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 Speaks to Senate about the Auto Bailout
SESSIONS. Mr. President, I thank the Chair for the opportunity to speak. I appreciate the eloquent remarks of my colleague, Senator Mikulski. She is a passionate advocate for Middle America, and it is a pleasure to serve with her in the Senate.
I have to say, it is a historic day that Senator Obama has resigned and will be on the road now to inauguration as the President of the United States. People are happy about it. For so many people, you can feel their excitement about the possibilities. The country wanted change, and we have some change out there. I think we need to ask ourselves pretty clearly what kind of change it is they were demanding of Congress. We may well have some disagreements about that.
The day after the election, I was doing a little exercise at the park back home in Alabama, and I met an African-American with an Army hat on. He and his friends were talking happily, and there was an excitement about this election. He said: You know, this is the first time I know my sacrifice in Vietnam meant something. He was sincere about that. There is a good feeling out there.
I would say that one of the things the American people did not vote for, however, was wasteful Washington spending. It is just not so. One of the things they rejected in the Bush administration was reckless spending, unprincipled spending. That is something that has worried them. So in interpreting the results of the election, I think we need to take care.
I noticed a recent Rasmussen Poll showed that 80 percent of Americans think the Government is too involved in the economy, that the Government is getting its nose too much in this and taking their money they sent here and spending it on somebody the Government wants to favor with Federal largess. I do
not think that is what the election meant: that we ought to spend more.
Also, on the question of the bailout, less than one-third of the American people in the Rasmussen Poll said they favored an automobile company bailout. This is contrary to our fundamental principles. We may have to, at certain times, do things that are a violation of principle. We ought to be very cautious about doing so. These are things that have served this country well for over 200 years. We need to be careful about it.
So I do not think the change people voted for was to authorize Congress to go on a wild spending spree, throwing money at every problem. We have already had, this year, a $150 billion stimulus that was supposed to ward off the recession--sending out checks to everybody, and this was going to fix it.
I hated to vote against that, but I could not vote for that $150 billion, every penny of which went to the debt. We were already in deficit, so we added another $150 billion to the deficit in one fell swoop. What did we tell people to do? We told them to go out and spend. I know the Acting President pro tempore is from Nebraska. I know he was raised right. We have had a talk about families and how families work. When you have a financial problem, you do not tell your children to go out and see how much they can spend. You ask them to get smart about what they have been doing.
When the economy goes into a recessionary period, people start watching their spending. They decide they do not eat out as much. They decide they cannot buy as fancy clothes. They decide they cannot afford a big, expensive house that has also been going up in price, and maybe it is not going up now, so they wisely decide to stay renting or stay in the house they have, which depresses the price of housing. This is the business cycle, I will just say.
I feel like we work our way through that. As people get their debt paid down, they start buying more. In the meantime, certain companies get hurt. Companies that are selling big gas-guzzling vehicles and are committed to that product are going to be one of the groups that gets hit the hardest. I wish it were not so. I know this is not a matter of insignificance that domestic automobile companies are in financial trouble. But they have been promoting a product the American people do not want right now and they are committed to that product and it is troubling as to how we work our way out of it. But I think rewarding misbehavior is not the way to do it.
So it is pretty clear now that we are in a recession and that credit had been too cheap in the years leading up to this. We had a bubble in housing. People thought prices would never go down, and they bought houses larger than they could afford, made payments that stressed them to the very limit to afford those big houses, pretty much on the theory that the housing prices were going to continue to go up and would never go down. Those of us who have been around a while should have known that is not a good way to go. We have known, and we have seen it in our very neighborhoods, the young couple buying huge automobiles, borrowing money to do so--$40,000, $50,000, $60,000--that they could not afford. It also guzzled fuel, cost them more at the pump, and each month they ran up debts on their credit card, including gasoline. When you get to the maximum limit, you have to cut back.
So what do you do? You do not buy as many of these things, you do not add as much, you do not buy the big cars, some people cannot afford to hold on to their big houses, and you go through a recessionary period. It is not a matter we ought to treat lightly. I certainly recognize that.
But as USA Today said a month or so ago, an economy founded on excessive personal debt, excessive Government debt, and huge trade deficits, is not sound. That is just it. We have to change our ways. We cannot buy our way out of this situation. There is no free lunch. For anything that somebody puts in front of you to eat, somebody has had to pay for it to get it there. Debts have to be repaid. We have to be honest about it.
We cannot continue to throw money at this problem. We are going to have to take our lumps now and come out of it stronger rather than trying to postpone the problem, kicking the can down the road in some desperate attempt at stimulus to avoid any pain in a normal recessionary cycle.
So I worry about it. Let me tell my colleagues about the deficit. The deficit surged after 9/11. We had increased spending at airports and we did all kinds of things and the deficit went up to almost $420 billion--one of the biggest deficits in dollar terms we have ever had, not as a percentage of GDP, but a huge deficit and a reversal of the situation prior to that. That deficit has gone down. A year ago September 30, our deficit for the year was $161 billion; still large, too large, but going in the right direction. As of September 30 of this year, after we popped $150 billion earlier this year directly into the deficit to fund the stimulus that was supposed to avoid a recession, now the deficit this year was $455 billion. And the one we are in today, I saw an article recently that said the deficit will clearly be in excess of $750 billion, the largest deficit in the history of our country and, probably, as a percentage of GDP, one of the largest we have ever had. Now we are talking about more spending, more spending, more, more, more; we have to bail out this industry, that industry, the other industry.
Alabama was heavily reliant on textiles. Now, seventy percent of our textile industry is gone. You can go to town after town where sewing plants existed--no longer there. Should the Federal Government have stopped that? The little community in which I grew up, the original community was on the river where steamboats plied the river. After railroads came, the community sort of moved a few miles over to the railroad. That is where I grew up, in a little railroad community. Then the passenger trains stopped, and the freight trains stopped and people had interstates and other ways to communicate and travel and airplanes came along. Should we have passed--we had a railroad depot there, and my friend's dad ran it. Well, it is closed. Should we have passed a law to keep the railroads just as they always were and all the depots out there? Years ago you remember the debate over whether the union should require a fireman, who used to shovel coal into the steam engines, to sit on a diesel train. That was part of the union contract. For decades after we ended steam engines, the union contracts required a person named a fireman to sit on a diesel train with the engineer. This is not sound.
Change is inevitable. We have to adjust to it. That is what we need to do. Maybe there are ways we can help the automobile industry--I assume there are, and I would be prepared to discuss that--but we have to be realistic and honest. When we start throwing money at private corporations to save them from the forces that are at work in our economy, we are taking on a big challenge.
This is a metaphor I have in my mind. Do my colleagues remember the story of the folks who flew airplanes over the hurricanes and threw out dry ice and they believed if they could just throw out enough dry ice, they could stop the hurricane? Well, we can't throw money into this financial hurricane and stop it either. We have to hunker down and do what we have always done to work through difficult financial circumstances. We can be sophisticated and come up with some good ideas that can help--and I am certainly for that--but I would tell my colleagues as a matter of principle we need to be very cautious about picking and choosing who we are going to reward with Federal taxpayer money.
In a meeting yesterday, Secretary Paulson was quite correct. He said: Look, any time you take Federal money and insert it into the marketplace--and he was talking about the automobile industry and the banking industry at the time--you distort the market. You help some companies and industries and you hurt others. I would just add, you do so with taxpayer money, you are taking sides in the process. That is dangerous, and we need to be as careful about it as we possibly can. So I would just raise those points.
Do my colleagues know our savings rate in America fell below zero at the height of this boom, at the height of this housing bubble, this automobile bubble? Gasoline prices were through the roof, commodity prices through the roof, farm prices surging, gold and other metals going up at incredible rates. They are all falling now, but during that time we didn't have any savings. Our savings rates fell below zero. Now that we are going into a recessionary period--and we are in a recession--people are saving. The savings rate I saw recently was about 3 percent. So people are not consuming as much. Is that all bad?
When people don't consume as much and don't travel as much, the hotels are not as full, the restaurants are not as full, the automobile companies can't sell as many automobiles, and they are going through tough times. But when you have an excessive boom, this is the kind of thing that is bound to happen.
One observer of the scene made this comment in 2006 about the housing market. He said:
Housing prices cannot continue to increase at twice the rate of the growth of GDP, and they cannot continue to increase at this rate when wages are basically flat.
Now, doesn't that make sense? Didn't we know people who couldn't afford a house because the prices were outrageous? There are some benefits from the collapse and the boom on housing prices. An average person now may be able to buy a house at a more reasonable price than they were before. So these are the cycles we go through.
The timber industry in my State depends on home building. When construction is down, our saw mills are shutting down in small towns, and that is the only business they have. Are we going to bail out the saw mills today? Is anybody proposing that? Then, the people who work in the woods to harvest the timber--good, honest, hard-working Americans--if the saw mills can't buy the lumber--are they getting an hourly wage? Are they being laid off? Yes, they are, as part of this tough cycle that we are going through.
I wish to ask this fundamental question: Who is going to bail out the American Government? Who is going to bail out the American taxpayers for the expenditures that we are increasing? I ask this: Isn't it true there are three basic ways to deal with money we are borrowing today, perhaps $1 trillion this fiscal year? When I say $750 billion to $1 trillion, I am not counting the $700 billion bailout. That has not been scored yet. I am talking about other spending, including some of these bailout proposals.
