S10904 CONGRESSIONAL RECORD — SENATE December 11, 2008 

Executives can even lose their deferred pay 

altogether if their employer ends up in bankruptcy court. When Lehman Brothers Holdings Inc. filed for bankruptcy last month, 

most executives became unsecured creditors. 

The government didn’t come to Lehman’s 

aid. 

In assessing liabilities, the Journal examined federal year-end 2007 filings by the first 

nine banks to get capital injections, plus six 

other banks and financial firms embroiled in 

the financial crisis. In many cases, the firms 

didn’t report enough data to estimate their 

obligations to executives. As for identifying 

amounts due individual executives, company 

filings provided a look at only the top few, 

and not a full picture of what they were 

owed. 

Just as banks aren’t the only financial 

firms getting federal aid amid the crisis, 

they aren’t the only ones facing scrutiny of 

their compensation programs. 

Struggling insurer American International 

Group Inc. agreed to suspend payment of deferred pay for some former top executives 

pending a review by New York state Attorney General Andrew Cuomo. Mr. Cuomo is 

also demanding to know this year’s bonus 

plans for the first nine banks getting federal 

cash, as is House Oversight Committee 

Chairman Henry Waxman. 

Among the payouts AIG agreed not to 

make are disbursements from a $600 million 

bonus pool for executives of a unit that ran 

up huge losses with complex financial products. AIG also is suspending $19 million of 

deferred compensation for Martin Sullivan, 

whom AIG ousted as chief executive in June. 

His successor as CEO, Robert Willumstad, 

who left when the U.S. stepped in to rescue 

AIG in September, has said he’s forgoing $22 

million in severance because he wasn’t there 

long enough to execute his strategy for AIG. 

However, the giant insurer—whose total liability for its executives’ deferred pay 

couldn’t be calculated—says most of the 

managers will receive the compensation. ‘‘Of 

course, we’ll be looking at all these to make 

sure they’re consistent with the requirement 

of the program,’’ said spokesman Nicholas 

Ashooh. 

AIG isn’t eligible for the government’s capital-injection plan, since it’s not a bank, but 

it’s getting plenty of U.S. aid of another 

sort. The Treasury has made $123 billion of 

credit available, a little more than twothirds of which MG has borrowed so far. 

Fannie Mae and Freddie Mac also don’t get 

in on the capital-injection plan for banks. 

But under a federal ‘‘conservatorship,’’ the 

Treasury agreed to provide each with up to 

$100 billion of capital if needed. In return, 

the government got preferred shares in the 

firms and the right to acquire nearly 80% of 

them. 

Their regulator, the Federal Housing Finance Agency, says it will bar golden-parachute severance payouts to the mortgage 

buyers’ ousted chief executives. The executives remain eligible for their pensions. 

Fannie Mae had a liability of roughly $500 

million for executive pensions and deferred 

compensation at the end of 2007, judging by 

the size of its deferred tax assets. A spokesman for the firm wouldn’t discuss the estimate or whether the executives would get 

the assets. 

At Freddie Mac, most will. ‘‘Deferred compensation belongs to the officers who earned 

it,’’ said Shawn Flaherty, a spokeswoman. 

Indeed, in September Freddie Mac made its 

deferred-compensation plan more flexible, 

allowing executives to receive their money 

earlier than initially spelled out. ‘‘Officers 

were nervous about market changes,’’ said 

Ms. Flaherty. ‘‘We wanted a retention tool 

for top talent.’’ 

Mr. WHITEHOUSE. I thank the 

Chair, yield the floor, and I suggest the 

absence of a quorum. 

The PRESIDING OFFICER. The 

clerk will call the roll. 

The assistant legislative clerk proceeded to call the roll. 

Mr. LEVIN. Madam President, I ask 

unanimous consent that the order for 

the quorum call be rescinded. 

The PRESIDING OFFICER. Without 

objection, it is so ordered. 

Mr. LEVIN. Madam President, I ask 

unanimous consent that the Presiding 

Officer, the Senator from Missouri, be 

recognized for up to 5 minutes, and 

that I be recognized for 30 minutes in 

morning business. 

The PRESIDING OFFICER. Without 

objection, it is so ordered. 

Mr. LEVIN. I suggest the absence of 

a quorum. 

The PRESIDING OFFICER. The 

clerk will call the roll. 

The legislative clerk proceeded to 

call the roll. 

