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Lehigh Valley Congressman opposes loans to American automakers

12.24.08

January 2009, Allentown/Bethlehem/Easton edition of The Union News

Lehigh Valley Congressman opposes loans to American automakers

By PAUL TUCKER
theunionnewsabe@aol.com

LEHIGH VALLEY, December 15th- Charlie Dent, the Republican United States House of Representative for the 15th Legislative District, voted against HR 7321, the Auto Industry Financing and Restructuring Act on December 10th, that would have provided a “bridge loan” of 14 billion to the American automakers even though a study shows the loss of the big three automakers would cost Pennsylvania 120,000 jobs.

“As the son of a 30 year Bethlehem Steel employee affected by the demise of that once mighty company, I can indentify with the plight of the auto workers, their families, and the numerous small businesses involved in this difficult situation;” stated Mr. Dent, which represents the Lehigh Valley in Washington DC. The House of Representatives passed the legislation, however, the auto loan failed to pass in the Senate.

According to a study released by the Economic Policy Institute (EPI) in Washington, DC, and the Keystone Research Center in Harrisburg, the financial woes of the United States auto industry is not just a Detriot problem but could impact the economies of states across the nation.

Pennsylvania ranks ninth among the 50 states in potential job loss as a result of one or all of the big three automakers shutting down, the study estimated. Also, up to 120,100 jobs would disappear in Pennsylvania within a year, if General Motors (GM), Ford and Chrysler were allowed to fall into bankruptcy. The loss of GM, the company most at risk of entering bankruptcy, would jeopardize up to 33,200 jobs in Pennsylvania.

The EPI estimated even if only motor vehicles and parts jobs are counted, Pennsylvania would lose up to 8,400 jobs from a total industry shutdown and up to 2,300 from a shutdown of General Motors alone.

Mark Price, Ph.D., a labor economist for the Keystone Research Center, noted that the EPI study should concern manufacturers and other industries in Pennsylvania. “Anyone who thinks an auto industry collapse has little impact on Pennsylvania should think again. As the EPI study shows, the 120,000 Pennsylvania jobs threatened by an auto industry failure account for 2.1 percent of total state employment,” said Mr. Price.

However, Mr. Dent opposed the legislation that would have provided the loans. “The United States House of Representatives passed the Auto Industry Financing and Restructuring Act. This bill provided $14 billion in loans to the nation’s three automakers, commonly referred to as the Big Three. After careful deliberation, I opposed this legislation. In late November, exectives from each of the three domestic automakers testified before the House Committee on Financial Services on the perilous condition of the American auto industry and its need for significant financial support from Congress to remain solvent. Following their unsatisfactory testimony, these executives were directed by Congressional leaders to return to Washington in December with precise plans on how they will use federal loans to restructure their companies in a manner that ensures long-term viabilty. After reviewing the proposals presented to Congress, I believe the Big Three’s restructuring proposals lack accountability. A responsible plan must accomplish two goals, protect taxpayers and help auto workers by making their employers more competitive,” added Mr. Dent.

Mr. Dent added, another reason he opposed the legislation was because it failed to implement the reforms that domestic automakers must embrace to ensure limits on executive compensation, and additional substantial concessions by the United Auto Workers (UAW) Union members, concessions he states, “that are absolutely necessary for the revitalization of the industry.”

The EPI study estimates the loss of “re-spending” jobs as a result of the wages lost by workers in motor vehicle industries and other sectors supported by car production, would within three years top $150 billion in federal tax revenue and without cars to export, the United States trade deficit would rise by $109.3 billion.

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