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The auto industry’s most prominent Republican backer is
pressing Democratic leaders to take swift action this month to help the nation's
car industry, arguing that doing nothing would have devastating economic
consequences. “I believe we must work swiftly to allow the domestic
automotive industry to gain access to emergency assistance,” Sen. George
Voinovich (R-Ohio) wrote to House and Senate Democratic leaders on Monday. “The
risk in doing nothing is too great,” he wrote.
Voinovich’s letter coincided with an ominous milestone
for the troubled economy: the declaration of a recession by the National Bureau
of Economic Research. The independent government body, responsible for
declaring whether the country is in a recession, said the U.S. has officially
been in a recession for a year, since December 2007.
Big Three automakers face a Tuesday deadline for
providing Congress with plans on how they would use billions of dollars in
bailout money. The Democratic leadership rejected the industry's push for $25
billion in bridge loans last month, but said it would reconsider after
reviewing automakers’ plans for how they'd use the money to become viable.
The House and Senate have scheduled hearings for this
week and have said they are prepared to return next week to consider
legislation extending aid to the industry. Democrats have pushed for the aid to
come from the $700 billion financial rescue package passed in October, but most
Republicans and the White House have been opposed, leading lawmakers to search
for a compromise solution.
Voinovich and Sens. Carl Levin (D-Mich.), Debbie Stabenow
(D-Mich.), Kit Bond (R-Mo.), Arlen Specter (R-Pa.) and Sherrod Brown (D-Ohio)
crafted a bill before Congress adjourned that would extend aid to the industry
from the Energy Department loans with the intention of returning the money to
its original purpose. The bill also included tougher oversight provisions, a
prohibition on dividends and limits on executive compensation.
In his letter, Voinovich emphasized that without help,
smaller companies in Ohio and other states facing the squeeze from the credit
crunch and auto industry’s challenges will be imperiled. He said Congress’s
decision not to act last month has exacerbated the problem.
“Banks are further tightening already tight credit
standards for these companies because they interpreted Congress’s failure to
act before the Thanksgiving recess as a signal that Congress lacks the
political will to provide solutions to such a significant problem,” he wrote.
“This is just the sort of cascading effect that worries
me and so many others who understand that it is not just the future of the U.S.
automakers at stake, but also the thousands of companies and workers who
support the U.S. automakers.”
General Motors Corp. has repeatedly warned that its
financial situation is dire, and the chief executive of Chrysler LLC said the
company has considered bankruptcy contingency plans. Ford Motor Co. said that
it may consider selling Volvo to help shore up the company’s financial footing,
adding that the amount of aid it would need would depend on the duration of the
economic downturn.
The White House supports a plan to allocate $25 billion
in Energy Department loans for immediate aid, instead of for their original
purpose of helping the manufacturers retool their factories to meet tougher
fuel-efficiency standards. House Speaker Nancy Pelosi (D-Calif.) has been opposed
to that effort. Meanwhile, several leading Senate Republicans have suggested
that bankruptcy would be preferable for one or more of the companies.
Voinovich questioned whether Congress has the appropriate
expertise to evaluate the companies’ proposals.
“I question your decision that congressional leadership
and committees of jurisdiction are best positioned to make determinations about
a multinational corporation’s future financial prospects,” Voinovich wrote. “I
would appreciate you informing the companies, the public, and me who exactly
will be making these decisions.”
Voinovich also expressed concern that the plans presented
to Congress might contain sensitive proprietary information that, if released
to the public, could wind up hurting the manufacturers. “Any financial
viability plan necessarily must include information that cannot be disclosed to
the public due to the fiduciary obligations that management has to
shareholders,” he wrote. “We must work together to ensure that whatever
legislation we consider includes adequate protections so that no one can
inappropriately profit off the misfortunes of others.”
Senate Majority Leader Harry Reid (D-Nev.) said before
Congress adjourned that the senators' bill did not have enough votes to pass.
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