Auto Workers Rally on Sunday

As the deadlines for the short-term rescue package for the American auto industry loom, I will join the United Auto Workers and the Automobile Dealers Association at a “Save Our Jobs Rally.” The Rally will begin at 2 p.m., Sunday, February 8, 2009 at the Penn Valley Community College Gym, 3201 Southwest Trafficway in Kansas City, Mo.

Thousands of residents from both sides of the state line will convene to stress the impact auto manufacturing has on the region.

The global financial crisis is crippling the availability of credit for the automakers, their suppliers, their dealers and consumers. As our local auto plants extend their work stoppages, it is quite possible one or more of the domestic automakers could collapse. No one can afford American auto makers going bankrupt, least of all the 7,200 men and women who work at the Fairfax and Claycomo plants, the thousands who work for auto dealers in the area or the tens of thousands of retirees. These are our neighbors, friends and family and they are in trouble.

“Save Our Jobs Rally”
Sunday, February 8, 2009
2 p.m. to 3 p.m.
Penn Valley Community College Gym,
3201 Southwest Trafficway, Kansas City, Mo.

Broken Down

Every week it seems I start this email telling you how frustrating the week has been. However frustrating these hearings and negotiations are in Washington, they pale in comparison to the insecurity, fear and anxiety being felt by millions of workers who are either standing in the unemployment line, or looking for a pink slip with every paycheck. So, while we shake our heads and stomp our feet in the Capitol, our Congressional troubles are trivial compared to the peril faced by far too many we serve.

The front page photo in the Kansas City Star is a good reminder of just what is at stake right now. In case you missed it, it features three material supervisors at the GM Fairfax plant watching C-SPAN yesterday, on their lunch break, as the Senate debated the auto rescue package. Three men whose families woke up to the news this morning that the Senate had failed to act on the proposal supported by the President and passed by the House.

The deal in the Senate broke down because some wanted the unions to agree to cut the salaries of the three men on the front page of the Star today and 7,200 of their fellow workers who call our community home.

At a time when the American worker is struggling, lay-offs are announced daily and the government is contemplating another stimulus package to encourage people to spend and boost the economy, cutting wages does not make much sense to me.

I am not saying that the auto rescue package was perfect — far from it. However, I fear that those who have never liked unions and never supported union workers used this dire moment for the auto makers to make a point while playing Russian roulette with the livelihoods of millions of families.

General Motors has testified that without a bridge loan they may not make it the rest of the year. It seems some Members of Congress are willing to see if their projections are correct. I am not. Economists from the left, right and center agree that our economy cannot sustain the damage a failed auto industry would yield.

Proof of the impact on our local economy came today. General Motors announced it would idle the Fairfax plant until February, one of 14 plants closed down. For us, that means 2,640 employees who will not clock in for nearly two months.

Not passing a short-term aid package was reckless and puts 3 million workers and our entire fragile economy at risk.

We are now asking the President to take emergency action to protect the economy. It is within his power and indications are that he understands the gravity of a failing auto industry. The President should direct Secretary Paulson to use the Troubled Assets Relief Program or other means at his disposal to provide short-term funding to the auto industry, so that it can restructure and resurrect itself into the backbone of our nation's industrial base once again.

Bad News and the Big 3

Over a half-million jobs — that is how many the economy lost in November. That is the worst one-month drop in over 30 years.

This morning, it was also announced that our nation's unemployment rate is 6.7% — the highest in 15 years. Hundreds of thousands more families will have a very difficult holiday season this year on top of the millions already out of work.

These new numbers come on the heels of a report from the Government Accountability Office (GAO) on the Treasury Department's implementation of the Troubled Asset Relief Program (TARP).

The GAO told Congress that the Treasury Department has no way to measure whether taxpayer funds invested in banks are being used in accordance with the purpose of the law - to increase lending. My committee has asked the Treasury repeatedly to track the impact of the taxpayer money. The Treasury has responded that it has no intention of doing so.

The GAO recommended that measures be developed to apply to how individual institutions are using their share of the $250 billion made available to them. In response the Treasury policy is to engage in "further discussions on general metrics for evaluating the overall success of the capital purchase program in addressing the purposes of the EESA."

So in the context of the very bad job losses last month and the refusal of Treasury to monitor the effectiveness of our last large taxpayer rescue package the Big 3 automakers came before our committee today to ask for $34 billion.

Here is what we know:

1. Without assistance of some sort, one or more of the Big 3 will be gone.
2. Locally we have 7,200 employees and thousands of auto retirees.
3. There is no assurance that government investment will save the industry.

