Senate Banking Chairman Chris Dodd (D-Conn.), whose committee tomorrow will examine a possible $34 billion bailout of the Big Three U.S. automakers, says the CEOs of the three companies must demonstrate a "commitment to profitability and viability" before his panel if they are to receive federal funds.
Chrysler, Ford, and General Motors submitted proposals to Congress yesterday for how they would increase profitability if the government approves the $34 billion they have requested.
"There is no question that this industry is facing monumental challenges. The failure of any one of these companies could have catastrophic consequences on our nation
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At an economic meeting with 49 governors and governors-elect in Philadelphia today, President-elect Barack Barack Obama heard input from governors on what the federal government should do to save the economy from crisis, seeking their help in crafting the stimulus plan that will likely be his first major action as president.
"As President, I will not simply ask our nation
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After Democratic leaders demanded that the Big Three present a business plan before they see billions in federal assistance, the House Financial Services Committee announced today that it would examine the industry's progress in making such plans at a Dec. 5 hearing.
The committee will hold a hearing entitled "Review of Industry Plans to Stabilize the Financial Condition of the American Automobile Industry" on that date at 9:30 a.m. in Rayburn. The committee has not announced whether the CEOs of Ford, Chrysler, and General Motors will be called to testify.
General Motors, one of the U.S. auto companies seeking a federal bailout, said Monday that its cutting loose golfer Tiger Woods as its spokesman.
A GM spokesman told the Associated Press that the move had nothing to do with the car companies' request for $25 billion in federal loans. But the company said in a statement that the halting the 9-year contract with Woods was part of GM's "search for budget efficiencies during a difficult economy."
Woods received about $7 million a year from the deal, which was set to end in 2009, according to the AP.
Democratic lawmakers have called on the Big 3 companies, GM, Ford and Chrysler, to come up with a plan by December before they consider approval of a rescue package.
To get a sense of what GM will now be missing out on, see the Buick commercial featuring Woods below.
Senate Majority Leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.) sent a letter Friday that calls on U.S. auto executives to "submit a credible restructuring plan" by Dec. 2.
House Speaker Nancy Pelosi (D-Calif.) said at a news conference Friday that Congress will do something for U.S. automakers, regardless of the quality of the bailout plan they put forth.
"We can't do nothing, because that -- I don't know if that works," she said. "But doing nothing is, I don't think, an option. But what we do will be determined by what they do."
Pelosi's comments came in response to a reporter who asked what effect the the automakers' bailout plan would have on a congressional action. Lawmakers this week delayed voting on $25 billion in loans to the General Motors, Chrysler and Ford and instead asked them to come up with a specific plan on how they will use the money.
"Until they show us the plan, we cannot show them the money," Pelosi said on Thursday.
See the full exchange at Pelosi's news conference below.
QUESTION: (inaudible) you would evaluate the viability plan that the industry sends, and decide if warranted calling Congress back into session. Does that mean that the -- the quality of their plan will determine whether or not your reconvene, or will you come back and legislate, in your own way, even they give you...
PELOSI: That may be the case. It's probably closer to the latter, because we can't do nothing. Nothing is not -- we can't do nothing, because that -- I don't know if that works. But doing nothing is, I don't think, an option. But what we do will be determined by what they do. And again, it's only a couple of weeks from then, from ninth or tenth of December until when Congress comes into session in January.
It would be my hope that -- looking at what they present to us -- and I'm very optimistic and hopeful that they have gotten the message that they just can't come as they give us this and maybe that -- No, wait a minute, we changed our mind, we want that.
What are they going to do with the money? And how is -- how do we tell the American taxpayer it was worthwhile to put this in, not as a life support for a few more months, and then they're back again, but as an investment in their viability.
Senate Minority Leader Mitch McConnell (R-Ky.) shot back against pressure from Majority Leader Harry Reid (D-Nev.) to support an economic stimulus plan next week, saying the total cost of the "as-yet unwritten spending and bailout bill" is unknown.
McConnell was reacting to a letter earlier Friday from Reid, in which Reid called on McConnell to support a multi-part package that includes $25 billion in loans for the auto industry.
"Sen. Reid has not yet provided us with the text of his proposed spending bill, or the cost to the taxpayer, or its impact on the deficit. So it would be a real challenge to promise any level of support or opposition sight unseen," McConnell said. "Perhaps when a bill is actually written, and its costs are known, both Republicans and Democrats can take a position on the legislation."
McConnell also took a shot at Senate Democrats, saying that the depth of support within the majority party's ranks is also still unknown.
"It would be helpful to know if a majority of his caucus even supports what he will propose," he said. "The silence from the Democrat rank and file on this matter has been deafening."
Senate Majority Leader Harry Reid (D-Nev.) criticized Minority Leader Mitch McConnell (R-Ky.) for not supporting a Democratic-sponsored economic stimulus bill and called on the Republican leader to cooperate with Democrats during next week's lame-duck session.
In a publicly released letter to McConnell, Reid said if the GOP continues to oppose Democratic ideas to boost the economy, he will push for unemployment benefits and loans to the U.S. auto industry, which would put Republicans into a politically difficult position.
"The adoption of a robust recovery package should be the top priority of the upcoming lame duck session," Reid wrote McConnell. "Based on our conversation earlier this week, however, I understand that you currently oppose such a package and that Senate Republicans are prepared and able to block such legislation. This is disappointing and I hope you will reconsider."
Reid added: "Unless I hear from you to the contrary, I plan to press forward with two provisions of that package - an extension of unemployment benefits, which passed the House by a bipartisan vote of 368-28 and legislation to protect the millions of workers at risk from the possible collapse of our domestic auto industry. These two provisions both address especially urgent needs and seem most likely to win your support and the support of your caucus."
National Republican Senatorial Committee Chairman John Ensign (Nev.) and Sen. Saxby Chambliss (R-Ga.) on Wednesday both opposed Democrats' plans for a second economic stimulus package during November's lame-duck session.
On a conference call with reporters about Chambliss's Dec. 2 runoff election, Ensign said Republicans will oppose dramatic new spending but would endorse cutting the capital gains tax rate.
Majority Leader Harry Reid (D-Nev.) has said he wants to bring a second stimulus plan before the Senate during the chamber's session next week. Republicans lost several seats in the chamber earlier this month but can still effectively block Democratic legislation until the new Congress takes office in January.
Instead of new spending, Ensign called for cutting tax rates to allow corporations to make money overseas and transfer that money back to the U.S. at lower tax rates.
"If just means more spending, it's not something I would support," Ensign said.
Chambliss agreed but added that the first stimulus package passed last spring was clearly ineffective.
"We tried to just write checks from a fund that just adds to the deficit. It didn't work," he said. "It doesn't make sense to take a failed philosophy and put more money behind that philosophy."
Giving his first press conference as president-elect today, Barack Obama vowed that he would pass a second economic stimulus package when asked what his first priorities in office will be.
"The one thing I can say with certainty is: we are gonna need to see a stimulus package passed either before or after the inauguration," Obama said.
House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.), and Congressional Democrats have pressed for a second stimulus package. Congress will return for a lame-duck session this month, when Democratic leaders will begin their push for a package.
Obama said his administration, in determining its economic priorities, will focus on job creation and assistance to state and local governments to prevent government layoffs.
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