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Cong. Peter DeFazio Washington, DC Office
2134 Rayburn H.O.B.
Washington DC, 20515
Phone: (202) 225-6416

Dear Congressman DeFazio
My comments are in blue.
Thanks for the reply. I value your time and talent. We have much in agreement, but the methods proposed to be used are the wrong methods for the wrong reasons. There is hope for restructuring Chrysler and GM with careful oversight of federal help. For the reasons given, HR 7321 is not the solution.

Dear Mr. Miller:

Thanks for your message in opposition to the auto industry bailout. The costs and failures of the Wall Street bailout, which I adamantly opposed, are becoming more apparent. The much touted restrictions of corporate pay have proven to be totally ineffective. You and other members of the American taxpaying public are totally justified in expressing anger with the failures of the $700 billion Wall Street bailout and the Bush Administration's commitment to spend $1.4 trillion to save Wall Street financial institutions. HUD should be empowered to buy mortgages in default and pay, not to exceed the then fair market value of the property or the principal balance on the loan, which ever is lesser. Then HUD resets the terms of the mortgage so the borrower can make payments. The term should be five years and the monthly payments should not exceed one percent of the principal amount of the mortgage, with a balloon at the end of the term. HUD can also sell the repackaged mortgage to private parties or financial institutions. HUD would contract with Amazon to handle the sales over the Internet. Google would list all of the properties for sale with a URL to a data bank containing the appraisal report and the promissory note which spells out the exact terms. The prospective buyer could run a credit report.

I have consistently asked several important questions when evaluating proposed bailouts and other initiatives to stabilize or improve the economy.

1. Does the proposal protect the interests of the taxpayer by minimizing the cost and maximizing the benefits to the taxpayer? NO

2. Is it absolutely necessary for the government to intervene? YES Are there more effective alternatives or alternatives with lower costs? YES

3. Will the proposal mitigate further damage to the economy, stimulate the economy, and protect the middle class from the recession? NO

Applying these questions to the $700 billion Wall Street bailout led me to vote twice against this boondoggle. Despite the sheer size of the bailout, the law failed to include adequate taxpayer protections. The Wall Street executives who created the financial mess kept their excessive salaries, bonuses, and golden parachutes and continued to spend lavishly on themselves. Finally, there were many alternative solutions that cost significantly less and were more likely to restore liquidity in the financial markets. Liquidity is the availability of money for lending. If businesses and consumers cannot borrow, much of our commercial system is in jeopardy. Correct. Since the banks are refusing to loan, who is going to buy the new cars F-GM-C will be making? Since the banks are refusing to loan and businesses shut down for lack of liquidity, fewer persons will buy new cars, especially in view of the prospects of deepening crisis. Keeping all three automakers going so they can continue to build the internal combustion powered cars, makes no economic sense and less political sense.

In hindsight, there is no question that the Wall Street bailout achieved little for our economy besides a massive shift of taxpayer funds to the financial industry. In return, the taxpayer received a weakening economy, a record loss of jobs, and no relief to the housing slump. Correct.

The original proposal from the auto industry also failed to satisfactorily answer these questions. Earlier this fall, the auto industry first sought a $25 billion no-strings-attached bailout. When the auto executives breezed into Washington DC on their corporate jets, Congress declined to even vote on their proposal and demanded the companies submit vastly improved plans. When the requested amount rose to $34 billion I became doubly skeptical. The auto company mismanagement drove the industry into the ground and they continued to seek a bailout without changing their failed business model. These demands show the true colors of F-GM-C management – plunder the taxpayers while they have the chance.

H.R. 7321, the Auto Industry Financing and Restructuring Act, passed by the House of Representatives on December 10th was hammered out in tough negotiations between the Congress and the White House. It actually represents a tremendous improvement. I applied the same principles that led me to oppose the original bailout, and found the bill to meet those principles. I disagree.

1. Does the proposal protect the interests of the taxpayer by minimizing the cost and maximizing the benefits to the taxpayer?

H.R. 7321 gives a bridge loan to auto companies not to exceed $14 billion, or about 2% of the Wall Street bailout. That is less than half the cost of their earlier request. I expect the real economy will benefit far more from this 2% investment than it did from the Wall Street bailout. To ensure the companies restructure to achieve viability, international competitiveness, fuel efficiency, and reduced emissions, the government can require immediate repayment of the loan if the company has not made adequate progress to develop a long-term restructuring plan. These criteria are too little, too late. The money allows F-GM-C to continue making cares using the internal combustion engine as the principal motive power. That is why GM and Chrysler should be allowed to fail. Both had reasonably good hybrids on the road. GM made 800 EVA's, leased them out, refused to sell them to the happy drivers, recalled them, crushed them and shredded them. Read my earlier paper which documents this atrocity. GM still has the engineering and tooling for the EVA. Force GM to drop 15 models of cars with IC engines and make the EVA's. See the articles at: http://chyslerelectricautocompany.wetpaint.com/

