CNBC "Power Lunch" - Transcript
MR. GRIFFETH: With us in studio, we welcome Scott Garrett, the Republican out of New Jersey. And on Capitol Hill, we welcome the Democrat Brad Sherman, who represents my old stomping ground, San Fernando Valley out there in Los Angeles.
We welcome you both. Thanks for joining us today.
REP. GARRETT: Good to be with you, but frankly, I have not taken a position against the auto bailout now.
MR. GRIFFETH: Well, you were highly critical during the first hearings --
REP. GARRETT: Mm-hmm.
MR. GRIFFETH: -- two weeks ago of the plan that they had presented. I mean, you were one of those most outspoken who said, "What are you doing here flying on, you know, private jets just looking for the cash here?"
But from what I hear, this time around, you've looked at the plans, and you're more impressed. Is that correct?
REP. GARRETT: I am more impressed. I think Ford is in much better shape than its two competitors, but I do think that they're not going to put the restrictions on their own executive compensation and perks that we want to see. And if we want those, we are going to have to put them in the bill, not just rely on the companies.
MR. GRIFFETH: Congressman Garrett, you opposed it before, and I think you still oppose it.
REP. GARRETT: Well, I opposed it before just as that, and I also opposed the --
MR. GRIFFETH: The TARP.
REP. GARRETT: What was it? The TARP --
MR. GRIFFETH: Right.
REP. GARRETT: -- that was originally going around.
You know, one of the interesting things about this is -- I've expressed the phrase before -- that you talk about a bridge loan here. The question is, it's a bridge to where? It's a bridge to nowhere --
MS. FRANCIS: Right.
REP. GARRETT: -- at this point in time. And some of the testimony actually sort of reinforces that, that the testimony just a little while ago in its saying that we may come back -- I think he said March 1st or March 31st, at that period of time -- to come back to see whether we get all the players around the table to agree to it.
So basically what he is telling Congress and the American taxpayers is, right now, "We're not really exactly sure where this bridge is going to bring us to; it's just going to bring us to another point to actually have to come back before Congress and hopefully have this thing worked out.
MS. FRANCIS: Yeah. I mean, you're quoted as saying the real problem is that the bailout is going -- isn't going to change the company; it's going to perpetuate the same business practices. So it sounds like you still feel that way, even with the new plan and you're not in favor of it.
REP. GARRETT: Well, the new plan sounds a lot better than what we heard a couple of weeks ago when --
MS. FRANCIS: Right.
REP. GARRETT: -- they came the first time.
And we can't fault them too much on coming to the Congress without any plan in place because, look, that's exactly what the banks did. The banks came forward and said, "Give us 250 (billion dollars), give us $700 billion, and we don't have to give a new plan." And that's what the Congress did. They gave them all the money without a plan. So that's what they did the first time.
Now, they're coming with some sort of a plan, but the testimony we just heard really says, "It's really not down in black and white yet; we still have to work all these things out.
MR. GRIFFETH: Congressman Sherman, what is your first question to the big three auto makers tomorrow when you get to the hearing?
REP. SHERMAN: My first question will be whether in this big show they've made of driving to Washington, are they committing that most of their business trips next year will be on commercial aircraft?
What I'm hearing some of the companies is "Sure, we drove to Washington, but we're going to charter luxury aircraft in the future." Now, I don't think that's the be all and end all --
MS. FRANCIS: Right.
REP. SHERMAN: -- but it's a good test as to whether these companies get it and whether they understand the American people.
MS. FRANCIS: But, I mean, surely, Representative Sherman, there is a lot more to their business plan and what's really important here going forward. I mean, flying privately was a symbol that they didn't get it.
But honestly, you must have a lot more serious questions than that.
REP. SHERMAN: Well, I just did a two-hour meeting with representatives from Ford and asked maybe 80 questions.
MS. FRANCIS: Okay. Like what?
REP. SHERMAN: I had a --
Everything from when they're going to come up with hybrid vehicles and automobiles and not just SUVs. When they're going to be drawing down on the 136 money, which is the $25 billion for retooling. How Ford can survive if GM went under, and they had to deal with their parts network. How they would be affected by a Chrysler failure and how interconnected their parts supplying is with Chrysler.
MS. FRANCIS: And how'd you feel about their answers?
REP. SHERMAN: I think Ford had very good answers.
I think Ford is likely to survive this unless they're pulled down by a loss to their supplier network. And Ford is asking for a lot less than the other two big companies in terms of a percentage of their operation.
MS. FRANCIS: What's your first question tomorrow?
REP. GARRETT: Well, I agree with you that the issues of whether they came in on a plane is really irrelevant at this point. It just goes to the showmanship aspect. So, too, as far as dealing away with the job banks aspect. That really has a minimal impact upon their bottom line. So those things are just show. I think they really do get it.
And at this point in time, I'd like to go into more than some of the weeds on some of the issues. Some of these things they say they can save some of their money on.
For example, the dealership aspect, that's one of the things that they point as saying "We can save some money there." I've talked to my own folks back at home as far as the dealerships will say. You know, the dealership pays their own way, they say, in most of these cases, that they're for all of that. No problem.
But most of their operation and what have you, is that a really a cost savings to them at the end of the day, or is it just something as far as a showmanship aspect and just a benefit to extend as far as eliminating some of the lines?
MR. GRIFFETH: I don't know how long you've been here, but we had Governor Granholm of Michigan last hour with us to discuss the problems that they face jobs-wise in their state obviously.
I'm curious. As somebody who has opposed TARP --
REP. GARRETT: Yeah.
MR. GRIFFETH: -- and at this point is still highly skeptical about providing money, a bailout money, to the big three automakers, your view of what the economy would look like if we didn't provide any of this government money.
REP. GARRETT: Well, you know, the economists here I think made the comment, if I'm not mistaken, as far as -- I think he was a someone who said that -- that the pocketbook of the Treasury and the pocketbook of the American taxpayer is not limitless. And so that's our responsibility as managers, as you say, of the government.
Of course, we're not really in the best position to lambast any industry as far as counting just not running their show right. Because look at us; we -- Congress comes into this whole mess with a $450 billion deficit of our own in the first place. So --
MR. GRIFFETH: But how high would you allow unemployment to go? How low would you allow growth or contraction to go in this economy if the government were to step back and say, "You guys are on your own?"
REP. GARRETT: Yeah. Those are some great questions. And we've got other economists who would say that in order to get to where you really need to be, I think one of the other -- at one of the other hearings was, you're not going to get there -- I think this economist might say this; I'm not sure -- you're not going to get there through anything short of forcing them almost to the door of bankruptcy.
I don't want to see that at the bankruptcy or within that, but they say you almost have to get to that door before some of these agreements are going to be reached. And that's really the problem.
MS. FRANCIS: Real quick.
REP. GARRETT: Sure.
MS. FRANCIS: Are you leaning towards no right now or yes?
REP. GARRETT: I'm leaning to having an open mind when I go to the hearing.
MR. GRIFFETH: And Congressman Sherman, we assume you are voting yes at some point?
REP. SHERMAN: The bill hasn't been written, the testimony hasn't been heard.
REP. GARRETT: Yeah.
REP. SHERMAN: I think it's very important that we have not just "Oh, we like your plan. Here's 25 (billion dollars) or $34 billion." But rather "If you take the money, you have to live with these rules."
We shouldn't be writing a blank check even if we like the plan.
MR. GRIFFETH: Gentlemen, thank you both for your time.
MS. FRANCIS: Thank you.
MR. GRIFFETH: Thanks for coming on here as well today, Representative Garrett.