Congresswoman Bachmann has been a strong and vocal opponent of the efforts to provide government funds to GM through loans and bailouts. She opposes the idea that the government should intervene into the auto industry, she opposed that the actions were taken without Congressional authority, she opposed the illegal actions taken by the Obama administration, and she opposed the view that GM and Chrysler could only be saved through government intervention and not through the bankruptcy laws.
When the big three auto companies came forward and asked for a loan, Congresswoman Bachmann noted that there had already been numerous bailouts, all of which were stated as necessary to stem the economic spirals, and all of which only led to further bailouts. She stated that any allocation of funds to GM would not fix their long-term management and productivity problems, and taxpayers were being asked to throw their hard-earned money behind a short-term, unproductive investment.
As the initial plan failed to pass Congress and a plan executed by Congressional leadership and President was put in place, Congresswoman Bachmann objected and noted that there was no guarantee that they would not be back for more money beyond the $25 Billion loan. She wrote a letter to President Bush calling on him to avoid the use of TARP funds (which was illegal) to provide loans to GM.
When President Obama violated TARP law and previous statements by switching the preferred stock to common stock, Congresswoman Bachmann strongly objected. As more and more control of the auto industry was ceded to the Obama administration, the government began to have decisions in which dealerships would close and some indirect influence on cars to be manufactured. The Obama administration also secured a bankruptcy deal to give more of the company to the union than they were owed. Congresswoman Bachmann referred to these actions as a gangster government.
Congresswoman Bachmann eventually stated that although the actions taken by the government could have effects that last for years, the only sure outcome was that taxpayers would pay.
Opposition to Proposed Bailout
In November of 2008, Congresswoman Bachmann released a statement noting her opposition to the proposed bailout of General Motors.
Bachmann Statement on the Proposed Financial Bailout of the American Auto Industry
Washington, D.C., Nov 19, 2008 - (Washington, DC) - Today, U.S. Representative Michele Bachmann (MN-6), a member of the House Financial Services Committee, submitted the following statement for today’s House Financial Services Committee Hearing on "Stabilizing the Financial Condition of the American Automobile Industry:"
"Once again, our Committee has convened to hear the pleas of another industry begging for a taxpayer bailout. This time, from Detroit’s Big Three automakers: Ford, GM and Chrysler.
"It’s only appropriate that we again total the taxpayers’ current bailout tab: $29 billion for Bear Stearns, $200 billion for Fannie and Freddie, $300 billion to expand the Federal Housing Administration (FHA), $150 billion for AIG, and $700 billion for the Paulson Plan -- plus $110 billion in sweeteners to pass that plan.
"Secretary Paulson and Chairman Bernanke chose to start this bailout mania over eight months ago. Since then, the American people have been told over and over that the woes in our financial markets will subside. Yet after bailing out bad decision-makers time and again to the tune of over a trillion dollars, our financial markets remain in turmoil.
"Throwing taxpayer money at Detroit’s spiraling problems will not fix their long-term management and productivity problems. It has been reported for years that CEOs at Ford, GM and Chrysler have not made the necessary changes to rein in labor costs and have not downsized facilities to ensure the companies’ long-term viability. In fact, the Big Three pay out an average of $30 more per hour than their competitors. And they support large numbers of retirees under outdated union contracts. GM, for instance, actually supports more retirees than current workers.
"They have also been criticized for failing to invest in enough competitive, innovative products that American consumers want to buy. And they have failed to look to the future or take steps to prepare for a rise in gas prices.
"Taxpayers are again being asked to throw their hard-earned money behind a short-term, unproductive investment which will only prolong the companies’ failures at a cost that could be even greater later on down the road. I have received no assurances to date that this money will not simply be down a rabbit hole. None of us have.
"Plus, much of the urgency that would force the Big Three to make tough restructuring choices would be reduced if federal money is available. Like AIG, it is easy to predict that they will be back at the taxpayer’s trough in no time.