Mrs. MCCASKILL. Mr. President, I 

ask unanimous consent that the order 

for the quorum call be rescinded. 

The PRESIDING OFFICER (Mr. 

LEVIN). Without objection, it is so ordered. 

Mrs. MCCASKILL. Mr. President, I 

know we have an important piece of 

legislation that we are going to vote on 

today. I desperately want to support 

that legislation. I wish to ask first and 

most importantly if anyone has the information as to whether the CEOs of 

Wells Fargo or Bank of America or 

Citigroup have taken private jets in 

the last month. Has anyone asked the 

CEOs of Citigroup, Wells Fargo—all of 

these financial companies—to take a 

cut in compensation? Has anyone 

asked about their workers and how 

much money they make and whether 

they are overpaid and whether they are 

competitive with the salaries of community bankers across the country? 

Every one of the institutions I named 

has gotten $15 billion or more of taxpayer money. Think about that for a 

minute. Citigroup has gotten $50 billion. Have we checked on their private 

jets? Have we checked on their CEO 

compensation? Have we checked on 

their work rules and whether their 

workers are given enough flexibility? 

It is unbelievable to me that we are 

setting this double standard. The thousands of jobs and families who build 

great American cars do not deserve 

this incredible hypocrisy in terms of 

the different treatment they are getting. What is good for the goose is good 

for the gander. 

I say let’s call in those CEOs of those 

big companies that have gotten more 

than $15 billion of our money and ask 

them when they are going to take a 

dollar in pay, ask them if they got here 

on a corporate jet, ask them if their 

workers have cut their pay to $14 an 

hour, ask them if they have talked 

about cutting their pension costs and 

their health care costs. Until we do 

that, we ought to be quiet about the 

American autoworkers, and we ought 

to be quiet about these companies that 

have reduced fixed costs, that have 

agreed to sell corporate jets, that have 

agreed to cut executive compensation. 

I want to support this bill on behalf 

of manufacturing in the United States 

of America, on behalf of wonderful, 

hard-working families in Missouri. 

However, there is one problem that has 

arisen, and that is, unfortunately, in 

this bill right now, as written, is a provision to increase the pay of Federal 

judges. Wrong time, wrong place. 

We have unemployment numbers 

today that show we have the highest 

unemployment in this country we have 

had in decades. We have families all 

over this Nation who are scared today, 

who are not buying Christmas presents. Federal judges get lifetime appointments and they never take a 

dime’s cut in pay. They die with the 

same salary they have today. My phone 

is ringing off the hook from people who 

want to be Federal judges. I am having 

to have staff work overtime to handle 

all the phone calls I am getting from 

people who think there may be a Federal judgeship opening in the eastern 

district of Missouri and how badly accomplished, wonderful, smart lawyers 

want that Federal appointment. 

We are not hurting for qualified applicants for the Federal judiciary. Is it 

fair that they have not gotten a costof-living increase like every other Federal employee? Probably not. But you 

know what is a lot more unfair is to 

give somebody with a lifetime appointment, great health care, no cut in pay 

when they actually retire, what is unfair is to give them a pay raise on this 

day in this bill at this time. It is not 

the right time. And if it is in the bill, 

I regrettably will have to vote against 

this legislation because I feel so 

strongly that it sends the wrong message to the United States of America 

at this scary moment in our economic 

history. 

Mr. President, I suggest the absence 

of a quorum. 

The PRESIDING OFFICER. The 

clerk will call the roll. 

The legislative clerk proceeded to 

call the roll. 

Mr. LEVIN. Madam President, I ask 

unanimous consent that the order for 

the quorum call be rescinded. 

The PRESIDING OFFICER (Mrs. 

MCCASKALL). Without objection, it is 

so ordered. 

f 

ORDER FOR RECESS 

Mr. LEVIN. Madam President, I ask 

unanimous consent that at the conclusion of my remarks, the Senate stand 

in recess until 3 p.m. 

The PRESIDING OFFICER. Without 

objection, it is so ordered. 

f 

DOMESTIC AUTOMOBILE 

INDUSTRY 

Mr. LEVIN. Madam President, the 

bill that has been filed by the chairman 

December 11, 2008 CONGRESSIONAL RECORD — SENATE S10905 

of the Banking Committee would do for 

the U.S. domestic auto industry what 

governments around the world are 

doing: providing emergency assistance 

to their auto industries because their 

survival is jeopardized by a worldwide 

recession which has resulted in plunging auto sales. 

