, this will be replenished. Speaker Pelosi has indicated to me personally that they will be replenished. I call on my colleagues in the Senate to support quick replenishment of the program, which is essential to the effort of repositioning the U.S. at the forefront of new transportation and advanced battery technologies.
You know, we have startup companies in my State--very exciting. One of them is called Tesla Motors and the other is Fisker Automotive. That is two of them. They are leading the effort to develop advanced technology batteries, zero-emission cars, and high-performance plug-in hybrid electric vehicles. I have driven some of these cars. They are extraordinary. These companies and others, including the big three, are processing section 136 loan applications to retool manufacturing plants and speed up the development of technology that will put the United States right out in front, leading the way to clean cars and clean technology.
I wish to point out that no bill is perfect. I could write a bill that would be far better for me. Every Senator could. But there is significant taxpayer oversight in this bill, as well as benchmarks that the big three must meet in order to continue to receive Government assistance.
By January 1, the car czar will develop benchmarks to determine how to assess each company's progress in turning its plans submitted to Congress into long-term restructuring plans. The benchmarks will focus on how the big three will restructure their businesses for long-term viability, increased fuel efficiency, advanced technology, managing debt, capitalization, and future cost requirements.
So to my colleagues on the other side of the aisle who say: Let them go bankrupt, it is better, they will restructure, we are going to make sure they restructure without declaring bankruptcy and without unloading all of the cost of that bankruptcy onto the backs of taxpayers. If any of the big three fail to submit long-term restructuring plans by March 31, 2009, the car czar has the authority to call the loan or cancel the loan commitment within 30 days, requiring the loan to be paid back at an accelerated rate.
Taxpayers will recover the cost of these loans over 7 years at a rate of 5 percent for the first 5 and 9 percent thereafter. The car czar will have access to all financial records of the big three and will have the ability to prohibit asset sales or possible investments over $100 million, which will protect U.S. jobs being outsourced. The Government will have senior debt status for repayment of the loans, meaning we are in the front of the line to recover loan payments regardless of the companies' success. Stock warrants will ensure the taxpayers benefit from any future growth these companies may experience. The bill prohibits golden parachutes, puts limits on executive compensation and bonus compensation to top employees, and it requires the companies to divest from any private jet investments. The payment of dividends to shareholders will be prohibited during the loan period. In other words, there is every incentive for these companies to turn their companies around. They want to pay dividends to shareholders, they want to get bonuses, they want to get back to business as usual. But we say: Before you do, you have to pay us back. They have a lot of reasons to make this turnaround.
The loan program will be subject to strict auditing by the Comptroller General and the GAO. The car czar will be tasked with facilitating agreements between unions, retirees, debtholders, creditors, suppliers, auto dealers, and shareholders to reduce costs and ensure long-term viability.
Again, I say to my colleagues who are saying let them go bankrupt, take a look at this bill. You are saying let them go bankrupt because they will have to restructure. We say restructure without the bankruptcy because if, in fact, there is a bankruptcy declared, 80 percent of the American people say they will not buy a car from a company that has gone bankrupt. I understood that. So this avoids the bankruptcy and allows them to restructure. If we fail to do this, we are playing Russian roulette with this recession. In times of crisis, you have to see opportunities.
I believe, as a major critic of the car companies since the 1980s when I was here in the House of Representatives, they have finally gotten the message. It has taken them too long. They have been too arrogant. They have not seen the world changing. They have not noticed global warming. They have been blinded to so many things that were happening around them. They were hostile to California and the 19 other States that want to clean up our environment and get better fuel mileage, have clean cars. Instead of embracing those States and working with those States--by the way, those 19 States and California represent a majority of the American people. A majority of the American people want clean cars.
Now, it may have taken this horrific turn of events to get the message through, but clearly the message must be getting through. Jeffrey Sachs wrote recently in the Washington Post:
American-made fuel-cell cars may be a large-scale reality
within a decade. Success would dramatically improve energy
and national security and U.S. global competitiveness.
Now, this is the opportunity. But guess what. If we do not act, if we do not act and this recession keeps deepening, we will not have this chance. We will be the only industrialized democracy without a domestic auto company
and without that manufacturing base. So we have to do what is necessary to push Detroit toward a stronger, more efficient future. It may be that at some point in the future, that industry will have a different look to it. Maybe it will have a different look to it. We do not know that. But what we do know now is that what has hit Detroit is far more than making the wrong choices about what cars they produce. I think they made those wrong choices, but it is far bigger than that because every company in America and outside of America that is making cars is suffering today because of the terrible recession we are in, because of a lack of consumer confidence, because of a loss of equity in the stock market, because of home foreclosures, because of all of these things.
So I say you never know what could happen in the future. I am not able to predict it because I cannot. But I know what I have to do now. I have to think about those three things: jobs, jobs, and jobs. When I think about that, and I recognize that just today we had more filings for unemployment insurance than we have had in 26 years, I say for us to walk away from this without this scaled-down bridge loan would be playing Russian roulette with this recession. I love my country too much to do that. With all of the problems I have with Detroit, I will support helping them in this fashion.