"Some say that this bailout is needed under the premise that consumers cannot get access to car loans due to the broader credit crunch and that this is causing the Big Three to suffer. But there are many other automakers that have remained profitable even through these tough times. Toyota, Honda and Nissan are Japanese-owned but operate huge manufacturing firms in the U.S., including in Kentucky, Tennessee and Ohio. These companies also employ thousands of American workers who are paying their taxes and struggling to put food on the table each day. Taking money from this group of taxpayers to save three ailing companies is not only unproductive, it’s plain wrong.
"Congress has already spent more than a trillion dollars in bailouts this year. If it moves forward with this proposal, I do not know where or when the bailout bonanza will end.
"There are other alternatives that should be considered. For instance, if the Big Three were able to restructure and reorganize under the protection of the bankruptcy courts, they could be saved without a taxpayer bailout and could fix many of their long term management and labor problems. Filing for Chapter 11 bankruptcy does not mean a company has gone belly up and all jobs are lost – it means a company actually has the ability to make structural changes to keep itself afloat without the threat of outside lawsuits and through a comprehensive payment plan."
Bloomberg Appearance
In November of 2008, Congresswoman Bachmann appeared on Bloomberg and spoke about the auto bailout. She noted that there was no plan in place to stop the loss of funds once the US government bailed out the companies. She also stated that companies other than Chrysler, GM, and Ford make cars in the US.
Next Up - The Auto Industry
In November of 2008, Congresswoman Bachmann wrote an op-ed discussing the upcoming bailout of the auto industry.
Next Up...The Auto Industry 11/18/2008 | Email Michele Bachmann | All Posts By Blogger
Fresh off the $700 billion-plus financial service sector bailouts, including the most recent dole to AIG that upped their bailout total from $85 billion to $150 billion, the Democrat-controlled Congress is trying to rationalize a new $25 billion bailout for the auto industry.
For years, the American auto industry has struggled to keep up with foreign manufacturers like Toyota, Honda, and Nissan. CEOs at Ford, GM and Chrysler have operated using outdated business models, failed to invest wisely in new products and technology, and were not prepared for the massive rise in gas prices that scaled back their truck and SUV sales dramatically.
But besides the Big Three’s lack of innovation and mismanagement problems, the Big Three have labor costs that are far higher than their global competitors. Their CEOs failed to take on union bosses – and as a result millions of jobs could be in jeopardy. Ironic, isn’t it?
The Big Three pay out an average of $30/hour more than their competitors, including pension and health care costs for hundreds of thousands of retirees.
Take GM for instance, as Michael Levine from NYU School of Law wrote in the Wall Street Journal yesterday: “GM is contractually required to support thousands of workers in the UAW’s ‘Jobs Bank’ program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers.”
Taxpayers are once again being asked to throw their hard-earned money behind a short-term, unproductive investment which will only prolong the companies’ failures at a cost that could be even greater later on down the road. Throwing taxpayer money at Detroit’s spiraling problems will not fix their long-term management and productivity problems. Any urgency that would force the Big Three to make tough restructuring choices would be lessened if federal money is available. Like AIG, they will be back at the taxpayer’s trough in no time. Let’s not forget that Congress already approved $25 billion in auto industry loans only a couple of months ago.
There are alternatives. For instance, if the Big Three were able to restructure and reorganize under the protection of the bankruptcy courts, they could be saved without a taxpayer bailout and could fix many of their long-term management and labor problems. Filing for Chapter 11 bankruptcy does not mean a company has gone belly up, that it will be broken up and that all jobs and productivity are lost – it means a company actually has the ability to make structural changes to keep it afloat without the threat of outside lawsuits and through a comprehensive payment plan.
Once you cross this line and bail out the auto industry, where does it end? Are the airlines next? We have already spent more than a trillion dollars in bailouts this year. We must take a hard look at why the auto industry is in this position in the first place. Only then will our economy regain the stability it desperately needs.
CNBC Appearance
In November of 2008, Congresswoman Bachmann appeared on CNBC and spoke about the auto bailout after the heads of the "Big Three" appeared in Washington to ask for loans. She stated that they could not prove that bankruptcy would not be the better path for the company in the long run. She states that while things may change when the new administration takes over, she did not see a path through Congress and the Presidency for assistance.
