Speeches & Floor Statements
Posted on July 28, 2009
I am offering today the auto stock for every taxpayer amendment. This is an amendment I and a number of other Senators, including Senators Bennett, Kyl, and McConnell, have introduced before. It basically would require the Treasury to distribute to all Americans who pay taxes on April 15 all of the government common stock in the new General Motors and Chrysler within 1 year following the date of emergence of General Motors and Chrysler from bankruptcy proceedings. In addition, General Motors, we are glad to say, has now emerged from bankruptcy proceedings, so the amendment becomes very timely. The amendment would prohibit the Treasury from using any more TARP funds to bail out GM or Chrysler, and it would require that the Secretary of the Treasury and his designee have a fiduciary responsibility to the American taxpayer to maximize the return on their investment as long as the government holds stock in these companies. This is the best way to get the auto companies out of the hands of Washington bureaucrats and politicians and into the hands of the American people in the marketplace where the companies belong. There is a great deal of sentiment on the Democratic side as well as the Republican side about this. I know Senator Nelson of Nebraska had introduced legislation along the lines of finding a way to move the stock of auto companies out of the hands of government and into some other hands as quickly as possible, taking the very sensible notion that the job of the U.S. Government is not to operate automobile companies in the United States. And Senator Thune, Senator Corker, and Senator Johanns all have offered amendments to that effect. I would like to suggest to my colleagues that this amendment, which I hope we have a chance to consider, is the most responsible way to take the taxpayers' investment in General Motors and Chrysler, maximize the return on the investment, get it out of Washington, DC, so we politicians are not tempted to meddle with it, and get it back out in the hands of the American people in the marketplace. It will create a sort of "Green Bay Packers" fan base for Chevrolets and whatever else General Motors decides to produce. Most Americans know that in the National Football League there are a lot of teams who have a lot of loyalty, but the Green Bay Packers have more loyalty than most. One reason is that the fans own the team. In this case, the taxpayers would own General Motors and the taxpayers would own Chrysler or at least part of it. They would own 60 percent of General Motors and about 8 percent of Chrysler. That would give about 120 million Americans who pay taxes on April 15 a few shares in General Motors and Chrysler. And it might make them a little more interested in the next Chevrolet, and produce a little consumer interest. That is not the best reason to do this. The most important reason to do this is that the American people, by overwhelming margins, understand what I think most of us understand: that the federal government has no business trying to run a car company. We do not know anything about running car companies. Yet, if we own it, we cannot keep our hands off of it. We have seen many examples of this on both sides of the aisle, I may say. I started giving out car czar awards a few weeks ago. I gave the first one to the distinguished Congressman from Massachusetts who called the president of General Motors and said to him: Don't close a warehouse in my congressional district. And, lo and behold, the warehouse was not closed. Well, the Congressman said he was only doing what any Congressman would do about a warehouse in his district. I think he is right about that. But the problem is, the Congressman owns part of the company. He happens to be the chairman of the House bailout committee - the Financial Services Committee - in addition to that. So it creates a political incestuousness that we need to end. Now, lest my colleagues on the other side think I am trying to pick on Democratic car czars, I had to give the second car czar award to myself because, lo and behold, General Motors came around visiting the delegations of Michigan, Indiana, and, yes, Tennessee to try to see where they might build a plant for small cars. Now, what was I to do, as a Senator from Tennessee and as the Governor who helped recruit Saturn to Spring Hill, TN, 25 years ago? I got with Senator Corker, and we got with the Governor, and we had a meeting in my office, and we met with the General Motors executives, and we put our best case forward. Of course, we own 60 percent of the company. I counted up that there are about 60 committees and subcommittees in the House and the Senate that conceivably could have jurisdiction over General Motors and Chrysler and could hold hearings about the color of their cars and why they are buying a battery for the Chevy Volt in South Korea when they could be buying it from Tennessee, or why they do not make a car that is this big or that big or that many miles per gallon. Or what about the dealers? That has been a matter of great concern in the Congress. There is legislation pending that would overrule whatever the management's decision on dealers is. You name it, we have a reason to meddle. And most of us have been meddling. So what do we have here? We have these chief executives of major companies for which we have now paid almost $70 billion of taxpayers' money for 60 percent of the stock in General Motors and 8 percent in Chrysler. And what do these CEOs do? They are reduced to the status of some assistant secretary, driving their congressionally approved hybrid cars from Detroit to Washington to testify. They dare not fly in an airplane or we would want to know what kind of airplane they are flying in. So they come to Washington. They testify all day before the committee. Of course, they have to get prepared for that, which takes some time. Then they turn around and drive back home. My question is, How many cars did they design that day? How many cars did they build that day? How many cars did they sell that day while they are up here talking to all of their distinguished owners -- Senators, Congressmen -- all of us who are here in Washington, DC? Now, we are well meaning, and they are well meaning. But my point is, the chief executives are never going to be able to succeed if we are constantly meddling in their business. So this amendment would make sure we move the ownership of stock from the government in Washington, DC, into the marketplace. So the reasons for doing this, to summarize, is that all of us seem to say -- the President has said he does not want to micro-manage the auto companies. But if we own the companies, it is kind of hard for him not to do that. He fired the president of General Motors. His