Before Thanksgiving the CEOs came to Congress in private planes with a request for $25 billion of taxpayer money but no plan. Today they drove to Washington in hybrids with a plan in-hand and asked for $34 billion. That is some serious inflation.

Ford appears to be in the best shape of the three and may well weather the storm with very little assistance. The other two are in very bad shape and frankly I am not sure what the Congress is going to do at this point. That is the difficult part.

We have their plans, their testimony and their answers to some very difficult questions. The hearing was good and frustrating. It certainly went better than the last hearing, but I feel like we have heard all we are going to hear. It was frustrating, for me, because we really haven't made much progress on what we will do next. We need a plan and we need to vote on the financial mechanics to help the industry.

Our committee will work with the Banking Committee in the Senate as well as leaders of both chambers to craft a bill that can be passed quickly. Waiting helps no one. The longer we wait the fewer cars are bought (no one wants to buy a car from a company that may go under, even if they can get the loan) and the worse the problem gets.
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Two frustrating hearings

This was an interesting and frustrating week. The week began with some hope of getting explanations from Secretary Paulson and answers from the Big 3 auto executives. Neither promise was fulfilled completely.

Treasury Secretary Paulson, Federal Reserve Chairman Bernanke and FDIC Chairwoman Sheila Bair testified Tuesday morning in front of our Committee. Members, including me, were interested in hearing from this trio why, after expending half of the money allocated, more progress had not been made in loosening the credit markets.

We were also curious as to why some financial institutions are under the impression it is acceptable to use government-provided funds to pay dividends, continue excessive executive compensation and for acquiring other banks.

None of us expected that the Troubled Asset Relief Program would be a magic pill. We did not expect lenders to immediately start making loans again. However, we also did not expect and certainly did not intend for banks to be hoarding their government assistance or using it to further expansion schemes.

The concern we expressed, particularly to Secretary Paulson, was that it didn't seem unreasonable that financial institutions demonstrate SOME degree of responsibility to the American taxpayer whose investment in them was predicated on relieving the clogged credit markets.

I think that what we learned from the hearing is that we have to go back to work. If the financial institutions continue to behave irresponsibly, then we're going to redraft the Act to require them to act responsibly.

Additionally, we are frustrated that not near enough has been done to help keep homeowners in their homes. I think we made it clear that we believed that the FDIC Chairwoman, Shelia Bair, is on the right track with her proposed program to encourage refinancing of troubled mortgages by providing government guarantees. If we do not see movement toward her plan by the Treasury Secretary soon, I believe we will need to require it.

We saw a bit of the pressure we exerted this week paying off as Fannie Mae and Freddie Mac announced this morning they would freeze all foreclosures until after the holidays as they work to renegotiate troubled loans.

Progress has been made. However, I think we left no doubt in the mind of the Secretary and Fed Chairman that we had expected a great deal more progress for $300 billion and that changes would be needed.

As for the Big 3 executives...

I would not have believed it had someone told me before hand the hearing would go as poorly as it did. From the moment these three arrived in Washington via their private airplanes it was all down hill.

I don't mean to be too flippant about this, but if you are going to ask the government for $25 billion of the taxpayers money, it is very helpful to have 1) an explanation for why that amount is necessary and 2) a plan for how the money will save the industry.
These gentlemen provided neither.

Here's an example of what I mean, demonstrated in a question I asked:

CLEAVER: Why $25 billion? I mean why not 26? Are we going to divide three into 25?

ROBERT NARDELLI (CEO of Chrysler): Chrysler is asking for $7 billion.

ALAN MULALLY (CEO of Ford): Sir, it would be the rest based on the market share.

CLEAVER: This is - I mean we're just spending $25 billion loosely. I mean this is loosey goosey, whatever's left, I'll take.They seem to just be picking numbers out of a hat with no real clue as to how much is actually required to right the ship.

As I said last week, the automakers and our District are intertwined and should they go under it would be a disaster for us locally. Nationally, we are talking about 3 million workers who depend on making cars for employment. But the bottom line is, as much as I understand the need, Congress cannot commit billions of taxpayer dollars without first knowing how the automakers intend to use it to keep from sinking and how they are going to re-tool their industry to make it more green and more competitive.

As a result of the hearing this week, we have asked to see plans detailing exactly how the automakers would spend these loans which are due by December 2nd. With the plans in hand, we will return to session and revisit these loan requests by December 8th. I think this is a very reasonable and responsible approach with so much taxpayer money at stake.