Wednesday, December 31, 2008

RNC Resolution Opposing Taxpayer Bailouts


WHEREAS, America is embroiled in an economic crisis which threatens to become a severe and
prolonged recession; and

WHEREAS, as an alleged remedy to the economic crisis, the United States Congress proposed the Emergency Economic Stabilization Act of 2008 (“Bank Bailout Bill”), which would authorize the United States Secretary of the Treasury to spend up to $700 billion dollars to bail out the financial industry from the consequences of its own poor decisions and misguided government policies, by purchasing distressed assets, especially mortgage-backed securities, and make capital injections into banks; and

WHEREAS, when the original Bank Bailout Bill failed to pass, it was augmented with$150 billion
dollars in additional, unnecessary spending designed to earn the incumbent politicians who voted
for it the support of their constituents back home; and

WHEREAS, Congress adopted, and the President signed, the bloated Bank Bailout Bill; and

WHEREAS, the Bank Bailout Bill has neither reversed the economic crisis nor protected the
taxpayers, but rather has added $850 billion dollars to their tax bill and raised the national debt
ceiling from $10 trillion to $11.3 trillion, which has the potential long-term effect of further
weakening the economy; and

WHEREAS, the Bank Bailout Bill effectively nationalized the Nation’s banking system, giving the
United States non-voting warrants from participating financial institutions, and moving our free
market based economy another dangerous step closer toward socialism; and

WHEREAS, what was needed, and is still needed, to fix the banking industry is not a bailout, but
rather a commitment to fiscal responsibility. This entails more than considering only the quick fixes for Wall Street. It also entails considering how to restore Wall Street to sustainable profitability. It involves common sense legislation from Congress, such as (1) eliminating the capital gains tax, which will lead investors to flood the real estate and financial markets in search of tax-free profits, creating liquidity in the markets; (2) examining, and if need be, amending the Community Reinvestment Act (Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.), to ensure that it accomplishes its purpose of preventing discriminatory lending without also forcing the financial industry to engage in high risk lending; and (3) adopting a “hands off” approach from government toward the financial sector, so that free-market forces can correct the market; and

WHEREAS, there have been other federal government bailouts, including the $85 billion dollar
bailout of American International Group Inc. in return for its nationalization, with the United States acquiring an almost eighty percent equity stake in the company, a bailout and nationalization of Fannie Mac and Freddie Mac, and a bailout of Bear Sterns; and

WHEREAS, the cost to the American taxpayers of the various bailouts enacted by the 110th
Congress and signed into law by the President is potentially $8.7 trillion dollars; and

WHEREAS, none of these bailouts have forestalled the economic recession, protected the jobs of
American workers, made American companies more competitive, or relieved the tax burden on
American taxpayers, but rather have threatened to deepen the economic recession, and have
increased the national debt and the burden faced by the American taxpayers; and

WHEREAS, the “Big Three” Automakers (Chrysler, General Motors, and Ford) appealed to
Congress for a bailout bill of their own, seeking up to $34 billion dollars in emergency aid; and

WHEREAS, the American people overwhelmingly oppose a bailout of the Big Three, with 61% of
those polled opposing government assistance to the automakers and 70% saying that such assistance would be unfair to American taxpayers; and

WHEREAS, when faced with both Congressional and public disapproval, Ford announced that it
did not need actually need federal money at this time, but Chrysler and General Motors continued to request financial assistance from the government; and

WHEREAS, on December 11, 2008, the House of Representatives passed the Auto Industry
Financing and Restructuring Act (H.R. 7321) (“Auto Bailout Bill”), which authorized $14 billion
dollars in loans to the automobile industry in exchange for, among other things, the nationalization of the auto industry, whereby the United States receives warrants for up to 20% of the common or preferred stock of each automaker, and the appointment by the President of an executive officer (“Car Czar”) to oversee various aspects of the auto industry’s business; and

WHEREAS, the Auto Bailout Bill was rejected in the United States Senate, garnering only 52 of the 60 votes necessary to bring the Bill to the Floor for consideration; and

WHEREAS, on December 19, 2008, the President announced that he would create a $17.4 billion
dollar Auto Bailout Package for the auto industry, taking the money from the funds appropriated by the Bank Bailout Bill; and

WHEREAS, the President has announced that Chrysler and GM must prove they are financially
viable by March 31, 2009, or face the possibility—but only the possibility—of the recall of the funds extended to bail them out; and

WHEREAS, President-elect Obama is under no obligation to insist that Chrysler and GM meet this obligation, or pay back the money used to bail them out and the UAW is already calling on
President-elect Obama to reject the wage reduction requirements of the Auto Bailout Package; and

WHEREAS, the Auto Bailout Package is not only a bailout of the bad management decisions of the leadership of the automobile industry, but also a bailout of the leadership of the United Auto
Workers union (UAW), whose excessive labor wage and benefit demands have substantially
contributed to the automobile industry’s financial woes, as demonstrated by the fact that the average hourly cost to the unionized Big Three Automakers for its workers’ salary and benefits is nearly $80 per hour, compared with Toyota, Honda, and Nissan, whose total hourly U.S. labor costs, with enefits, are about $48 per hour; and