So there are three ways we could do it. We could cut spending. Our Democratic colleagues were pretty hard on Republicans for, they said, spending too much, and they were right more than I would like to admit. I would just say this: Are we getting any better now? The talk we are hearing today, is it spend more, more, more, more, or is it a discussion about a contained spending? No. What we are hearing from the change group, I am afraid, is spend more.
Well, that is one way to pay off your debts. Another way would be to raise taxes. None of us want to see taxes raised, for heaven's sake, especially not in a time of economic slowdown, so taxes is not a likely way to pay off the debt.
What has happened throughout history? Fundamentally, the way debts are paid off is by debasing the currency.
The PRESIDING OFFICER (Mr. Cardin). The Senator's time has expired.
Mr. SESSIONS. Is that 10 minutes, I believe?
The PRESIDING OFFICER. Yes.
Mr. SESSIONS. Mr. President, I would ask unanimous consent for 5 additional minutes.
The PRESIDING OFFICER. Is there objection? Hearing no objection, the Senator is recognized.
Mr. SESSIONS. So I am afraid of inflating the currency, reducing the value of currency so that when the government has to pay back debts, it pays back in dollars less valuable than the ones it borrowed, and we basically cheat the people who loaned money. When that happens, they are going to demand a higher rate of interest on the trillions of dollars of debt we have today.
Let me briefly share with my colleagues some thoughts about the bailout and why I cannot support the plan that is being proposed and offered by Senator Reid, the Democratic leader. I commend to my colleagues the article by Michael E. Levine entitled, ``Why Bankruptcy Is The Best Option For GM.'' He is a former airline executive and is a distinguished research scholar and senior lecturer at NYU School of Law. He just points out this fact--and as a lawyer, I think he is absolutely correct. Regarding contracts and ways that would really reform and streamline and make these companies competitive, he said this:
Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement.
Why would somebody agree to have you not pay them what you have been paying?
Then he said: ``GM will run out of cash and out of time.'' That is even if we give them $25 billion. They cannot fix themselves until they confront their costs that are pulling them down.
Mitt Romney, whose father was a CEO at American Motors, in his recent op-ed estimates that the average American automobile is carrying a $2,000-per-car excess cost. If you wonder why foreign automobiles are better, it is because they can put 2,000 more dollars in it. So how do you get out of that? You have to get out of these contracts.
Mr. Levine fundamentally points out that through the process of reorganization--not chapter VII liquidation but the process that Delta Airlines used to reorganize itself--is the one way you can get out of these contracts and restructure the company, reduce some of its burdens, and come back again as a fighting, competitive company, producing automobiles that people will buy in large numbers. I think that is very possible.
So in bankruptcy, those kinds of things can occur that can occur outside. Mitt Romney, in his editorial, said:
A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the company to shed excess labor, pension, and real estate costs. The Federal Government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.
Now, those are the kinds of suggestions that come close to making sense to me.
He talked about his father, George Romney, the Governor of Michigan, who also ran for President at one point. This is what he said his father did when he saved American Motors at the time:
My dad cut his pay and that of his executive team, he bought stock at his company-- To show faith in it-- and he went out to the factories to talk to workers directly. Get rid of the planes, the executive dining rooms--all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.
I think that is the right way to do it. I think we can do that. I really would urge my colleagues to look for ways for this to happen.
Now, you cannot trust the automobile dealers when they come forward and say: Well, we are doing all of these things.
They don't have the power to do these things. I know they don't want to go into reorganization and bankruptcy as Delta Airlines did. But it is not going to be a horrible thing. Delta went in and emerged about a year and a half later. They reorganized, reduced expenses, altered and amended contracts and obligations, and they recently bought Northwest. They went bankrupt in 2005, and they came out leaner and more competitive and are now a viable company. But these CEOs--if you give them money, they are going to have less leverage with the unions, less leverage with their 7,000 automobile dealers, when Toyota has 1,500 automobile dealers. They are going to have less leverage with the lease agreements and health care agreements they entered into years ago, in a different situation, to deal with people's health care requests and demands at that time. They are stuck with that until they can break loose from it.
A bankruptcy judge whose motive would be to help them become leaner and more effective and sends them out as a viable entity so that jobs are saved and debts are fundamentally repaid--that would be the goal of reorganization and bankruptcy. I don't think we ought to be putting a lot of money into this company until we see it in a position that would actually break the chains of $2,000 per car that is slowing them down, actually pulling them down hopelessly.
I thank the Chair for the opportunity to share some of my thoughts. I believe when we violate the principles of intervening in the free market and picking winners and losers, we are taking a great risk. If we do so, it ought to be done with the greatest of care, the least exposure to the taxpayer, and with the greatest potential for creating a successful company in the end.
I yield the floor.
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