That global recession is not the making of the auto industries around the 

world, including our own domestic industry. Past mistakes of the big three 

are not the cause of the worldwide recession and resulting credit freeze. 

People who want to make large purchases, such as automobiles, are unable 

to get credit, and 90 percent of the people who buy automobiles buy on credit. 

Many people simply are afraid to make 

large-scale financial commitments in 

these scary economic times. So the 

U.S. domestic auto industry is not 

alone in needing loans to make it 

through the global economic calamity 

we are in. Look at the rest of the autoproducing world. Here are some headlines in the news recently: 

‘‘Facing a Slowdown, China’s Auto 

Industry Presses for a Bailout From 

Beijing.’’ 

Brazil. ‘‘In Brazil, Whiplash on Assembly Lines.’’ ‘‘The Government 

stepped in with a $3.5 billion aid package for the auto industry by funding 

banks to boost the amount of credit 

available for car loans.’’ 

‘‘European Carmakers Get $50 Billion 

in Aid.’’ 

‘‘European governments poised to 

help their automakers.’’ 

‘‘Automakers in other nations get 

more government help. Requests for 

aid made worldwide’’—another headline. 

These are all headlines in papers 

across the country. 

Reuters, ‘‘Spain to support car industry.’’ 

‘‘France’s stimulus plan includes 

carmakers.’’ 

‘‘Portugal rolls out loan.’’ 

‘‘Auto industry faces massive job 

losses without aid,’’ according to the 

chairman of one of the largest automobile industries—not one of the big 

three. 

Now, why are nations around the 

world stepping in to support their auto 

industries? It is because of the drastic 

decline in sales across the industries 

around the world—not just domestic, 

not just the big three—leaving no alternative to every other auto-producing country and its government but 

to support its industry. Hyundai sales 

are down 40 percent; Toyota sales are 

down 34 percent; Honda, down 32 percent; Nissan, down 42 percent; Mercedes, down 38 percent. These are not 

the big three. These are automobile 

makers around the country that are in 

the same situation as the big three. 

But the difference, so far, is that other 

governments are stepping in. We have 

not yet stepped in to support our industry. 

In arguing against these loans for the 

big three, some continue to describe 

the domestic companies of the 1970s 

and 1980s when fuel efficiency was not 

high on the list of the big three as big 

three goals or achievements. Some 

would have us ignore dramatic gains in 

quality and vastly greater numbers of 

fuel-efficient vehicles now being offered by the big three. In the area of 

quality, big three autos are equal to or 

better than their foreign competitors. 

For example, the J.D. Power Initial 

Quality Study scores the overall quality of Buick, Cadillac, Chevrolet, Ford, 

Mercury, Pontiac, and Lincoln—these 

are objective, outside studies on quality for those American brands, Buick, 

Cadillac, Chevrolet, Ford, Mercury, 

Pontiac, and Lincoln—as high or higher than Acura, Audi, BMW, Honda, Nissan, VW, and Volvo. J.D. Power rates 

the Chevrolet Malibu as the highest 

quality midsize sedan on the market, 

and both the Malibu and the Ford Fusion score better than the Honda Accord or the Toyota Camry. 

On the fuel efficiency side, here are 

some facts that hopefully colleagues 

will consider. Long before the credit 

crisis hit, GM laid the groundwork to 

offer 15 hybrids by 2012. Thanks to investments they have already made, GM 

already has 20 models that achieve 30 

miles per gallon or better—twice the 

number of its nearest competitor. All 

the big three are working to ensure 

that at least 50 percent of their American production is capable of running 

on biofuels by 2012. Domestic automakers produce numerous cars that 

have equal or better fuel efficiency 

than their foreign competitors. And 

again, the most fuel efficient Chevy 

Malibu gets 33 miles per gallon on the 

highway, which is 2 miles better than 

the best Honda Accord. The most fuel 

efficient Ford Focus has the same highway fuel efficiency ratings as the most 

fuel efficient Toyota Corolla. 

In the area of productivity, Chrysler 

tied Toyota as the most productive 

automaker in North America this year, 

according to the Harbor Report on 

Manufacturing, which measures the 

amount of work done per employee. 

Eight of the ten most productive vehicle assembly plants in North America 

belong to Chrysler, Ford, or General 

Motors. 