Bailout Battle
In December of 2008, Congresswoman Bachmann wrote an op-ed discussing a recent agreement that Congress had come to in an effort to stabilize the auto industry.
Bailout Battle for the Auto Industry 12/10/2008 | Email Michele Bachmann | All Posts By Blogger
Late Tuesday night, the White House and the Congressional Leadership reached a general agreement on a $15-billion bailout bill for the auto industry. There are still some points that reportedly need to be worked out, and some Senate Republicans remain reluctant to support the package, which could threaten its passage by that body.
But, from what we've seen of the bill so far, here's a quick overview:
* Calls for a $15 billion package of short-term loans for U.S. automakers taken from the Dept. of Energy “retooling” loan program already signed into law. (Few recall that Congress already passed a $25 billion loan program for the automakers in September.)
* Includes a provision that would ALLOW the government to demand early repayment of the loans if the firms were not making adequate progress toward reinventing themselves. This is an option, not mandatory.
* Allows the President to choose whether to appoint a single administrator — referred to as a “car czar” — or a board of Cabinet officials to oversee the loan program.
* Speaker Pelosi has conceded to WH demands that any bailout come from an Energy Dept. loan program already passed for the auto industry, not TARP. However, she has stated that the bill must specifically include provisions to replenish the retooling program -- and do so within weeks. Furthermore, she's been quite vocal about her expectation that Congress will have to send additional funds to Detroit in the new year. Speaker Pelosi hasn't hidden the fact that she considers this just a first step in Detroit's bailout.
* Speaker Pelosi wants the package to include a provision prohibiting the Big Three from opposing state fuel emissions rules. Basically, they'd have to drop their lawsuits in CA and elsewhere against state emissions laws that require the automakers to meet standards that are certainly not cost effective and often not even technologically feasible.
Senate Republicans are right to question the plan's ability to put the Big Three automakers on a viable, sustainable path that protects the taxpayer’s investment. The underlying problem in all this is that the law already provides for judicial oversight of such matters in the bankruptcy courts. What is being proposed here is that the government make special concessions to the auto industry to walk them through a special bankruptcy program administered by a 'car czar,' rather than a judge as in a normal bankruptcy case. Our government will have a controlling stake in yet another significant portion of our economy.
I understand that our nation’s auto companies are hurting, but the last thing these companies and our economy need is a multi-billion-dollar bailout that does nothing to reform the failing business model that put them in this position in the first place.
For instance, GM is drowning under the high costs of their employee benefits. Due to the negotiation of long-term retirement and health packages, GM currently supports more retired employees than present employees. Because American automakers’ costs are so much higher than their competitors- an estimated $2000 more per car- their competitors are able to put in more extras without pricing their products out of the market. It's not that no Americans are buying cars; it's that foreign companies are producing cars that Americans want to buy.
Senator Voinovich, an Ohio Republican who has been a strong advocate for an auto industry rescue, summed up our concerns over the proposed plan the best:“One of my concerns is that this bill doesn’t go far enough to secure viability plans from the auto companies that would best ensure that the money will be paid back to the taxpayers."
I'll keep you posted as things develop throughout the day and week.
Opposition to Auto-Bailout
In December of 2008, Congresswoman Bachmann released a press statement noting her opposition to the auto-bailout.
Bachmann Opposes Auto Industry Bailout
Washington, D.C., Dec 11, 2008 -
Last night, U.S. Representative Michele Bachmann (MN-6), a member of the House Financial Services Committee, made the following statement in opposition to the proposed $15-billion auto industry bailout:
"Today Congress is about to embark upon another corporate bailout - this time for Detroit's Big Three automakers - without any assurances to the taxpayers that it won't be back for more. In fact, from all news reports, while this bailout comes with a starting price of $15 billion, Congressional leadership negotiating the deal fully expects that this is just the beginning and that taxpayers will be hit up again in the new year.