The automakers would be required by March 31 to cut costs, restructure debt and obtain concessions from labor sufficient to report a positive net present value. You know what will happen. F-GM-C will fail to hit the target and come begging for extensions which will be granted for the same reasons Congress is granting the loans. As to Chrysler, the proposed solution of turning it immediately into a manufacturer of electric cars as described in my Part II article, should be mandated. See: http://chyslerelectricautocompany.wetpaint.com/page/STOP+THE+GM-CHYSLER+ECONOMIC+RAPE+OF+AMERICA+-+PART+II

The electric cars of F-GM-C were killed because the dealers depend heavily on the revenue from tuning and repairing the IC engines. Electric cars require little maintenance. That is why the auto makers are killing their electric cars and making the new ones very costly and also dependent on the IC engine. They are addicted to the IC engine which makes us addicted to fossil fuel. Change to all electric power and we greatly reduce our dependence on foreign oil. Change to fuel from plants, and we reduce our dependence on foreign oil.

Furthermore, the bill requires strong independent oversight by the Government Accountability Office and the Special Inspector General overseeing the Wall Street bailout. The government will also get warrants for stock to allow taxpayers to profit from the companies' recovery. More smoke and mirrors. Until management is totally changed, the companies will continue on the same failed course of action and the warrants will never have any value. Finally, if the restructuring fails and an auto company goes into bankruptcy, the taxpayer's interest is protected because it is first in line for debt repayment. Actually not. The Trustee and the attorney for the trustee are the first who will reap a huge reward for doing little except to stall the proceedings, make it more expensive and defeat the purpose of the Chapter 11. Then the workers take the next bite, based on their excessive pay and benefits. There is a better way. By negotiations, have GM and Chrysler make an GENERAL ASSIGNMENT FOR BENEFIT OF CREDITORS, and appoint a receiver for each company (GM and Chrysler), who answer to the General Accounting Office, both of which are supervised by the GAO plus a three member panel of arbitrators who can render quick decisions on controversies.

2. Is it absolutely necessary for the government to intervene? Are there more effective alternatives or alternatives with lower costs?

Many critics of the auto industry have argued that the companies should be allowed to go into bankruptcy as a lower cost alternative. If true, that would be an option I'd favor. Bankruptcy is the last alternative, since it can abrogate union contracts. Unfortunately, bankruptcy will actually cost taxpayers more money and will probably force the companies to sell off all their assets rather than reorganize and stay open. F-GM-C need to sell off the engineering and tooling for the IC engine for cars and trucks which are the exclusive power for cars and trucks. The rest of the tooling for the car bodies can be salvaged to make all electric plug-in for short trips and plug-in hybrids for longer trips. I cover this topic in http://chyslerelectricautocompany.wetpaint.com/page/STOP+THE+GM-CHYSLER+ECONOMIC+RAPE+OF+AMERICA+-+PART+II

Under current law, people who lost their job from a bankruptcy are eligible for unemployment benefits and their pensions are guaranteed by the federal government albeit with greatly reduced benefits. If the job losses are significant, the unemployment insurance fund could require additional funds. That would be far cheaper than seeing 14 billion go to waste. The government just announced that the number of Americans filing for unemployment benefits for the week ending Dec. 6 was 570,000, the highest in 26 years. Furthermore, the Pension Benefit Guarantee Corporation (PBGC) fund is already operating in a deficit and would require up to $30 billion in taxpayers subsidies to cover the losses of autoworker pensions. The cause of the meltdown is because Bush et al., is implementing the crisis in advance of the the establishment of the New World Order by the hegemony of the Travistock Institute and the Skull and Bones Society alumni. See: http://masallp.wetpaint.com/page/TRAVISTOCK+INSTITUTE .

Also watch these video clips:

http://www.youtube.com/watch?v=hZsY5XbLinw

http://www.youtube.com/watch?v=4PpMdTmVMpo&NR=1

http://www.youtube.com/watch?v=VvWF5FlBsqs http://www.youtube.com/watch?v=evTi_C4hHqw

http://www.youtube.com/watch?v=pHpg77sMNz8&feature=related

http://www.youtube.com/watch?v=_9P15YZrnv0

http://www.youtube.com/watch?v=SCWJrtMm8Q8&feature=related

http://www.youtube.com/watch?v=5bQDedDevxQ&feature=related

http://www.youtube.com/watch?v=aCnnqQive0g&feature=related

http://www.youtube.com/watch?v=4UQ5CHifqMs&feature=related

The on-going liquidity crisis that the Wall Street bailout failed to correct prevents the Big Three from reorganizing in bankruptcy proceedings. The auto companies will not be able to borrow any money to continue operations, as a company would normally do under bankruptcy protections. The U.S. lost over a half million jobs in November. Now is not the time to lose millions more. The bailout of the financial institutions is part of the game plan of the New World Order, now being implemented by Bush et al. See attached articles GOAL OF THE GLOBALISTS AND OUR PLAN and THE PRIVATIZATION OF THE UNITED STATES OF AMERICA.