Now, there are also some who want 

to ignore the reduction in benefits that 

have been taken already by UAW workers and retirees. In the collective bargaining agreements negotiated in 2005 

and 2007, the UAW, along with GM, 

Ford, and Chrysler, achieved billions of 

dollars in cost savings and set the companies on the course to bring labor 

costs, including benefits, in line with 

their foreign competitors in the United 

States by 2012. Wages were cut and pension and health care benefits were 

greatly reduced as well. 

The UAW is taking responsibility for 

managing its own retiree health care 

benefits beginning in 2010 by setting up 

its own voluntary employee beneficiary 

association, or VEBA. The VEBA plan 

will transfer responsibilities for health 

care benefits for existing employees 

from companies to an independent 

trust. This eliminates half of the companies’ liabilities for retirees’ health 

care, with billions of dollars of savings. 

The memory of mistakes made decades ago lingers and remains the impression that many have of the big 

three despite all the facts I have just 

outlined. Beliefs are always hard to 

change. So the facts I have just shared 

about improved quality and more fuel 

efficient vehicles and alternative-energy vehicles being produced by the big 

three may not be readily accepted by 

people who have beliefs that are to the 

contrary. But one fact is indisputable 

and will hopefully influence some who 

are open to argument: Auto industries 

around the world are seeking the support of their governments through 

loans and other methods and are getting it. I went through that series of 

headlines, from Brazil to Europe, all 

the way to China. The Chinese automobile industry is asking for loans 

from the Chinese Government. No 

other auto-producing country that I 

know of in the world is failing to act to 

make sure its industry is alive when 

the deep global recession is over, and 

we shouldn’t either. 

There is also a national security aspect to the American auto industry, 

and I wish to spend some time on this 

because there was testimony that was 

prepared for delivery to the Banking 

Committee when they met on this subject by the Director of the U.S. Army 

Tank Automotive Research, Development and Engineering Center, called 

TARDEC. So this is the Army R&D and 

engineering center. It is located in 

Macomb County, MI. TARDEC develops, integrates, and sustains the right 

technology solutions for all of our 

manned and unmanned Department of 

Defense ground vehicle systems and 

combat support systems in order to improve force effectiveness and provide 

superior capabilities for the future 

forces of this country. 

The Director of TARDEC is Grace 

Bochenek. Because of the security importance of what I am going to relate, 

I am going to read from her prepared 

testimony, and this is going to take 

some time. I am going to read from her 

prepared testimony, though it wasn’t 

actually delivered. It ended up that 

they had too many witnesses, and so 

she wasn’t invited, but this testimony 

is a compelling story of the continuing 

relationship between the big three, the 

domestic auto industry, and our U.S. 

Army vehicle program. 

We all look back—some of us nostalgically—to what Detroit did during 

World War II. That is the past. There is 

a present which is critically important 

in terms of the security of this country. Some have pointed out the need to 

have a manufacturing base in order to 

quickly expand in the case of need, and 

that is a powerful argument—a national security argument for keeping 

our big three auto industry around the 

way other countries keep their auto industries around. Some other colleagues 

S10906 CONGRESSIONAL RECORD — SENATE December 11, 2008 

have pointed out in some detail the relationship between the suppliers of the 

big three and the suppliers of vehicles 

for the Army and how much trouble 

those suppliers would be in—these are 

Army vehicle suppliers—if the big 

three did not survive, and that is another powerful national security argument. But I am going to focus on what 

Grace Bochenek focused on, the Director of TARDEC, which is the relationships, the synergies that exist between 

the big three now and the Army in 

terms of current products and current 

technologies which are inserted into 

our vehicles and future technologies 

which are being developed as we speak. 

I am going to quote from her testimony, and this will all be quotes except where I insert my own words, 

which I will try to make clear. But this 

will be a long quote, for those who are 

listening to this testimony and, hopefully, reading it. 

The synergies between TARDEC and the 

U.S. automotive industry and the collective 

challenges we face. TARDEC’s connection to 

the automotive industry dates back to 1947, 

when the Tank Automotive Components 

Laboratories, now known as TARDEC, was 

established. The level of cooperation between the Army and the auto industry was 

strengthened by the Secretary of the Army’s 

charter of the National Automotive Center, 

NAC, in 1992 to champion the development of 

dual-use automotive technologies and their 

application to military ground vehicles. 

Today, the NAC remains the connective 

piece and continues to engage through many 

different mechanisms to leverage the capabilities, skills, and facilities of the automotive industry. 

