The Standing Rules of the Senate are drafted to encourage vigorous public debate on our nation’s most important issues. Indeed, the U.S. Senate is often referred to as “the world’s greatest deliberative body.” The Rules allow any Senator to seek recognition from the Chair at any time and, absent a temporary agreement to the contrary, to speak without interruption so long as he or she wishes. Debating important questions before the Senate is one way a Senator can highlight an issue, advocate for a change in policy, or voice his or her opinion on pending legislation.
Senate debate occurs in public, and is televised on CSPAN and transcribed in the Congressional Record. For your convenience, I post transcripts of my Senate floor speeches on this site for your review. I hope you find them informative and useful. My web site also makes available information on my voting record and legislation that I have sponsored in the Senate.
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Sessions Cautions the Senate on the Auto Bailout
Mr. SESSIONS. Mr. President, I am worried about the process we have been undergoing here in the Senate in recent weeks, and I expressed that concern. I know Senator Dorgan indicated he voted against the $700 billion bailout, and I did, too, for a lot of reasons, one of which was I thought it was unthinkable that the Senate, the one body in this Government that is supposed to look at the long-term effect of a piece of legislation on America, was stampeded. I think my colleague from Alabama, Senator Shelby, said we panicked and we threw $700 billion at one man, the Secretary of the Treasury, and basically allowed him to utilize it in any way he chose, although he told us explicitly that he desired to use it to purchase toxic assets--that is, bad mortgages--from banks so those banks would not have the economic threat of a bad mortgage on their books and could be able to lend money and this would fix the financial crisis. There was a superhighway and a big truck laying across it, and all we had to do was get this truck off and the financial markets would be open again. Within a week or 2 weeks, Secretary Paulson had changed his mind. Directly contrary to what he told us he wanted to do, he bought stock in 10 banks at hundreds of millions of dollars, the likes of which this country had never seen before, and we never talked about that one bit in the Senate.
Mr. President, $700 billion is an incredibly large sum to commit this country to. I hope we will get most of it back. I do not believe we will get all of it back. I hope we at least get some of it back. But I would note to my colleagues that 5 years of the Iraq war cost this country $500 billion. In a few days, we authorized $700 billion. But it really was not just $700 billion because they had added in there a lot of pork items. This followed appropriations for $25 billion in loans for the automobile companies that was included in the Continuing Resolution in September, which was hardly even discussed. It was put in the bill, to my knowledge, with virtually no real discussion in the Senate about how to help them transition their plants to make more energy-efficient automobiles--just tacked it in there.
But you remember the fear if we didn't pass the bill the first day they brought it up. It had to be passed before the Asian markets opened the next day. It didn't happen. We went a week or 10 days later, and the world didn't collapse. We finally passed the thing, and a lot of people have doubts whether it has helped much at all.
Regardless, I just would say that this Senate has responsibilities to the taxpayers of America. When we are talking about tens of billions of dollars or hundreds of billions of dollars--the largest expenditure of funds on any one project in the history of this Republic, $700 billion--we need to ask ourselves what this means. One of the things it means is that everybody else will want to get into the act. Before the ink was dry on that, here come the automobile companies.
Let me say briefly, Americans are going to have to think about this. After 9/11, we had a little stimulus package--it was little compared to the one we have now--but we sent out checks then. The economy was in a state of nervous exhaustion and a spasm of economic disturbance. Our deficit hit about $412 billion in 2002. I think that was the highest deficit in dollar terms this Nation had ever had. In the ensuing years, through fiscal year 2007, the deficit fell to $161 billion. Then, earlier this year, it was decided it would be a good idea to have another stimulus package, and we sent out these hundreds of dollars in checks to all Americans. It was about $100 billion, a little over $100 billion. We just sent out the checks, and that was supposed to help fix the economy. In that economic slowdown, this September 30, when the fiscal year for 2008 budget was ended, the fiscal year, the debt was $455 billion--the deficit, for one year.
What is going to happen next year? Without counting the $700 billion as a loss to the Government, experts are now telling us the deficit will exceed $455 billion. It will exceed $1,000 billion--$1 trillion. But we have to pass another $34 billion or $15 billion, or whatever the number is, right now because we have to act. We cannot ask too many questions, we cannot have too much debate because things might happen fast, and if we do not act you will be blamed for a company failing. I wish to say that somewhere along the line this Senate is the body that is supposed to ask the questions and slow this train down and actually go through the details and figure out what to do.
But I know my good friend Senator Reid, who has the toughest job in Washington--they have all been meeting with the Banking Committee and the automobile industry and the White House and special interests and labor unions--all through the weekend, they say. They didn't invite me. They didn't invite a lot of other Members of this Senate. So today they plopped down a bill that is supposed to move forward with a temporary fix of $15 billion, and we are supposed to say thanks for saving us so much. One of our Members has said we have to do something in a hurry; we have 48 to 72 hours. Why 48 to 72 hours? We have plenty of time, if we want to, to work at this thing.
I know you have heard this statement, that bankruptcy is not a good way for the companies to go. Most people, when they think of bankruptcy, think of chapter 7 in bankruptcy, which is a liquidation of a company and its assets. All the people to whom that company owes money come in and line up, and the bankruptcy judge sells all the assets and parcels out what money is left--usually not very much--to those claimants.
But there is another very common bankruptcy procedure called chapter 11; it is called reorganization in chapter 11. You have heard the phrase ``They sought protection in bankruptcy.'' If you file for bankruptcy under chapter 11, your company continues to operate. Delta Airlines--I flew them yesterday--Delta Airlines in 2005 was in bankruptcy for over a year. They came out of bankruptcy leaner, having confronted many of their difficulties. They actually bought Northwest Airlines. They are doing very well today. They didn't disappear. They didn't lay off all their workers. They didn't shut the airline down, they continued to operate. The automobile companies, if they seek reorganization and protection under chapter 11, will then be in a position to confront their excessive legacy costs to deal with contracts that are pulling them down.
I think it was Mitt Romney whose father, in Michigan, was active in the automobile industry. He wrote an op-ed, and he calculated--others have used a similar figure, but I remember his--that an average American automobile is carrying a $2,000 legacy cost, the cost that is a burden on them and keeps them from being competitive in the marketplace. How do you get out of that? They say we will meet and we will talk about it and we will appoint a czar and that czar will make these companies concede these contractual provisions. But contracts are not something you have to concede. A contract is a binding document against the company or against an individual. An individual doesn't have to concede that contract, and many of them may not. Many of them will say: You guys can concede. You can cut your salaries, unions, but I am not cutting my health care benefits because I retired 10 years ago, and I still expect a health care benefit that exceeds 95 percent of the American workers' health care benefits today; I want mine kept. Who is going to make them give that up? It cannot be done voluntarily. What about a dealer and other groups, leaseholders who have claims against these companies? Why should they give up?
But in bankruptcy, the whole purpose is to create an environment in which a judge can make some decisions about what it is going to take to save the company, to save the jobs. The judge has the power to amend these contracts and to say: The only way this company is going to survive is you health care guys are going to have to give some; you salaried people are going to have to give some; you executives are going to have to give some; the dealers are going to have to give some. Otherwise, this company is going under. They have witnesses, they take testimony, and they all have the right to have their lawyer there and to present evidence. It is under oath, in detail, subject to cross-examination. Certified financial statements have to be produced. All of these things happen in bankruptcy. At the end, a bankruptcy judge, after hearing all of these arguments, will have as his or her goal the creation of a bankruptcy order that will allow the company to operate and to keep operating, keep making cars. They will not have to stop making cars during this whole process. They will continue. But if people cannot make claims against them, they can't file lawsuits. All the lawsuits against the companies, if they can't pay their debts, are stayed. It all stops. Nobody can levy against any of the property until the bankruptcy judge says so. I am amazed we are not going in that direction. For some reason, it seems that certain interests are objecting to the normal course of how a company should go about dealing with financial problems.