representatives are appointing the board. The President himself called the mayor of Detroit and seemed to get on the side of the issue of where the General Motors headquarters would be -- in Warren, MI, or in Detroit. He has an Auto Task Force, whose business it is to pay a lot of attention to how these companies are running. There is a pay czar over in the White House whose job it is to check on the pay of certain executives in General Motors and Chrysler. It is hard for me to see how General Motors and Chrysler -- with all they have to do and the challenges they have ahead of it – how they are going to compete with Honda and Nissan and Toyota and Ford, which posted a big profit. If General Motors is spending a large percent of its time responding to meddlesome questions and directives by its majority owner, the U.S. Government. I am not the only one who thinks that. According to the Nashville Tennessean, an AutoPacific survey reports that 81 percent of Americans polled "agreed that the faster the government gets out of the automotive business, the better." Ninety-five percent disagreed "that the government is a good overseer of corporations such as General Motors and Chrysler." Ninety-three percent disagreed "that having the government in charge of (the two automakers) will result in cars and trucks that Americans will want to buy." According to a Rasmussen Poll done in June, 80 percent believe the government should sell its stake in the auto companies to private investors "as soon as possible." According to the Wall Street Journal on June 18, 70 percent of those surveyed said "they had concerns about federal interventions into the economy, including Mr. Obama's decision to take an ownership stake in General Motors Corp." But I do not think that is news to any of us. I think almost every Member of Congress understands that General Motors and Chrysler would be better off if we did not own them. So that leaves the remaining question: What is the best way to get the stock from where it is in the government to where it needs to be, which is in the market place? There have been a variety of good proposals made. I mentioned Senator Nelson's proposal, Senator Corker's, and Senator Thune's. But I would argue that a straight, simple stock dividend, which is what I am proposing, is the simplest and most effective way to accomplish this job. It is called a "corporate spinoff," in corporate terms, or a spinout. It is a new entity formed by a split from a larger one. It often happens with very large companies. It usually happens when a major company -- in this case, the U.S. Government -- has a subsidiary -- in this case, General Motors and Chrysler -- which has very little to do with the business of the major company. Well, surely operating a car company is not the main business of the U.S. Government, which has a lot on its plate, when we go from health care, to climate change, to energy, to the budget, et cetera. Examples of corporate spinoffs are pretty familiar to us. Procter & Gamble did a spinoff with Clorox in 1969. In other words, Procter & Gamble owned Clorox. Procter & Gamble declared a stock dividend. It gave its shareholders shares in Clorox, and Clorox and Procter & Gamble were severed. Time Warner did a spinoff with Time Warner Cable in March 2009. Time Warner stockholders received a pro rata share of Time Warner Cable common share stock. That is the same idea I am proposing here today. Then PepsiCo did a spinoff with its restaurant business -- KFC, Pizza Hut, and Taco Bell in 1997. This is also something familiar. PesiCo shareholders each received 1 share in the new restaurant company for every 10 PepsiCo shares they held. The idea of Americans owning stock is not a new idea in the United States. Fifty-one percent of families hold stocks in publicly traded companies directly or indirectly. And many big companies have many shareholders. Several of us Congressmen and Senators were on a phone call with Fritz Henderson, the General Motors chief executive officer, several weeks ago. The question came up about, what is the government going to do with all this GM stock after the bankruptcy? Mr. Henderson made very clear that was not his decision, it was the Treasury's decision to make. But he said this is a "very large amount" of stock and that the orderly offering of those shares to establish a market might have to be "managed down over a period of years." Well, if the government in Washington holds the shares of General Motors and Chrysler for a "period of years," I cannot think of anything that will make it less likely that General Motors will succeed because we will be meddling every single day, and GM will never have time to design, build, and make cars. Instead, the government could declare a stock dividend within the next few months, which should be relatively easy to do because we have the names and the accounts of the 120 million people who pay taxes on April 15. The principle here is: they paid for it, they might as well own it. So if the taxpayers own it, and that is good for them, and if getting rid of the stock from the government is good for the government and good for General Motors –- just like creating a fan base of 120 million Americans who might be interested in the next Chevy, like Green Bay Packers fans are interested in the next quarterback – then, it seems to me this is a very wise idea. I have talked with a number of corporate lawyers and bankruptcy lawyers and securities lawyers. I have discussed it with Governors. I have discussed it with financial officials. And I have talked about it with average Americans who are not happy about the fact that the government owns 60 percent of General Motors. They all think this stock distribution is a good idea. I am afraid some of my colleagues think: Well, he is just making a point. He is just being facetious. I am not. We need to get rid of this stock. We almost all agree with that. It will take us years to do it if we sell it just in an orderly way over a period of time. The single best familiar way to get the stock out of the hands of the government and into the hands of the marketplace is a stock dividend. Give the stock to the people who have now paid almost $70 billion for it -- the 120 million people who pay taxes on April 15 -- and let's get this economy moving again. Not many weeks ago, a visiting European auto executive said to me, with a laugh, that he was in Washington, DC, which he referred to as "the new American automotive capital: Washington, D.C." Well, it would be a little humorous if it were not so sad. None of us like the fact that we are in the situation we are in. But to give General Motors and Chrysler a chance to succeed, let's get our auto companies out of the hands of Washington, DC, and back into the marketplace. And the sooner the better.