"Though the already-passed $700-billion Wall Street bailout has had little to no success, Congress is about to go down this same road again. And, it appears that it does so with few qualms about the impact of its actions on hard-pressed taxpayers.
"We hear promises of strict oversight and accountability measures - but who does the Congress think it's kidding?
"Already two nonpartisan, independent panels have lambasted Treasury for its execution of the current bailout scheme. The Government Accountability Office's (GAO) scathing report about the federal government's poor oversight says it all in the title: Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency.
"Why should taxpayers expect the government's oversight of this bailout be any different?
"Unfortunately, the Democrat-led Congress has chosen to blindly oblige Big Labor at every turn, regardless of whether it's in the best interest of taxpayers.
"They have dismissed consideration of alternative proposals that could truly restructure these companies over the long-term and help them rein in costs.
"They don't want Ford, GM and Chrysler to reorganize under the protection of the bankruptcy courts, even if it would save them without a taxpayer bailout, because it means that they would actually make structural changes and renegotiate labor contracts without the threat of outside lawsuits.
"The Democrats have already spent more than a trillion dollars in bailouts this year - why not a few billion more?
"Madame Speaker, the hardworking men and women in America did not sign up for this.
"They did not turn over their hard-earned money to Uncle Sam just so Congress can dole it out to unaccountable companies that made poor business decisions for years.
"Throwing taxpayer money at Detroit's spiraling problems will not fix their long-term management and productivity troubles and they will only be back for more time and time again.
"Congress should not look the other way and put the taxpayers, and their children and grandchildren, on the hook for billions more in unaccountable spending."
Bachmann is supporting an alternative to help the American automakers stabilize their industry while they execute long-term restructuring and reorganization. That alternative would set hard benchmarks for reducing their debt and renegotiating money-pit deals with Big Labor and would set up the financial assistance as interim insurance instead of a taxpayer-financed bailout. Unlike the proposal Congressional leadership has brought before Congress, which essentially nationalizes the auto industry, this alternative would maintain an outlet for private investment in the American automakers.
Letter to the President
In December of 2008, Congresswoman Bachmann released a press statement noting a letter sent to President Bush asking him to rethink the bailout.
Bachmann to Bush: Don't Bail Out Automakers on Taxpayers' Dime
Washington, D.C., Dec 16, 2008 -
Today, Congresswoman Michele Bachmann joined several colleagues in writing to President Bush to urge him not to use any of the $700-billion Troubled Asset Relief Program (TARP) to bail out the domestic auto industry. The letter reminds President Bush that Congress appropriated the TARP money explicitly to leverage financial institutions – not Detroit’s automakers – and that the companies need solid restructuring, not a taxpayer bailout, in order to achieve long-term viability.
Bachmann, who voted against Congress’ $700-billion financial bailout and last week’s $14-billion auto bailout, has argued that the string of bailouts places too large a burden on responsible taxpayers and enables continued reckless financial behavior. “Congress relies too heavily on the taxpayers as an ATM,” said Bachmann. “It’s time for Congress to rein in government spending and pursue a pro-growth tax policy that attracts new investment, production and jobs. The real road out of this recession is through Main Street America, not Washington.”
The text of the letter follows:
Dear Mr. President:
We are writing to express our concerns over the possibility of funding from the Troubled Asset Relief Program (TARP) being used to bail out the “Big Three” auto manufacturers. The Emergency Economic Stabilization Act was intended to provide stability to the nation’s lending system—not to provide a taxpayer-funded capital infusion to favored businesses. The legislation allows the $700 billion to be used for leveraging “financial institutions,” which auto manufacturers surely are not. Congress never voted for a federal bailout of the automobile industry, and the only way for TARP funds to be diverted to domestic automakers is with explicit congressional approval.
No one wants the “Big Three” to fail, and we are not proposing it. But the federal government cannot undo decades of mismanagement, so we are faced with a decision about how to deal with it. Exercising options already afforded them by law, under a Chapter 11 reorganization for example, the American automobile industry can make the necessary reforms and could soon return to profitability. A federal bailout of the automobile industry, on the other hand, would put taxpayer money at risk, shield the companies from making the reforms necessary to restore competitiveness again, and set a costly precedent that the federal government will bailout other failing companies and industries.
