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Updated: 4:46 p.m.
House and Senate conservatives are pushing back against the Bush administrations plan to use part of the $700 billion financial rescue plan to bail out the Big Three automakers, warning the White House in separate letters that it would have dire, long-term economic consequences.
Twenty-six House lawmakers, led current Republican Study Committee Chairman Jeb Hensarling (Texas) and incoming RSC chairman Tom Price (Ga.) argued in their letter to President George W. Bush that providing funds from the Troubled Asset Relief Program would violate Congressional intent and would place an unfair financial burden on taxpayers.
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, the Members wrote. Tempting as it is to step in with a federal bailout, American taxpayers cannot afford to save every company facing financial peril. Last years federal deficit was the highest nominal deficit in U.S. history, and many economists believe this years deficit will exceed $1 trillion.
Similarly, late Tuesday afternoon GOP Sens. Jim DeMint (S.C.), Jeff Sessions (Ala.), John Ensign (Nev.), Tom Coburn (Okla.), John Cornyn (Texas), Mike Enzi (Wyo.) and Saxby Chambliss (Ga.) sent out their own letter to Bush to oppose the use of the $700 billion bailout.
The group of Senate conservatives which includes a number of leadership Members, including incoming National Republican Senatorial Committee Chairman Cornyn and Republican Policy Committee Chairman Ensign pointed out that Republicans in the Senate blocked an auto bailout bill last week because it did not adequately address issues of union member pay and overall automaker financial health.
Last week, the Senate rejected a legislative bailout after the United Auto Workers (UAW) union refused to agree to changes necessary to help the Big Three automakers become competitive. According to news accounts, your Administration is considering providing TARP funds to the automakers without requiring the UAW and the automakers to make sufficient reforms. Absent such restructuring, we do not believe any amount of money will succeed in saving these companies, the Senators wrote.
The letters are the latest in a series of efforts by House and Senate Republicans to stop the government from bailing out the American auto industry. Only 32 House Republicans voted with Democrats to pass a $14 billion bailout bill on Wednesday.
The measure later died in the Senate.