The auto industry is one of the last remaining sectors of the U.S. industrial manufacturing base that led to the growth of the middle class in the post-World War II era. The U.S. has steadily lost much of its manufacturing base to China and other developing nations and the blue collar middle class has suffered as a result. Since 2001, Oregon has lost almost 36,600 jobs to the growing trade deficit with China, according to the Economic Policy Institute. Liquidating the auto companies will simply mean the factory equipment will be packed up and sent to China, and we will soon be limited to buying cars from Japan, Germany, Korea or China. This will further undermine our manufacturing capacity and worsening our already massive trade deficit. F-GM-C need to sell off the engineering and tooling for the IC engine for cars and trucks which are the exclusive power for cars and trucks. The rest of the tooling for the car bodies can be salvaged to make all electric plug-in for short trips and plug-in hybrids for longer trips.

3. Will the proposal mitigate further damage to the economy, stimulate the economy, and protect the middle class from the recession.

I have long supported job creation for the middle class. According to the Economic Policy Institute(EPI), the short term bridge loan will protect up to 3.3 million jobs that are critical to our economy. EPI estimated 37,000 of those jobs would be lost in Oregon. There are plenty of jobs which can be created to prime the pump. See attached: INSTANT JOBS – save energy and our economy One of the key improvements found in H.R. 7321 is the requirement that automakers begin producing cars that people actually want to buy. The bill sets aside $500 million to help the industry retool and build advanced technology vehicles that greatly improve efficiency and reduce carbon emissions. In addition, the government can recall the loans if a car company fails to meet the efficiency standards approved in 2007 and soon to be phased in. No Federal money should be spent on IC engines except for plug-in hybrids and then only small gensets.

Another important improvement to H.R. 7321 is the strict ban on corporate excesses. The legislation blocks golden parachutes, bonuses for the 25 most highly paid employees at each company, and requires each company to sell its corporate aircraft. I am adamantly opposed to the auto company executives benefiting from this bridge loan and many of them should lose their jobs for running these companies into the ground. The bill also bans dividend payments to shareholders over the life of the loans. Agreed.

Finally, the bill gives the government the ability to block all transactions over $100 million. This ensures that the government can stop any overseas investment or any attempt to ship jobs overseas. Is 100 million “pocket change”?

In the end, I believe that the taxpayer, American workers, and our economy are best served by supporting the bridge loan. The domestic auto industry must significantly restructure its business model and fundamentally shift its long-term thinking about automotive transportation. The U.S. can't continue to lose its manufacturing base. We need to get back to building useful products to stimulate our economy. But these products need to be something Americans will actually buy. You might be interested in my efforts to research and form Central Peoples Power, a locavore public utility which will produce, transmit and sell locally derived green energy. See: http://centralpud.wetpaint.com/page/PROPOSED+CPP+PLAN

On December 11th, the Senate failed to pass H.R. 7321. Following that vote, the Bush Administration belatedly agreed to consider using some of the $700 billion Wall Street bailout funds to offer domestic automakers a bridge loan. The Administration's initial refusal to consider using the Wall Street bailout funds was astounding. They refused to shift a mere 2% of the Wall Street funds away from the failed bailout and to auto companies to protect 3.3 million jobs. The Republican/New World Order's game plan is to put debt on the Federal government in favor of private companies – a form of privatization of Federal assets. See attached: DISASTER LOOMS

By the way, if the Democrats are serious about winning more seats in Congress, then a panel of experts ought to be employed by a Democrat organization to document and prove beyond any doubt that the New World Order is moving hard and fast toward control of all productive assets and the major governments of the developed world. They are the real enemy—financial terrorists. Don't be surprised that the Clinton's are part of the New World Order. How else did Hillary invest $5000 in cattle futures and during the year, got profits of $950,000 when the best traders in that market made a 4% return?

Thank you for sharing your concerns about the auto bailout. I regret that we disagree on this issue, but hope you will continue to share your views with me when we agree and when we disagree. Your views are important to me. Please keep in touch. Better yet, please read The Shock Doctrine by Naomi Klein and Sin Patron by Lavaca.org. These books document the attempt to install the New World Order in Latin America using Friedmanist theories.

Sincerely,

Rep. Peter DeFazio
Fourth District, OREGON

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