Referring to the Department of Defense and the domestic automobile industry, she continued: 

For the past 70 years, we have shared common research goals, leveraged investments 

in technology, mutually benefitted from 

those technical developments, and collectively owned the responsibility for our Nation’s next generation of automotive engineers and scientists. Technologies may have 

changed, but the importance of working together to collectively drive innovation has 

not. The Army’s specific challenges are as 

follows: First, significantly increasing fuel 

efficiency to reduce the logistics burden on 

our troops. In some cases, fuel is 70 percent 

of the bulk tonnage that we take to war. 

Second, substantially increasing electric 

power available on the battlefield and developing the next generation of electronic warfare tools. Third, increasing soldier protection through the development and application of advanced light-weight material solutions. Fourth, utilizing sensor technology 

throughout our vehicle platforms to collect 

prognostic data allowing for overall improved reliability and reduced sustainment 

costs. Fifth, engaging the enemy without 

putting soldiers in harm’s way through the 

fielding of unmanned systems. 

Another word for that is robotics. 

Continuing now with Grace 

Bochenek’s prepared testimony. 

Often the only difference between military 

and commercial automotive technologies is 

a matter of scale both with regard to the 

market (quantity) and component durability 

(military specifications). The goals and the 

technologies leading to their accomplishment, however, remain very similar. Our motivations may differ, but our technological 

goals are shared ones. Both the Army and 

the automotive industry seek to achieve 

technical advances in the areas of power and 

energy, vehicle intelligence, robotics, safety, 

advanced lightweight materials and leadingedge manufacturing methods. 

Then she goes into examples in each 

of those areas, where there is a working together, a cooperation, a synergy 

between the American automobile industry and the Army vehicle program. 

She continues: 

In 1997, TARDEC began a commercially 

based tactical truck program focused on 

leveraging GM, Ford and Chrysler’s commercial truck platforms to meet some of the 

military’s light tactical vehicle requirements. Chrysler and GM provided hybrid 

electric vehicles that included start-stop operation and vehicle exportable power providing TARDEC with information critical to 

defining future requirements. 

A Cooperative Research & Development 

Agreement (CRADA) between Ford and 

TARDEC launched the development of a 

thermal management software modeling 

tool. This further matured under multiple 

Small Business Innovation Research (SBIR) 

contracts utilizing tri-service investment. 

The dual use software produced has been 

fully commercialized and is now sold worldwide by one of the SBIR, recipients, resulting in a new Michigan business with revenues of about $10M per year. Ford’s initial 

investment was absolutely critical in the development of this world class product the application of which has also become the 

Army, Navy, and Air Force standard. This is 

an example of how an Automotive OEM— 

TARDEC partnership was able to leverage 

resources to create jobs and develop useful 

technologies. 

TARDEC continues to partner with automotive industry OEMs and suppliers on advanced powertrain technologies including 

fuel cell technologies, power and thermal 

management, and advanced automotive batteries all of which are necessary for the next 

generation of military systems. TARDEC 

leverages fuel cell developments primarily 

through the automotive supplier base with 

companies such as Ballard, Delphi, and 

United Technologies. TARDEC also has a 

longstanding relationship with General Motors in the demonstration and evaluation of 

light duty commercial fuel cell vehicles. 

This program has allowed TARDEC to assess 

multiple generations of fuel cell technologies. 

Batteries are critical to implementing advanced automotive powertrains. As such, 

there is a growing body of collaborative 

work between TARDEC, the automotive 

OEMs, and their suppliers. The cornerstone 

of TARDEC’s efforts in this area is the development of manufacturing technologies needed to mass-produce high power and energy 

density Lithium-Ion (Li-Ion) batteries—particularly critical for the Army’s Future 

Combat Systems platforms. Additionally, 

there are many ongoing military battery 

technology development efforts that leverage emerging automotive battery technology 

providers such as Al23, AltairNano, Boston 

Power, GS Yuasa, Inanovation, EnerDel, 

EnerSys, Firefly, Kokam America, Quallion, 

and SAFT America. With the help of the 

Automotive OEMs and the Department of 

Energy, TARDEC is escalating efforts to define the boundaries for dual-use commercial 

and military applications of advanced battery technologies through the U.S. Advanced 

Battery Consortium. Additionally, General 

Motors is supporting TARDEC advanced battery requirements through direct, individual 

collaboration through a CRADA and an additional newly awarded contract. 

