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Rep. Michele Bachmann opposes Big 3 bailout

Newly re-elected 6th District Rep.

Newly re-elected 6th District Rep. Michele Bachmann weighed in today on the auto industry bailout: She’s against it.

Instead, she supports restructuring of the Big 3 under bankruptcy to fix management and labor problems.

Here’s the text of her statement to the 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 And they support large numbers of retirees under outdated union contracts.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.”