WHEREAS, the UAW has steadfastly refused to renegotiate its current labor contracts to ease the financial burden on the Big Three, and has also self-servingly insisted that bankruptcy was not an option for any of the Big Three, because bankruptcy would allow a renegotiation of their labor contracts; and

WHEREAS, bailing out the UAW with the Auto Bailout Package will not make the automobile
industry solvent, because it does not address the underlying cause of its financial difficulties, but
merely applies a band aid to tide the industry over for the time being; and

WHEREAS, the open-ended nature of the Auto Bailout Package, which only contains the possibility of a recall of the bailout money if Chrysler and GM do not have a plan for financial viability by March 31, 2009, will not provide incentive to their leadership and the leadership of the UAW to create a financially viable business plan, but rather will encourage them to continue ‘business as usual’ and count on future government bailouts whenever such are needed; and

WHEREAS, the men and women who work in the automobile industry are patriotic Americans who work hard to supply America with automobiles and also to provide a decent living for themselves and their families; and

WHEREAS, America’s auto workers are not helped by a temporary band aid which does not require the automobile industry and the UAW to change practices and create a sustainable profitability. Rather, they need a solution that will enable the American automobile industry to recover and thrive again in order to ensure the long-term survival of their jobs; and

WHEREAS, what is needed to fix the American automobile industry is restructuring that will
eliminate the competitive disadvantage faced in their costs and finished products relative to foreign brands, which can only be accomplished by (1) negotiating new labor agreements to align their pay and benefits to match those of their competitors; (2) reducing the benefits paid to their retirees so that the total burden per auto for the Big Three is not higher than that of foreign companies;
(3) restructuring their business plans with an eye to the future, such that they invest in competitive
products and innovative, fuel-saving technologies; and (4) recruiting management teams who excel in marketing, innovation, creativity and labor relations; and

WHEREAS, a group of governors met with President-elect Obama to press for their own bailout
plan, whereby federal taxpayer would pay $136 billion for state infrastructure projects and untold billions of dollars for state health care costs; and

WHEREAS, President-elect Barack Obama decided to propose an enormous public works project, which is really a cleverly disguised Government Bailout Plan designed to bail out state and local governments by providing federal tax dollars to repair and rebuild their local infrastructure; and

WHEREAS, some have proposed spending up to $1 trillion dollars to fund the President-elect’s
Government Bailout Plan; and,

WHEREAS, the Government Bailout Plan will be the biggest earmarked spending program in our Nation’s history;

WHEREAS, the Government Bailout Plan will not fix our economic woes, but rather will extend
the current economic crisis, much as President Franklin Roosevelt’s Works Progress Administration extended the Great Depression, and will cost the American taxpayers $1 trillion dollars or more; and

WHEREAS, what is needed to ease unemployment and stimulate the economy is not a Government Bailout Plan to bail out state and local governments from their deficit spending, but rather common sense solutions which will work, including (1) lowering our corporate tax rate which is the second highest in the world and fifty percent higher than our international competitors, so that corporations will have more ability to invest in product development and job creation; (2) lowering taxes on the middle class and eliminating the capital gains tax, so that America’s families will have more money to invest and spend for their families’ needs; (3) spending to replenish and, where necessary, modernize our military equipment and improve our national defense capabilities against both foreign nations and terrorists; (3) investing in energy research, exploration and development to free our Nation from its dependence on foreign oil; and (4) eliminating wasteful government spending and restructuring government programs that can be accomplished more efficiently. Together, these measures will create jobs, energize the economy and protect our national freedoms, all of which will improve the quality of life of the American family; and

WHEREAS, the Republican Party must, for the good of America, reestablish our commitment to the common sense, conservative values of free enterprise, free markets, limited government, and personal responsibility, which are advocated by the Republican National Committee in its national platform; and

THEREFORE, BE IT RESOLVED, that the Members of the Republican National Committee
commend the Members of Congress who have opposed the bills seeking to bailout American
industries and to nationalize American companies; and

BE IT FURTHER RESOLVED, that the Members of the Republican National Committee call for
all Members of Congress to oppose any and all future bailouts that might come before the Congress, including President-elect Obama’s public works program; and

BE IT FURTHER RESOLVED, that the Members of the Republican National Committee call on
Congress to identify the government programs and policies which have lead to the current economic crisis and to revise or repeal them in favor of government policies which promote free enterprise and free markets;

BE IT FURTHER RESOLVED, that the Republican National Committee, in cooperation with
Republican Members of Congress and the Republican Governors of the various states, shall be
authorized to engage in vigorous debate on public policy issues, including calling for Congress to
oppose measures which are detrimental to the welfare of our Nation and our People, consistent with the conservative principles of the Republican Party as expressed in its national platform, and to devote appropriate resources of the RNC for this purpose.

No comments: