By Walter Alarkon - 07/16/09 08:29 PM EDT
The House on Thursday approved legislation that would prevent General Motors and Chrysler from closing car dealerships across the country.
Language blocking federal money for the car companies’ reorganization if they shut down the dealerships was included in the House Financial Services and General Government appropriations bill approved by the House on Thursday night.
While the language faces an uncertain future in the Senate, the popularity of the standalone bill underscores the anxiety House members feel about job losses. The unemployment rate hit a 26-year high in June, and more losses are expected in coming months.
“We will not give billions of dollars to GM and Chrysler until they come to terms with the hundreds of thousands of people out of work,” Rep. Steven LaTourette (R-Ohio) said during floor debate on the bill.
LaTourette proposed the language on dealers in the appropriations bill approved Thursday, but it was also backed by Democratic leaders.
GM and Chrysler are looking to close almost 3,000 dealerships across the country as part of their government-directed reorganization, and they have the support of President Obama. The move by the House reflects the difficulty Obama faces in keeping local politics out of the government effort to save Chrysler and GM.
Obama’s administration argues that closing dealerships is essential to the companies’ reorganization. The two companies have noted that rivals such as Toyota and Honda have far fewer dealerships, lowering their costs.
The White House said closing dealerships is a “critical part” of the plan to save the companies and thousands of jobs and to recoup some of the $65 billion in taxpayer funds injected into the companies.
“The decision to invest taxpayer dollars into these companies required all stakeholders to make difficult sacrifices, and it would set a dangerous precedent, potentially raising legal concerns, to intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point,” the White House Office of Management and Budget said Wednesday.
The House amendment was popular among members across the country worried about the impact of dealership closings on their districts.
House Appropriations Committee Chairman David Obey (D-Wis.), citing the difficulties dealers in his own district were having, pressed lawmakers to include the measure as an amendment during his panel’s markup of the spending bill. And Hoyer, appearing with a group of dealers Tuesday, argued that the measure was a way for dealers who had been left out of bankruptcy decisions to be heard.
Grassley and one of the Democratic co-sponsors, Sen. Kay Hagan (N.C.), said they will press on with the legislation because of the need to save jobs during the recession.
“[A dealership] is a mainstay of the community,” Hagan said. “I’m very concerned when you lose such a business like that in a small community in North Carolina, it’s really devastating.”
Other senior Democrats have signed onto Grassley’s effort, including Sens. Edward Kennedy (Mass.), John Kerry (Mass.) and Barbara Mikulski (Md.).
Grassley’s bill has been referred to the Judiciary Committee, but its chairman, Sen. Patrick Leahy (D-Vt.), has yet to schedule a hearing.
Forcing the companies to keep the dealerships open would also cost taxpayers more than they’ve already spent, said Sen. Debbie Stabenow (D-Mich.). GM and Chrysler would have to re-enter bankruptcy, which both have exited in recent weeks, in order to find savings elsewhere, perhaps by closing plants and renegotiating their financial liability, Stabenow said.
“I think the public would raise a lot of questions if we, by our actions, put GM and Chrysler back into bankruptcy,” she added.
Sen. Dick Durbin (D-Ill.) said that senators are looking for other ways to help the dealers without hurting unrelated lawsuits, including cases over injuries and defective products.
“I’m concerned not just for the dealers; I’m concerned for people who have impending lawsuits in tort cases,” Durbin told The Hill.
Senate Majority Leader Harry Reid (D-Nev.) said this week he isn’t inclined to allow a vote on any measure forcing the dealerships to stay open.