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Congress Asks: Why Are Bailed-Out Auto Firms Closing Plants? | The Nation

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John Nichols

John Nichols

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Congress Asks: Why Are Bailed-Out Auto Firms Closing Plants?

Democratic and Republican members of the US House have suggested that they were deceived by Chrysler management and members of the Obama administration's auto industry task force with regards to plant closings and layoffs related to the restructuring of the smallest of the "Big Three" automakers.

There is mounting evidence that this was the case.

When the Cleveland Plain Dealer reviewed the details of an April 30 conference call where details of plans relating to Chrysler's restructuring were discussed with members of Congress – for an article headlined "Chrysler, Obama take the truth about plant closings for a spin" -- it reached a conclusion that was as blunt as it was unsettling:

Were Congress members duped? If so, by whom and why?

The short answers appear to be yes, by both Chrysler and the White House.

The need for Congress to examine the specific question of whether members were deceived and the broader ramifications of the dysfunctional process by which the federal government is addressing the crisis in the auto industry is more pressing than ever.

Tens of billions of taxpayer dollars are being poured into Chrysler and General Motors, ostensibly to "save" the US auto industry. Yet, the companies have acknowledged that they plan to use the money to shutter factories, lay-off tens of thousands of factory workers and dramatically downsize dealership networks -- at the cost of as many as 100,000 additional jobs.

Responding to that need, the House Judiciary Committee on Thursday held a "Ramifications of Auto Industry Bankruptcies" hearing that featured testimony from consumer advocate Ralph Nader; Public Citizen president-emeritus Joan Claybrook; Center for Auto Safety executive director Clarence Ditlow; National Association of Minority Dealers president Damon Lester; Chrysler dealer Randy Henderson; constitutional scholar Bruce Fein and law professors and legal analysts.

The hearing was called, at least in part, as a response to Nader's prodding of Congress to exercise its oversight powers with regard to the auto company bankruptcies and bailouts.

Nader and Multinational Monitor editor Rob Weissman argue that: "The government-led restructuring of Chrysler and General Motors has been twice delegated -- first by Congress to the Executive, and then by the President to a task force. Formally made up of cabinet officials and high-level political appointees, control over the process has in fact been delegated, without adequate standards, to a handful of special advisers. Thus has the future of a centerpiece of American manufacturing capacity been delegated to a small unelected and largely unaccountable group arranged to avoid the Federal Advisory Committee Act."

Before the plant closings and layoffs begin, Nader and Weissman say, "(Congress) should, at the very least, urge the Obama administration to defer any plans for bankruptcy or other irreversible moves until after the task force plan has been subjected to close and careful review via thorough Congressional hearings. If delay requires some additional bridge funding for GM, surely such funding with suitable equity positions is appropriate, in light of the potential risks of bankruptcy to millions of families and further governmental relief programs, and the vastly greater sums that have been so recklessly expended on the virtually condition-free Wall Street bailout."

Thursday's Judiciary Committee hearing, organized quickly by chairman John Conyers, D-Michigan, and his staff, is an important step toward asserting a role for Congress -- which is more likely than the administration to seek protections for workers and communities -- in any process of restructuring the auto industry.

Also important is a move made by Ohio Democrat Dennis Kucinich, who says that deceptive briefings of members of Congress have raised "a question of credibility."

As chairman of the Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform, Kucinich has opened an investigation into the matter.

In a letter to Chrysler chairman and CEO Robert L. Nardelli, Kucinich writes:

The Domestic Policy Subcommittee of the Oversight and Government Reform Committee is examining the implications and circumstances of the Chrysler bankruptcy. On a conference call on April 30,2009, Members of Congress were assured that there would be no permanent Chrysler plant closings or job losses under the terms of Chrysler's pending bankruptcy. When the terms of the bankruptcy were released on May 1, 2009, plants in Michigan, Missouri, Wisconsin, and Ohio were targeted for closure.

In order to assist the Subcommittee with its investigation, I am writing to request thefollowing documents:

1) All external communications, including transcripts of conference calls, that conveyed information relating to the future status of Chrysler company plants in Michigan, Missouri, Wisconsin, and Ohio between December, 2008, and the present…

Kucinich has requested that the documents be delivered "as soon as possible, but in no case later than 5:00 p.m., Friday, May 29, 2009."

The responses of Conyers, Kucinich and their committees are first steps in what should be an aggressive congressional response to all the questions raised by the Chrysler and General Motors bailouts and bankruptcies.

But they are essential steps.

The federal government has the power to save the US auto industry.

But the steps being taken at this point will not do that. In fact, they promote plant closures, dealer cutbacks and layoffs that will make the industry weaker in the US -- while offshoring Chrysler and General Motors production to foreign countries.

Congress, which has the power of the purse, can and should intervene to restructure the restructuring processes so that taxpayer dollars are spent to preserve, rather than downsize, America's industrial capacity and the communities that maintain it.

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