Tempting as it is to step in with a federal bailout, American taxpayers cannot afford to save every company facing financial peril. Last year’s federal deficit was the highest nominal deficit in U.S. history, and many economists believe this year’s deficit will exceed $1 trillion.
For the long-term stability of our nation and our automotive manufacturers, we urge you to not expand the use of TARP money to bailout American auto manufacturers.
Glenn Beck Appearance
In April of 2009, Congresswoman Bachmann appeared on the Glenn Beck program and spoke about the change of stock from preferred to common stock in companies that received TARP funds. She then discusses the involvement of politics in decisions made at General Motors.
Gangster Government
In June of 2009, Congresswoman Bachmann spoke on the House floor about the use of government to shut down car dealerships according to government desires.
Mrs. BACHMANN. I thank the gentleman from Missouri.
And I'm very concerned again about these motor takeovers from the Federal Government. One thing that I am very concerned about, a story came out today where there's been approximately 1,500 letters that have gone out to GM dealerships.
One story that came out today, there is a dealership that I know of that applied to their Democrat Senator to appeal for help so that they could stay open. That Senator was able to arrange a meeting between the dealer and the officials at GM. We all know GM is now Government Motors because it's owned by the American people. It's been nationalized. There is no private corporations the way we used to think of GM. Now, the main stockholder is the American Government. So this Democrat Senator who was applied to for help was able to secure a meeting with General Motors and a car dealership, and they were able to get their dealership back.
Well, that's great, that's wonderful.
There is also another article I saw today where a constituent had contacted one of the representatives, a Democrat representative here in this Chamber, Representative Barney Frank. Barney Frank was able to go and talk to the right people and get this dealership back open. Is that what we have come to in this country, that rather than a private business with a private contract with another private corporation, they're no longer able to work out their agreements because, as columnist Michael Barone has called, he said, Now we've moved into the realm of gangster government. We have gangster government when the Federal Government has set up a new cartel and private businesses now have to go begging with their hand out to their local--hopefully well politically connected--Congressman or their Senator so they can buy a peace offering for that local business. Is that the kind of country we are going to have in the future?
When I was on the phone today for over an hour with one of my local dealers, the very first thing out of her mouth was this, she said, This is the most un-American thing I have ever seen in my life. I can't believe that I lived to see the day that my country would come to this point where, having my dealership for 90 years, I get a letter FedExed to me that tells me I have until Friday to sign this document to not only give up my company that was made worthless--worth $15 million, made worthless overnight--now GM is demanding that she hand over her customer list, her service customer list to GM. Why? GM most likely will use those customer lists, they will give it to her former competitors. What is she getting for this? What is her remuneration? She had the rug pulled out from her and from her husband. They virtually lost everything overnight to what? To what Michael Barone calls a gangster government.
We need to call this for what this is, my colleagues. We need to call this for what this is. Call it out. The American people need to get outraged and figure out that it could be them next. No business is safe when you see the administration appoint czars--car czars, wage czars--there's over 20 czars that have been appointed. And what do those czars do? They bypass the Congress. We are the people's elected representatives; we have been bypassed.
We now have an imperial presidency where the President has appointed various czars reporting directly to him. And now he is reaching into the confines of private businesses and overnight rendering them virtually worthless--unless, unless they have a special tug, a political tie to a local Democrat Congressman. Is that what we've come to? And I yield back.
CEO of the American Auto Industry
In May of 2009, Congresswoman Bachmann wrote an article calling the President the new CEO of the American automobile industry.
CEO of the American Automobile Industry 5/19/2009 | Email Michele Bachmann | All Posts By Blogger
The Obama Administration is certainly having its say when it comes to the U.S. auto industry.
For instance, what kind of cars should we drive? The Administration is announcing plans to increase the fuel efficiency of cars by 2016 to 35.5 mpg. The current CAFE standard is 27.5 mpg for cars and 24 mpg for light trucks. Current law already requires a 35 mpg standard by 2020. But, given the Administration’s dominance in the auto board room these days, why not move the deadline up 4 years?