TARDEC and the automotive OEMs have 

both identified advanced automotive batteries as a key area for collaboration going 

forward. In the support of expanding collaboration in advanced batteries, TARDEC has 

worked with the automotive OEMs and suppliers of battery technologies to assess the 

scope of effort around establishing a robust, 

diverse manufacturing base for advanced 

automotive batteries. This effort recently 

culminated in a two-day Battery Summit, 

which involved over 70 participants from industry and government. Discussions covered 

the technology, policy and manufacturing 

implications of having a domestic base for 

the manufacture of advanced batteries. 

TARDEC intends to continue to work with 

key stakeholders to identify near term opportunities in the area. 

VEHICLE INTELLIGENCE

The Army faces high operating and support 

costs in its aging fleet of vehicles. Currently 

the Army reduces this heavy cost burden 

through periodic scheduled inspections and 

sustainment efforts. To further reduce this 

cost burden, the Army must move towards 

an intelligent vehicle architecture. 

Both the Army and the automotive industry have vested interest in enhancing their 

platforms by providing predictive maintenance enhancements through prognostic capabilities. This requires equipping vehicles 

with computing devices, sensors, 

middleware, and wireless infrastructure. 

Through these enabling technologies, vehicle 

intelligence is made possible. This could ultimately enhance operational readiness and 

reduce lifecycle maintenance costs for 

ground vehicle platforms by reducing the 

heavy cost burden of periodic scheduled inspections and automating the supply chain 

to proactively provision for part replacements to optimize the maintenance repair 

process. 

Vehicle intelligence is also an enabling 

technology for Condition Based Maintenance 

and (vehicle) Health Monitoring technologies. It is related to existing developments in the commercial automotive industry such as the installation of electronic 

control units (ECU) and electronic control 

modules (ECM), computing devices, and sensors. These devices facilitate diagnostic 

analysis at the vehicle subsystem level. This 

in-vehicle network provides the ability to diagnose such components as the powertrain, 

ABS, and critical safety systems. GM 

Diagnostics has taken this a step further by 

enabling cellular transmission of data off 

platform for off-board analysis and status 

updates through their OnStar system. The 

Army is working with commercial automotive partners to develop this technology 

for military use via secured communication 

pipelines. 

Robotics—now she addresses robotics 

in her prepared testimony. I am going 

into this at some length because what 

has not been focused on enough in this 

debate is the security implication of 

the failure of the big three. There has 

been a lot of discussion about why it is 

essential that we not allow the big 

three to go under in terms of this economy. But what has not yet been focused on specifically, other than general statements about the connection, 

the current and future connection, is 

the essential synergy between the big 

three and the Army particularly but 

also the military in general. 

People’s minds tend to go back and 

say that was all World War II, that was 

all the ‘‘arsenal of democracy,’’ and 

yes, it was, and we are proud of it. But 

December 11, 2008 CONGRESSIONAL RECORD — SENATE S10907 

it is also 2008, 2010, 2015, 2020. What 

kind of equipment our troops will have 

will depend upon whether we have the 

kind of connection between our military and our commercial worlds. In the 

area of vehicles, to disconnect that 

connection, to rip it apart, to allow the 

big three to go under, has a massive 

negative security impact on this country and on the well-being and survival 

of America’s troops. 

She goes on: 

ROBOTICS, UNMANNED SYSTEMS

The U.S. Army has a long history of working with the automotive industry on the development of enabling technologies for 

manned and unmanned systems. Unmanned 

systems are key resources for our fighting 

men and women in the Global War on Terrorism. 

Many of the key technologies currently 

used on ground robots have their start in cooperative programs between the U.S. Army 

and the Big 3 Automotive and their tier suppliers. The Army and the automotive companies have several aligned activities in unmanned systems. For example, the Army has 

several overriding objectives we are trying 

to achieve for the development and deployment of future unmanned vehicle systems. 

Primary among these goals are Safe Operations (Safe Ops) and Total Situational 

Awareness (SA) around the vehicles, necessary because a robot operates by sensing 

the environment around it at any given moment. Safe Ops and 360 degree SA are also 

critical for the safe operation of passenger 

cars on automated highways, which means 

our goals are aligned perfectly with the programs in the auto industry. 

