Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, I rise to speak on the pending discussion and debate in the Senate about subsidies to the auto manufacturers and whether passing a large…
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
Mr. President, I rise to speak on the pending discussion and debate in the Senate about subsidies to the auto manufacturers and whether passing a large bailout subsidy package for the auto manufacturers is a good idea. Earlier this afternoon I objected to a unanimous consent request by Senator Mikulski and she responded to that objection by noting that she certainly hoped that objecting to a bailout package for auto manufacturers wasn't the last thing I did in the Senate, given that my term is going to be expiring and I am going to be retiring from the Senate. Well, it won't be the last thing I do. If nothing else, the last thing I will do is to explain why her legislation was such a terrible idea to the people of New Hampshire who elected me and to the American people whom I think I have an obligation to serve in making sure that their interests are protected, that their wallets are protected, and that we act with a commitment to fiscal responsibility.
We don't need to be providing subsidies, special benefits or protection to individual businesses, whether they are auto manufacturers or any other business. This is wrong for a large number of reasons. To be sure, no one is happy about the fact that our country is in a recession, that Europe is in a recession, that we have a global slowdown that will affect hundreds of thousands, if not millions, of lives across the United States and across the world. But by providing subsidies to the auto manufacturers, we do several things that are fundamentally wrong--bad for our economy, bad for taxpayers, bad for consumers.
First, quite frankly, we reward bad decisions that have been made by these firms themselves. The problems within the auto industry are largely the making of those in the auto industry: management choices, production of models that consumers choose not to buy, legacy costs, contracts, health care, pensions. We all understand that within the economic slowdown there has been a significant drop in the number of cars being manufactured, but these businesses were losing money well before the current downturn. By stepping forward now to provide them with $25 billion or $50 billion, depending on which piece of legislation we would be considering and voting on, we, quite frankly, would be taking money from taxpayers across the country and rewarding those poor decisions that have been made by the manufacturers themselves.
Second, this would set a bad precedent. There are many businesses across America that are dealing with tough times, a slowdown in their growth prospects. They have had to deal with layoffs. They have seen a significant slowdown in construction spending or consumer spending. It is affecting every corner of our economy. If we set the precedent of stepping forward with $25 billion in subsidies for auto manufacturers, every other business and industry in America would be looking for the same kind of treatment from the Federal Government. That is simply not in the taxpayers' interests. It is certainly not fair to the average taxpayer. It is not fair to those taxpayers who work for companies that won't get that kind of special treatment. Any time the Federal Government starts putting a significant amount of resources--$1 billion, $10 billion, $25 billion--into a particular firm or industry we distort the marketplace. So we would be rewarding bad decisions. We would be setting a bad precedent.
Finally, we would be placing taxpayers at even greater risk. We need to be honest about the impact of giving $25 billion to the auto manufacturers in order to sustain their unprofitable operations. Many observers have suggested that $25 billion isn't nearly enough, $50 billion probably isn't enough to stave off bankruptcy. So when these firms ultimately did have to file for bankruptcy or when the losses mounted over the next 6 months or 12 months or 18 months and the firms needed additional capital, where would they turn? Back to the taxpayer. So the expectation would be--and I think the likelihood would be--that the $25 billion or $50 billion provided today would simply be a downpayment on even greater losses and greater exposure to the taxpayers in the future.
Now, the proponents of this legislation have said a number of things. First and foremost, they have talked about the number of jobs that would be affected. No one relishes the idea of higher unemployment and job losses that have already begun in this current recession. But there are many businesses and industries across America that employ hundreds of thousands of people, that employ even more than the auto manufacturing segment. The
three largest technology-based firms in the country employ nearly twice as many people as the auto manufacturers. The three largest firms in the financial services industry employ hundreds of thousands more than the auto manufacturers do. These businesses and industries such as the auto manufacturers have their own customers and suppliers and vendors and contractors who would also be affected by the slowdown or by layoffs at those businesses.
We care about the auto manufacturers. We care about manufacturing. We care about every job in our economy, because each job is important to that worker, their family, and their dependents. But we can't be providing unique benefits, unique treatment to one business at the expense of others and at the expense of taxpayers.
A second argument that has been made is that since we passed a financial stabilization package a month ago, we should be willing to keep passing additional subsidy or bailout legislation. I think we need to understand that taking the action we took when the credit markets in the United States and across the world froze was action taken only with the greatest imaginable reluctance, and it was only taken to protect access to credit for a home loan or car loan, a small business loan that our economy needs to function every single day. Moreover, only action of the Federal Government--and the European governments as well--only that action could provide the capital or had the capacity to provide the capital necessary to enable those credit markets to function normally again. And they have begun to function more normally today.
Now, normal functioning of credit markets doesn't guarantee economic growth in this quarter or next quarter, but it does prevent a collapse of the credit system that our economy needs to operate on a daily basis.
So I think the arguments that there are jobs at stake in the auto industry is a false argument, because there are jobs at stake in every corner of our economy. The argument that an economic recovery package passed last month is justification for these kinds of subsidies to other manufacturers is mistaken as well, because that was legislation designed to protect every family, every business in America, given the unique crisis we have had in our credit markets.
Our economy is built on the idea of freedom, transparency, and entrepreneurship. I think we should never forget that. We have the freest economy in the world. If you look at the freest and most open economies in the world and compare them to their more heavily regulated counterparts, in every measure, free and open, transparent markets performed better than their more heavily regulated counterparts. I think there is a lesson here: that we should avoid Government intervention wherever possible. We should minimize the cost of regulation wherever possible. Of course, we should avoid legislation such as that being proposed for the auto manufacturers that would intervene and subsidize bad economics, poor performance, and bad management choices.
I hope this legislation will be dealt with in an appropriate way. I hope my colleagues will see the value in protecting the taxpayers by opposing this kind of intervention, this kind of unnecessary subsidy. A lot of people have made the observation that a failure to pass subsidy legislation would make bankruptcy for the auto manufacturers more likely, and that may well be the case. But the bankruptcy protection process is designed to allow firms, large and small, to reorganize, to restructure, to establish a better, more effective business model, a better system for producing the kinds of products customers want, for delivering the services our economy needs, improving efficiency and, in doing so, provide strong, well-paying jobs that are secure for as many of their employees as possible and for an employment base that suits the marketplace. But when you have a business model that has been proven to be as problematic as those of the large three auto manufacturers, sometimes bankruptcy protection is the best possible methodology for restructuring, reorganizing, and putting together a firm that is more competitive and stronger and healthier for the long term.
I appreciate the opportunity to speak on these issues. I think it is important that we protect our economy to the greatest extent possible by keeping taxes on capital low, by creating a Tax Code and a regulatory structure that encourages manufacturing and investment, that rewards entrepreneurship, but none of these things requires that we single out one firm or one business over another for a handout or a subsidy at the cost of the taxpayers.
I yield the floor.