Automakers are strapped as it is when it comes to manufacturing and car sales, and this new standard will increase the strain on these manufacturers to meet requirements four years sooner. Furthermore, the AP reports that new fuel and emission standards for cars and trucks will increase the costs to consumers of about $1,300 per vehicle by 2016.
Seeing as how standards were already in place to meet these fuel efficiency standards by 2020, it's interesting that the President would choose to hit the wallets of already struggling Americans yet again to advance his environmental agenda.
The President's intercession has essentially made him CEO of the American automobile industry. In fact, his Auto Task Force has called for the elimination of more than 3,000 Chrysler and General Motors automotive dealerships which would subsequently put over 150,000 employees out of work.
Arbitrarily, dealerships across the country are receiving notice that no matter how profitable they may be, they’ll be closing their doors by government fiat. These closings will not fix the litany of problems facing the automotive sector nor make it viable once again, yet the President has chosen to destroy small businesses, hurting families and worsening the recession for communities all over America.
Given that nowhere in the U.S. Constitution is the President given the power to make such demands on businesses, the President should reconsider this plan. The government takeover of the automotive industry is unprecedented and unacceptable, and it’s families and small businesses who will bear the weight of this misguided policy.
The New Directors of GM
In June of 2009, Congresswoman Bachmann wrote an article labeling the US Senate and US House of Representatives as the new directors of General Motors.
The 535 New Directors of GM 6/5/2009 | Email Michele Bachmann | All Posts By Blogger
One of the many problems with the federal government controlling a private company like GM is that each Congressman in Washington will be looking our for their own state or district's interests -- even if that works against the interest of the company they are running.
Take, for instance, Massachusetts Congressman Barney Frank. Congressman Frank put a call into GM CEO Fritz Henderson on behalf of a GM distribution center in Norton, MA that was slated for closure as part of GM's restructuring plan. After talking with the Congressman, the decision to close the center and put about 90 people out of work was reversed. I'm not faulting Barney Frank for his actions--no Representative wants to see closures in his or her district, but this exemplifies how unsuited the federal government is in running private enterprise.
Here's what the Wall Street Journal had to say about it:
"Mr. Frank's spokesman, Harry Gural, says the Congressman discussed, among other things, 'the facility's value to GM.' We'd have thought that would be something that GM might have considered when it decided to close the Norton center, but then a call from one of the most powerful Members of Congress can certainly cause a ward of the state to reconsider what qualifies as 'value.' A CEO who refuses the offer can soon find himself testifying under oath before Congress, or answering questions from the Government Accountability Office about his expense account."
Not only will decisions like plant closures be made now by politicians – politicians vulnerable to political influences particularly when they’re up for re-election every two years – but so will such decisions like what kind of technology to use in manufacturing.
In a great editorial by the Washington Post this week, GM's New Owner: What kind of deal did you get?, the editors write:
"In practice, the political manipulation of the company has probably only just begun; Democratic Rep. Eliot L. Engel (N.Y), for example, has declared that the government should require GM to install "flex fuel" technology in its cars. If GM still isn't profitable enough to attract private investment a couple of years from now, the pressure will be intense to shovel even more public money into it. Administration officials say they hope and expect that this $30 billion for GM will be the last. But they don't promise, because they can't."
We need to take a good hard look at this government power grab. Not only is it unprecedented and unconstitutional, it will ultimately prove disastrous.
Supreme Court Halts Fiat Deal
In June of 2009, Congresswoman Bachmann wrote an op-ed discussing a recent supreme court decision to temporary halt the sell of Chrysler to Fiat while investigations were made into the bankruptcy package Chrysler went through.
Supreme Court Hits the Brakes on Chrysler Deal 6/9/2009 | Email Michele Bachmann | All Posts By Blogger
Yesterday, Justice Ruth Bader Ginsburg rightly put a hold on the Obama Auto Task Force’s plan for selling Chrysler to Italian automaker Fiat in order to take a closer look at the claims made by teachers and police officers that their rights as secured creditors were violated in the way this plan was put together.
