Simpson votes against auto bailout

Despite House approval, plan might still be in jeopardy

By :GREGORY FOLEY

Idaho Rep. Mike Simpson yesterday voted against proposed legislation to loan federal funds to the U.S. auto industry.

The legislation, H.R. 7321, otherwise known as the Auto Industry Financing and Restructuring Act, proposes to provide $14 million in short-term loans to struggling automakers General Motors and Chrysler, with conditions that the companies make specific moves to become self-sustaining. The bill was approved by the House yesterday but now appears to be in jeopardy in the U.S. Senate. This morning, the Senate minority leader, Republican Mitch McConnell of Kentucky, spoke out aggressively against the plan, despite a request from President Bush that fellow Republicans support the measure.

Simpson said he believes fundamental restructuring is necessary for the "Big Three" domestic auto companies to be competitive and relevant in the future.

"We've been down this road before. In the early 1980s, Chrysler came to Congress requesting federal assistance and promising to change they way they did business," Simpson said. "While Chrysler repaid their loan within three years, they never carried out the required restructuring. A generation later, Congress has apparently not learned its lesson, passing legislation that provides funding without ensuring real results."

In a news release issued last night, Simpson argued that "instead of allowing the companies to be restructured through the processes outlined in law and emerge more competitive, H.R. 7321 would put government bureaucrats in charge of determining how these companies would operate in the future. In addition, the bill does not require any concessions by labor groups, even though high labor costs are a significant factor contributing to the Big Three's financial woes."

Instead, Simpson supports a GOP alternative that calls for the Big Three to receive temporary government insurance instead of a taxpayer-funded "bailout."