Garrett Expresses Concerns Over TARP Money Auto Bailout
Rep. Scott Garrett (R-NJ) joined with 21 other Republican Members of the House of Representatives in a letter to President Bush expressing concern over the possibility of funding from the Troubled Asset Relief Program (TARP) being used to bail out the "Big Three" auto manufacturers
"I would like to exhaust all appropriate options in order to protect and preserve the auto industry and American manufacturing," Garrett said. "That said, Congress has been given no guarantee that these auto manufacturers have revised their business models to sufficiently restructure their companies in order to regain profitability. I am hesitant to risk taxpayer dollars when other options for recovery have yet to be explored.
"With the deficit projected to be nearly $1 Trillion next year, it is more important than ever that taxpayer money be spent wisely. The use of TARP funds to delay a bankruptcy of the domestic automakers clearly does not meet that threshold. I stand ready to listen to ideas about how the automakers can transform themselves into sustainable companies in the long term, and provide assistance if appropriate, but their proposals thus far have been stunningly inadequate.
"I join with my constituents and Americans across the country in anxiously awaiting a change in our economic conditions, however, for the long-term stability of our nation and our automotive manufacturers, my colleagues and I urge President Bush against using TARP funds for an auto bailout."
The text of the letter is included below.
December 15, 2008
The Honorable George W. Bush
President of the United States
1600 Pennsylvania Ave NW
Washington, DC 20500
Dear Mr. President:
We are writing to express our concerns over the possibility of funding from the Troubled Asset Relief Program (TARP) being used to bail out the "Big Three" auto manufacturers. The Emergency Economic Stabilization Act was intended to provide stability to the nation's lending systemnot to provide a taxpayer-funded capital infusion to favored businesses. The legislation allows the $700 billion to be used for leveraging "financial institutions," which auto manufacturers surely are not. Congress never voted for a federal bailout of the automobile industry, and the only way for TARP funds to be diverted to domestic automakers is with explicit congressional approval.
No one wants the "Big Three" to fail, and we are not proposing it. But the federal government cannot undo decades of mismanagement, so we are faced with a decision about how to deal with it. Exercising options already afforded them by law, under a Chapter 11 reorganization for example, the American automobile industry can make the necessary reforms and could soon return to profitability. A federal bailout of the automobile industry, on the other hand, would put taxpayer money at risk, shield the companies from making the reforms necessary to restore competitiveness again, and set a costly precedent that the federal government will bailout other failing companies and industries.
Tempting as it is to step in with a federal bailout, American taxpayers cannot afford to save every company facing financial peril. Last year's federal deficit was the highest nominal deficit in U.S. history, and many economists believe this year's deficit will exceed $1 trillion.
For the long-term stability of our nation and our automotive manufacturers, we urge you to not expand the use of TARP money to bailout American auto manufacturers.
Member of Congress