As I've discussed in earlier posts, the question in all this is whether the Obama Administration had the right to violate established bankruptcy law to give unsecured lenders like the United Auto Workers priority in place of secured lenders like the Indiana pension funds who brought the case forward. According to established law, secured lenders have first priority in bankruptcy cases to recover debts owed to them.
Indiana State Treasurer Richard Mourdock also argued that the Treasury Department should not have been allowed to use money in the Troubled Asset Relief Program (TARP) to help Chrysler and General Motors reorganize.
David Skeel, a professor of corporate law at the University of Pennsylvania, says that the pension funds have a legitimate case:
"I'm very encouraged that they did decide to at least take a closer look because the one thing that nobody has really done yet is that. Everything has been so rushed from the minute the sale was proposed. It sure looks like the sale promises [the union] a fair amount more than they would get in a normal bankruptcy."
We can't choose to follow the law sometimes, and then sidestep it when it gets in our way. The rule of law is an important principle that should not be ignored when it is inconvenient. This case is just another example of Washington’s arrogance. They chose to side with their political allies in the UAW over the rights of hard-working Americans.
Government Run Economy
In July of 2009, Congresswoman Bachmann wrote an op-ed discussing the rate at which the government was involved in the economy.
A Government-Controlled Economy 7/8/2009 | Email Michele Bachmann | All Posts By Blogger
With the federal government about to take majority ownership of GM by the end of the week, it's imperative that we as a nation examine the unprecedented role our government is taking in private industry.
The Washington Times sums it up like this:
The takeover, which is the most extensive federal intervention into the operations of a major industrial company, follows in quick succession a government-assisted bankruptcy reorganization of Chrysler LLC, the assumption of partial ownership of two of the nation's biggest banks -- Citigroup and Bank of America -- and the seizure of mortgage giants Fannie Mae and Freddie Mac as well as insurance goliath American International Group Inc.
That's quite a portfolio.
According to William Boyes, an economics professor at the W.P. Carey School of Business at Arizona State University, "the government now owns or controls businesses that generate about one-third of U.S. economic activity."
It's shocking to see the ever-expanding role that government is taking over the private sector under the guise of crisis. The White House says it wishes it didn't have to do what it did, and that it is acting to save the economy from total collapse. Time will tell how genuine that “duress” was.
But in the mean time, the private economy as we once knew it has radically changed.
As Mr. Boyes notes: "I didn't think I would ever see the United States move to a primarily government-controlled economy, and its happened in just a few months."
We need to assess whether the actions of the government are working now and whether they are really in the best interest of our nation and future generations of Americans.
Obama Administration and Dealerships
In July of 2009, Congresswoman Bachmann wrote an op-ed discussing the involvement of the Obama administration in closing auto dealerships. She expresses her support for the Automobile Dealer Economic Rights Restoration Act of 2009.
Administration Focused on Keeping Car Dealerships Closed 7/21/2009 | Email Michele Bachmann | All Posts By Blogger
Looks like the Obama Administration is also going to great lengths to oppose H.R. 2743, the "Automobile Dealer Economic Rights Restoration Act of 2009."
I've talked extensively about how on July 6th GM dealers received a letter from the General Motors National Dealer Council urging them to sign a sort of petition to Congress immediately; no later than 5:00 p.m. the very next day, saying that they opposed passage of the bill.
I am a co-sponsor of H.R. 2743 along with 241 other Members of Congress. If passed, it would essentially reinstate the economic and contract rights of dealers who were arbitrarily dropped by Chrysler and General Motors during their respective restructurings. In essence, H.R. 2473 makes these dealers whole instead of allowing their livelihoods to be taken from them with no legal recourse and no financial compensation.
According to TradingMarkets.com, the Obama Administration is urging opposition to this bill, too. The White House has said that reversing the closings 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."
With all due respect: Tell that to the retired teachers and police officers in Indiana whose pension funds were decimated when the Obama car czar leapfrogged the unsecured debts of the United Auto Workers ahead of the secured debts of these legitimate bondholders.