I also believe a responsible Senate should be taken aback about the way this has all come about. First, $25 billion was slipped in to help these companies move to more fuel-efficient automobiles--that program. But the automobile executives came back a couple of weeks ago, about 2 weeks ago, and they asked for $25 billion on top of that--$25 billion more. They say: Just take it out of the $700 billion. We are not able to access this $25 billion you have already set aside for us. We have to do certain things on environmental issues, and we are not able to access that now. So if we want to do that--and we need $25 billion. They flew in in their big jets. They didn't have any kind of coherent plan. Congress and the American people were aghast. They couldn't imagine this $25 billion.
My State of Alabama is about an average size State--4 million people; we have 7 Congressmen. As I recall, our basic budget for the State is $6 billion or so a year, and that includes education and everything else a State needs. So I would say to you, $25 billion or $34 billion is a lot of money.
These executives go home chastened, and their advisers whispered in their ears: You guys have to be humble. Don't you understand? You were too arrogant. You have to go up there--you can't fly. You have to drive up in your fuel-efficient automobile before you go back to Congress, and grovel a little bit, tell them you did something wrong. If you tell them you did something wrong and grovel and act humble, maybe you can get the money.
So what did they do? They came back and they groveled and they say they made mistakes and they are so sorry. They want $34 billion. How humble is that?
What the problem is--President-elect Obama said it: We want to make sure the money we are putting into this company is worth something. It is not supposed to be a gift, it is supposed to be a loan.
Once you start putting money in a sinking company, as any banker will tell you--they refer to it as putting good money after bad--the more money you put into a corporation, the deeper they have you. You are the one who is hooked. You are the one who is stuck now because you are in $25, $34, $50, $100. What about if we just have another $50 after this $100, and maybe we will make it. If you don't help us with another $50, you are going to lose the hundred--right? That is how these things go. That is the way bankers look at this situation, and they will not loan them the money. Bankers are not going to loan them the money because they are too worried about it. The numbers don't add up. Since the bankers will not loan them the money, they want to come to us and get us to loan them the money and take risks a reasonable banker would not take.
Somebody says: Maybe it will not be a lot more than that; maybe this will be enough. It is pretty clear that nobody says the $15 billion would be enough, what we are apparently going to be asked to look at with the bill that was just plopped down a little while ago. But at the Banking hearing last week, an independent analyst predicted that it would be $75 billion to $125 billion to avoid them going into bankruptcy.
So if they are going to go into bankruptcy, how much money do we need to help them avoid that? Well, this analyst said it would be $75 to $125 billion. That is a lot of money. Maybe they should go into bankruptcy first, and then maybe we could see what the real facts are and have a judge and a hearing and evidence taken and decisions made. Maybe tough decisions could be made and maybe the Government can help a little bit and help them come out of there and keep these companies going at a reasonable price.
So I would certainly like the competition. We certainly want these companies to be successful. But it has to be done consistent with the value and principles of America.
There is no reason for us not to assume that we are going to be asked for more and more money to keep these companies alive under the circumstances we are in today.
I would ask a couple questions then. First, what certainty do we have that they will not be asking for many times the amount of money that is being asked for today? I think we are virtually certain. We know there is more. Within the bill, I would note, is a statement that we are authorizing--it is not putting up the money yet, it is a big step toward it--we are authorizing the full replenishment of the $25 billion fuel efficiency loan program.
So the $15 billion that comes out, we are authorizing it, to put in more. The way the language is written, it is pretty clear that it goes further than that. What it does is it authorizes, on page 3, excuse me on page 11, the Secretary of Treasury--``is authorized to be appropriated to the Secretary of Treasury sums as being necessary for the purpose of replenishing the funds available to the President's designee under this section.''
So first of all it says: Yes, we take the $15 billion out of the existing loan program, but we are putting it back in immediately. The $700 billion is not reduced, neither is the $25 billion we have already appropriated. Both of those have already been authorized and appropriated. We take this money out and we put every penny of it back in this same bill. A little slight of hand there; is it not? Sounds like it to me.
Then it goes on to have other language that indicates, the way it is written, it authorizes up to another $25 billion. So authorized in this bill, I think it is fair to say, based on our reading of it a few moments ago, since it just now appeared, that we are talking about $49.5 billion being authorized for this problem. That is a lot of money.
