Rep. Marchant Votes “No” on HR 7321

On December 10, 2008, I opposed legislation proposed by Congressional Democrats to address the crisis facing the American automotive industry. Like the $700 billion bailout that passed in early October, which I opposed, this bill (which passed 237-170) exposes taxpayers to considerable risk and liability with few assurances that it will work or that it will be the last money spent to address the issue.

The problems facing the automotive industry have been exacerbated by the recession. The combination of unfeasible and impractical environmental regulations and uncompromising labor costs has brought the entire American automotive industry to the brink of extinction. Having said that, I do believe it is important to have a robust American manufacturing base in America – but only if the industry is willing to undertake dramatic reforms, which heretofore they been unable to do.  

The bill we voted on is fundamentally flawed, as it lacks the accountability and oversight provisions to ensure the protection of the American taxpayer. Furthermore, I am not convinced that this legislation will result in the industry’s long-term viability, sustainability, profitability, and competitiveness – which should be the goal of any assistance. I have long believed that the American automotive industry needed complete restructuring and this bill does not fully address my concerns about management at the Big 3 or the labor union contracts.

As is typical in the House these days, alternative bills and amendments to improve this bill were not allowed to be debated or voted on. I did, however, support an alternative proposed by House Republicans Eric Cantor and Mike Pence that would 1) reform the auto industry and allow American automakers to become competitive again, while 2) protecting the taxpayers. The alternative bill I supported, “The American Automotive Reorganization and Recovery Plan,” would have locked in a restructuring plan within a few weeks rather than months or years. The bill would require the companies’ creditors agree to a framework to reduce each company’s indebtedness by at least 1/3. Furthermore, United Auto Workers would agree to their recently stated concessions in addition to: 1) eliminating Supplemental Unemployment Benefits; 2) eliminating the Jobs Bank Program; 3) reducing company retiree health care obligations OR converting a portion of obligations into equity; and 4) reducing wages and benefits to levels paid by non-Big 3 manufacturers. Rather than a “Car Czar”, this bill would mandate restructuring through pre-packaged bankruptcy or another mechanism that would bring all stakeholders to the table in earnest and achieve a workable plan towards viability. The bill also acknowledges the need for interim financing to begin restructuring; as such, the legislation proposes that the government provide insurance (funded with a modest FDIC-like fee by the participating corporations) which would cover up to half of the losses of new investment in the case of default, unleashing private investment (not unlike debtor in possession financing). The insurance, which would expire March 31, 2009, would protect the taxpayer while incentivizing the Big 3 to implement their restructuring plans without delay. 

You can access the roll call vote here: http://clerk.house.gov/evs/2008/roll690.xml.

I am honored to represent the 24th District of Texas, and appreciate your interest in my e-newsletter.  Please contact my District or DC office with any further questions you may have or visit my website at www.marchant.house.gov.