The deal crafted by the Obama White House to quickly move along the restructing of Chrysler and GM trampled on the rights of pension fund creditors by giving a bigger share of the pie to more junior, non-secured parties - like the UAW. Now, that’s a very ugly precedent for future investors.
Apparently, the Administration observes legal precedents only if doing so moves forward their priorities and agenda.
Ford on the Right Track
In July of 2009, Congresswoman Bachmann wrote an op-ed discussing the path of the Ford Motor Company in comparison with the companies which took TARP funds.
Ford Motor on the Right Track 7/24/2009 | Email Michele Bachmann | All Posts By Blogger
We received good news this week from our nation's struggling automobile industry, as Ford reported a profit of $2.3 billion. What's more, according its CEO, Alan Mulally, as reported in the Wall Street Journal, "Ford remains on track to break even or even make money in 2011 and has sufficient liquidity to fund its turnaround plan."
I think Chrysler and GM could learn something from Ford's example. Ford made the tough choice to restructure internally instead of taking an infusion of taxpayer bailout money and a government-run bankruptcy. They closed plants, eliminated different brands of cars, and had to cut about 40,000 employees. And, they borrowed $23.5 billion from private lenders, " mortgaging almost everything of value in the company." They made the tough choices, took the risks, and now they are on track to reap the rewards, branding themselves to be on track to be a vibrant, job-creating company once again.
On the other hand, we have the Chrysler and GM example. Who knows what's next on their dance card having danced the bailout/bankruptcy two-step with the federal government. What's more: Who knows how these rival companies will fare against one another taking such radically different paths. Will Ford find itself at a disadvantage for doing the right thing and living up to the American spirit of risk-taking, ingenuity, and innovation? As the Wall Street Journal reports today, "Ford's decision to decline U.S. aid or file for bankruptcy protection may have created consumer goodwill, but rival GM was able to eliminate about $40 billion in debt. Chrysler Group LLC similarly exited bankruptcy with lower financial obligations."
Henry Ford is responsible for the birth of the American auto industry. It's encouraging to see that the spirit of America still lives on in Ford.
Taxpayers Will Lose
In October of 2009, Congresswoman Bachmann wrote an op-ed discussing the auto bailout and her belief that the tax payers will end up paying the bill.
Taxpayers Lose in General Motors Bailout 10/28/2009 | Email Michele Bachmann | All Posts By Blogger
You may recall that when Congress was bailing out the auto industry, I had real concerns about whether the taxpayers would ever get that money back. The auto industry, GM in particular, has had a poor track record with loans in the past, having come back to the federal government again and again with its hand out. Last December, the U.S. Treasury Department loaned General Motors $13 billion. In the spring, Treasury loaned GM another $6 billion. In June, days before GM declared bankruptcy, the Administration loaned another $30 billion – just in time to convert taxpayer loans to equity taking ownership of GM. That’s a total of $49 billion.
The problem is that President Obama’s former “car czar,” Steve Rattner, estimates that the taxpayers’ stake in GM now stands around $25 billion. That means $24 billion of taxpayer dollars may have been lost for good. In fact, despite this multi-billion dollar cash infusion to GM, sales declined by 45% in September, while privately-owned Ford Motors fell only 6%. And, that makes it far less promising for taxpayers.
What’s more, we know little to nothing about how this whole transaction transpired. The President’s Automotive Task Force has operated in complete secrecy and they must be held accountable for their actions. Taxpayers deserve both fiscal responsibility and transparency from their government.
Voting Record
Auto Industry Financing and Restructuring Act
As the last vote in the 2008 session, the House passed the Auto Industry Financing and Restructuring Act. Although the legislation was not brought up for a vote in the Senate, it provided the blueprint for how Presidents Bush and Obama would later deal with GM. Michele Bachmann voted against the legislation to assist GM.
Michele Bachmann voted against the legislation to assist GM.
Sponsored and Cosponsored Legislation
This representative has not been identified as sponsoring or cosponsoring significant legislation related to this title.
