Rumors Spread as Truth -- Today in Washington D. C. - Dec 9, 2008

Both the Senate and House both conviened today. Yesterday, the news was reporting a rumor that a bill for the auto-industry bailout had been set to the White House. THIS WAS NOT TRUE. The House wasn't even in session yesterday and no bills regarding the big 3 bailout was bassed by Congress.

When the public hears “a bill was sent to the White House,” they rightly assume it was legislation ready to be signed into law. But the truth is they are being mislead. Democrats have been floating a draft bill idea to the White House staffers. The Republicans have not even been involved. In this situation, it’s just Democrats who wrote something up and then sent it over to the White House for comment. Nothing formal was done, just reporters being imprecise with their language. A good example of this poor reporting, maybe to be first with a story is the Washington Times article this morning that said $15 billion auto bailout goes to White House.

Democrats have circulated a problematic first draft of a bill for $15 billion in loans for U.S. auto manufacturers, but no schedule to move forward has been announced and the level of support for the bill remains unclear. Senate Republican Leader Mitch McConnell spoke on the Senate floor this morning about the proposal circulated by Democrats yesterday on government loans for domestic automakers.

Sen. McConnell discussed some of the significant problems with the current proposal: “On the management side, the draft plan released yesterday fails to require the kind of serious reform that will ensure long-term viability for struggling auto companies. By giving the government the option of cancelling government assistance in the event that reforms are not being achieved – rather than requiring it – we open the door to unlimited federal subsidies in the future. . . .

“On the labor side, this bill proposal fails to require any serious reform of legacy costs. Indeed, it states explicitly that one of its purposes is to preserve the same retirement and health care benefits that have made these companies so uncompetitive. It’s delusional to expect a company that spends $71 per labor hour to compete with a company in a neighboring state that spends $49 per labor hour.”

Further, Sen. McConnell pointed out, “[O]ne thing most people expect when they’re asked for help is that the one asking makes a commitment to change. This proposal does not go nearly far enough. It holds neither management nor labor truly accountable. And in areas where one side is held accountable, the other side isn’t. One example is a provision that requires automakers to drop all legal challenges to state fuel economy standards that are inconsistent with the federal standard. Where is the offer from our friends on the other side to call on environmental groups to drop their lawsuits?”

At the moment, it appears that Democrats have crafted a proposal suffering from significant flaws which fails to assure taxpayers that they will not be asked to pay even more down the line and which does not ask the right things of both management and labor at the auto companies.

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