[Congressional Record (Bound Edition), Volume 154 (2008), Part 18]
[Senate]
[Pages 24076-24077]
[From the U.S. Government Publishing Office, www.gpo.gov]




            FEDERAL LOAN TO THE AMERICAN AUTOMOBILE INDUSTRY

  Mr. NELSON of Florida. Mr. President, later this week the Senate is 
going to consider this question that befalls our American automobile 
industry and the question of whether to extend assistance to the 
American automobile industry and its workforce. What we are going to 
do--either this week or whether it is postponed into January--is going 
to determine the future of a key manufacturing sector and millions of 
American jobs.
  Some of our colleagues have said we should not interfere with the 
free market, that we should allow businesses that have acted 
irresponsibly to fail and to be replaced by more efficient competitors. 
I must say I have some sympathy for that view. For too long, our U.S. 
domestic automakers have sailed against the winds of change and have 
failed to produce vehicles for the 21st century--for that matter, for 
the last half of the 20th century.
  This is not the first time this Senator from Florida has faced this 
issue, for, as a young Congressman years ago, we had a similar issue 
facing us with the bailout of the Chrysler Corporation. I voted for 
that bailout, which included some $4 billion. In retrospect, that was 
the right decision because Chrysler did reinvent itself. But the 
circumstances were different because Chrysler had at its helm a man who 
we believed would go in and reform Chrysler, and that was Lee Iacocca. 
As I look across the landscape of the American automobile industry, I 
am wondering, where are the Lee Iacoccas? We do not see them.
  It is this Senator's judgment that there should be no bailout of the 
American automobile industry. There should not be a reward for poor 
management. But because of the American jobs at risk, because of 
American manufacturing at risk, I support a Federal loan with serious 
restrictions.
  I want to discuss some of those restrictions. I come to this position 
having fought tooth and nail against the automobile companies when they 
dragged their feet on implementing responsible fuel economy standards. 
They insisted, sometimes with crocodile tears, they could not meet 
those miles-per-gallon requirements, and: Oh, by the way, let the 
consumers decide. Those automobile makers are now coming to us asking 
for our assistance.
  But that is not the full picture. As the President-elect has said, a 
failure of the American auto industry would be disastrous not just for 
many Americans who work for the industry but for the entire economy 
because those jobs ripple with the multiplier effect through the 
economy. So whether you are considering assembly plants or suppliers or 
dealerships, we would face significant layoffs in all 50 States. It 
would push us further and further into an economic hole. We simply 
cannot let that happen, but we cannot allow a bailout. It has to be a 
Federal loan with a workout, and that is a financial term to 
restructure how a company can get out of its economic problems. We need 
to bring all of the stakeholders to the table--management, labor, 
lenders, suppliers--to figure out how to revitalize the American auto 
industry to make it competitive in the future while saving those good 
American jobs.
  So this Senator's conclusion is that any Federal assistance we 
provide for the American auto industry is going to have to include 
these conditions.
  First, we must insist that the automakers increase average miles per 
gallon to 40 miles per gallon in 10 years and to 50 miles per gallon by 
2020. Why do I say this? There are cars, fleets in Japan, that are 
already driving at 50 miles per gallon. In Europe, the cars are being 
driven at 40 miles per gallon. We are talking about 12 years in the 
future to achieve this. Technically, it can be done if we but have the 
will.
  Look, in the 8 years this Senator has been in the Senate, every year 
we have gotten beaten by the U.S. automakers as we have tried to 
increase the miles per gallon in the fleet average. They beat us one 
way or another, and they would always say: Let the consumer decide--all 
along while the foreign automobile makers were getting prepared to eat 
their lunch. As their lunch was being eaten, year by year, they 
continued to still fight us on the miles-per-gallon standards. Finally, 
we had a little victory, just a year ago, that was conditioned upon 
giving them--giving them--$25 billion in return for them agreeing they 
would move to 35 miles per gallon but not until the year 2020. We have 
to stop this kind of foot-dragging that has gotten them to the place 
they are now. So for any Federal assistance in the form of a loan we 
must insist they increase their miles per gallon.
  Second, the automakers must increase the production of flex-fuel, 
electric, and plug-in hybrid vehicles. Prices of gasoline at the pump 
have obviously fallen in recent weeks, but they are not going to stay 
low forever, and that is another whole subject. As soon as all the 
speculators start getting back into the oil futures contracts market 
again--which have been deregulated, so there is no regulation on the 
speculators--they will run the price right back up. Remember, the price 
of a barrel of oil is down in the range of $50 or $60 now. It went all 
the way to $147 a barrel. When the world economy started getting into 
trouble and they needed cash, they started bailing out of those futures 
accounts, so that brought the price of a barrel of oil down. While sure 
as shootin', if we do not impose some regulations on the commodity 
futures trading market, those speculators are going to take over in the 
future, the price of oil is going to go back up, and the price at the 
pump--which I just filled up my car for $2.12 a gallon back in Orlando, 
FL--is going to go back up.

[[Page 24077]]

  We need to end our dangerous addiction to oil, and we need to find 
new and renewable sources of energy. American automobile makers ought 
to be leading the way instead of the opposite of what has happened over 
the last three decades.
  Third, we must place limits on executive compensation and eliminate 
the executives' golden parachutes. Taxpayer money should not be used to 
reward individual executives until the taxpayers have been repaid.
  Let me divert from the automobile industry for a minute. There is a 
similarity about executive compensation and golden parachutes and what 
we have done with the big economic bailout of Wall Street, which this 
Senator voted against. Well, lo and behold, over the course of the 
weekend, I happened to be talking to a major bank CEO. This banker told 
me his bank is in good shape; he doesn't need any of the bailout money. 
But because some of his competitors are in bad financial shape and need 
the money and are taking it from the Secretary of the Treasury, he 
needs to take it, too, because they would be at a competitive 
disadvantage against the ones that are hurting that need to take the 
money. He says: We don't want to take it, but we don't want to be at a 
competitive disadvantage. Because of that, whenever they do take it--
remember, there are supposed to be some rules in there on executive 
compensation and golden parachutes. This CEO is retiring before the 
money comes in, so the bank still pays out the huge compensation. What 
we are dealing with, with the Wall Street $700 billion bailout, has to 
apply to automakers as well. We should not reward those executives 
until the taxpayers have been repaid.
  Fourth, the automakers should not pay dividends to shareholders until 
they have returned to financial health. It is a simple, straightforward 
condition on us giving them taxpayer money in order to get them back to 
financial health.
  Fifth, I wish I didn't have to say this, but there are no Lee 
Iacoccas now. The current senior management should be replaced. We need 
new leadership. We need fresh thinking. We need new people, new eyes, 
new ears to steer us out of this mess. We cannot reward those leaders 
whose poor decisions and poor judgment and sometimes selfishness got us 
to where we are now.
  We are going to face difficult choices. There are going to be tough 
times. Again, to quote a phrase from the President-elect: We need to 
act with all deliberate haste but with an emphasis on deliberate. We 
cannot simply provide our automakers with enough cash to continue their 
current operations for another 3 months or even another 6. We must 
instead put them on a path that leads to global competitiveness.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, I ask unanimous consent to speak for 20 
minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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