It is somewhat different than the pitch that all we are doing is putting up $25 billion or $15 billion. And they are at least honest about this. They say the $15 billion is just a bridge loan, and that at least by March they will be back asking for more. How much more, $75, $125 billion, without once having to submit themselves to the rigors of a reorganization process that current law provides for big corporations and little ones in America under chapter 11.
Now, the legislation calls for the appointment of a car czar. That is what they are calling it. It says this about the car czar. The guy is supposed to be able to meet with these executives, many of whom have spent their lives in the automobile industry, and it is going to tell them that: This is not a good idea. This is a good idea. Yes, you can do that. No, you cannot do that. We will not give you money unless you do such and so and tell them how to run their business.
This is what it says on page 3, section 3:
The President will designate one or more officers of the Executive Branch, [a Federal Government bureaucrat] having appropriate expertise in such areas as economic stabilization, financial aid to commerce and industry, financial restructuring, energy efficiency, and environmental protection, to carry out the purposes of this Act, including the facilitation of restructuring to achieve long-term financial viability of the domestic automobile manufacturing industry, and who shall serve at the pleasure of the President.
Which means the new President will remove the one President Bush puts in, I presume, and put another one, or certainly have the authority to do so.
This designee shall direct the disbursement of the bridge loans or enter into commitments for lines of credit for each automobile manufacturer that has submitted a request.
Well, does it say anything about the person that is going to tell these companies, you know, we are going to tell them how to do this right? What would you tell them? Would you tell them: We are never going to make anymore big pickups, cancel all SUVs, put all your money into hybrid cars. We do not know how well they are going to sell and how people are going to continue to buy them, but you can only use the money for these kinds of things.
That is a dangerous action for a politician to do. It is odd to me that the provisions of the act call for expertise in financial aid to commerce and industry, environmental protection and energy efficiency and not one requirement that the person knows anything about the automobile industry. I know I do not know much about it. I do know this. My father ran an International Harvester, a little town dealership, hardly made a living for us. I worked in his shop. I was a parts person in his office. He only had four or five employees. They squeezed him out because he was too small, lucky to get out with his shirt.
I was in high school. I remember that vividly. Well, certain things are not financially doable. He was not able to continue to operate an International Harvester truck and tractor dealership when he could only sell to so few customers, that he could not maintain the parts and the mechanics and the equipment necessary to maintain a viable business.
Things change. He did not ask for a bailout. So the person who is supposed to be working on this is not required to have any knowledge whatsoever of the automobile business but is going to tell them how to run it, apparently. It looks like, does it not, that this would give another unelected official the ``maximum flexibility'' to appropriate taxpayers' money as they see fit.
Is this not the same mistake we made with the Secretary of the Treasury when we gave him $700 billion to parcel it out to his friends on Wall Street, however he felt like giving it.
Now, the jobs bank, which is a very perverse problem the automobile industry has. It was an agreement they made that would pay employees up to 95 percent of their pay not to work. If they have been laid off, they get 95 percent of their pay. It defers health insurance payments. Unions have said they would make concessions. That has been touted about. But they were only temporary concessions that the union has made on this. I am not sure what power a union has to tell a company that you no longer have to pay an employee who agreed by contract to pay him 95 percent of his salary. How can they abrogate that contract? You can do it in bankruptcy. You cannot do it by voluntary agreement.
So I have my doubts about how this can be fixed short of a bankruptcy. So I would ask: How can we reach an agreement that would bind the union or any other group that has contracts with the automobile industry to follow those agreements?
I ask this question, even supporters of the deal admit that a bankruptcy may still be needed in the end. So does not this multibillion dollar bailout just delay actual productive restructuring? Is it not just a delay? I am afraid it is. It absolutely is unless we put more than $15 billion in, because with $15 billion, everybody knows that is not going to be enough to keep them liquid throughout the next year. It is pretty well conceded. So are not we delaying the inevitable?
I would also add, experts agree that to be successful, everyone makes concessions, must make concessions. So what concrete steps does this legislation require of creditors, suppliers, unions
or automobile dealers? It does not require any. I will answer that.
Also, the legislation calls for the development of a long-term structuring plan by the end of March. Doing so would require that various groups agree. Why do we think they will be able to accomplish this 3 months from now, when they have not been able to accomplish it in the last 3 months? How can these parties be forced to agree when they hold valid contracts for the automobile companies?
Now, as I indicated earlier, we are taking a big risk without ensuring that reform is going to occur that would make these companies viable. Everyone knows major restructuring needs to be done, that they need to emerge from this process, as I say, as Delta did from bankruptcy, chapter 11 reorganization, leaner, more competitive, keeping their employees, giving them a future, providing for their retirement and health care as they committed to do but to be able to shed unnecessary costs that had the danger of sinking the entire ship.
So we know that a banker today would not make a loan to these companies under these conditions of vague promises of improvement in the future. You think they are not telling their bankers: Oh, we are going to make progress, if you just loan us money. Companies know more than that. They want some assurance. We represent the taxpayers of America. Should we not be more concerned about the assurances too?
So we do have a regular order--I will conclude with this remark--a regular order in America. If a company gets to the point where they cannot meet their payroll, and they cannot pay all their debts, because they have a liquidity, a financial cash flow problem, the procedure is perfectly simply, you seek reorganization, you seek protection under chapter 11 in bankruptcy.
The company continues to operate, the employees continue to be paid, and, in fact, one of the highest, I believe the highest, priority of a bankruptcy judge is to see that the employees are paid. That is the first thing that comes with the limited money in a company that is in financial problems, is to pay the workers for their work, and throughout that process the company can be reorganized. Witnesses are under oath, can testify to the real facts that we in Congress have no capability of ascertaining, and they will be able to present evidence that sheds light on some of these matters. The unions would have their lawyers, the dealers would have their lawyers, the suppliers would have their lawyers and argue a case and a judge is going to have to say: Mr. Supplier, you are going to have to take 75 percent of what they owe; they cannot pay you the whole amount. We have to keep this country going. Mr. Union, you are going to have to accept less. Mr. Dealer, you are going to have to accept less. Then we will try to pay this back once we pare this company down and get it leaner and more efficient and more competitive and we are going to send it out there and we believe we can make this work.
But if you liquidate the company today, you are not going to get half of what you are owed. You are not going to get a fraction of what you are owed.
That is not the right thing. The whole motivation for a reorganization of procedure under chapter 11 would be to save the company, to save the jobs and save the industry. This Senate has no business trying to act as some sort of super bankruptcy judge in a reorganization. Our action in sending out money enables the continuation of bad behavior. It pretty closely approximates that psychological syndrome called enabler where the person who is drinking too heavily, instead of confronting the problem, the person's problem, you give them more money which allows them to continue to drink and they don't confront their problem and the problem continues to get worse.
It is time to confront the problem. Let's save this industry, and let's do so within the legal procedures the Nation has. And at some point if we can help them financially, let's do so. But we need to be sure, on behalf of the taxpayers, that we know exactly what the circumstance is, that a full examination of these companies has been undertaken. The idea of giving them billions of dollars based on a very poor statement of need is not acceptable to the people of the United States.
I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SESSIONS. I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. CARDIN). Without objection, it is so ordered.
Mr. SESSIONS. Mr. President, I was in error earlier in saying that there was a $15 billion line item in this legislation that we saw. In looking at it with my staff, basically this legislation, if it were to pass, would authorize the expenditure of $25 billion--really $24.5 billion--to the car companies. It also at the same time states that even though that money is coming out of the energy efficiency $25 billion, it also says that $25 billion will be available for expenditure in addition. So that is how I would say that as we read the legislation, it is an authorization of over $49 billion, in reality, to the automobile companies. It would take an additional appropriation for $25 billion, but that would be a single step instead of the normal legislative process. It enhances the ability for that to be expended. I think that is a correct statement. There is no reference, as has been discussed in the papers, about $15 billion. But it authorizes the full 25.
It says: There are authorized to be appropriated to the Secretary of Energy sums as may be necessary for the purpose of replenishing the funds made available to the President's designee under this section. It also says: No provision shall be construed to prohibit or limit the Secretary of Energy from processing applications for loans under the section. That is the existing $25 billion. So they still will get the loans under the $25 billion plus the other. I think in all fairness, the way we read this is a $49 billion authorization, not 25, and certainly not 15.
I yield the floor.
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