Recently, both GM and Ford participated 

in the series of DARPA Autonomous Vehicle 

Grand Challenges. The 1st Grand Challenge 

was held at the California Motor Speedway 

and it tested the ability of vehicles to move 

autonomously over structured roads. The 

2nd Grand Challenge was a 170 mile crosscountry road race in the deserts of Nevada. 

The 3rd and final challenge, called the 

DARPA Urban Challenge (DUC), was designed to push the state-of-the-art in autonomous navigation in urban environments, 

where each competitor had to obey the rules 

of the road and contend with other robots 

and driven cars. Many of these robust automotive sensing methodologies are being 

transitioned to Army programs for integration into both manned and unmanned systems. 

In every one of these competitions both 

Ford and GM partnered with leading universities in the U.S. to put together winning 

teams that finished in the top 5 percent of 

race finishers (the GM-Carnegie-Mellon team 

won the DUC in 2007). The close coupling of 

robotic sensors, actuators and intelligence 

was enhanced by the collaboration of automotive engineers at the OEMs. 

Then she goes on with her description of safety issues. 

There are multiple overlapping safety 

goals between the commercial automotive 

industry and the military ground vehicle 

fleet. Just as injury risk mitigation and 

thorough modeling and simulation of technologies is important to the commercial 

automotive manufacturers; these precautions must be taken to reduce the impact 

to our Soldiers, Sailors, Airmen, and Marines. 

Automotive industry OEMs and key suppliers have worked with TARDEC in the development of advanced modeling and simulation efforts to characterize occupant impact 

during rollover and side impact crashes. 

TARDEC recently developed ground-breaking full vehicle underbody blast models and 

methodologies to both accurately predict occupant injury during an energetic event such 

as a mine/IED blast, and to develop new 

countermeasures. This effort would not have 

been possible without heavy leveraging of 

automotive tools and methodologies from 

the automotive crashworthiness area. 

TARDEC’s commercial partners have also 

been critical in advanced technology product 

development, testing and validation, design 

studies, and developmental tests. Finally 

TARDEC relies on the commercial partners 

for prototyping and large quantity manufacturing capabilities. 

Advanced lightweight materials is 

the next subject that she took up in 

her prepared testimony. 

One of TARDEC’s mandates is to research, 

develop, engineer, and to leverage lean, 

agile, advanced manufacturing technologies 

used by the U.S. Auto Industry, Academia, 

and other segments of the U.S. Industrial 

Base. This is accomplished through partnerships and contracts with manufacturers, suppliers, and universities, taking advantage of 

manufacturing capabilities developed to 

service the high volume needs of the auto industry and adapt the technologies for manufacturing the low volume production of military components. 

With the auto industry leading the charge, 

TARDEC is pursuing several advanced manufacturing processes such as friction stir 

welding, laser additive and subtractive manufacturing, flexible manufacturing cells 

using robotics, and water-based environmentally safe painting processes. 

Then she addresses automotive expertise, knowledge, and education. 

To maintain technological superiority now 

and in the future, we need top quality scientists and automotive engineers in our 

workforce. Alongside the automotive industry, we have always had a shared commitment and felt the collective responsibility to 

develop the next generation of engineers, and 

recognized the challenge to do so. 

TARDEC has long recognized that a scientifically and technologically literate citizenry is our Nation’s best hope for a diverse, 

talented, and productive workforce. To 

achieve this goal, we have partnered with 

the automotive industry and universities to 

develop curriculum that will benefit both 

TARDEC and the American automotive 

original equipment manufacturers. 

We have also been able to address this 

challenge through our Automotive Research 

Center, which has created ways for us to 

partner with universities and allow students 

the opportunity to develop and work on relevant automotive engineering challenges. 

Over the years, the automotive industry 

has made significant contributions to the 

Army through technology exchange processes available in the ARC [which is the 

Automotive Research Center]. And in recent 

years, an increased emphasis on research involving high mileage, low polluting vehicles, 

as well as the new high technology needs for 

large trucks, off-road vehicles and robots has 

provided invaluable data and resources for us 

towards the Army’s long term transformation goals and objectives. 

In 2007 and 2008, TARDEC supported 52 

ARC research projects spanning Power, Mobility, Survivability, Modeling and Simulation technology areas. Ford, Chrysler and 

General Motors and at least 12 Tier-1 suppliers provided their resources and expertise 

towards 36 of the 52 research projects. The 

remaining projects had industry involvement from Tier-2 and Tier-3 suppliers such as 

large software companies, industry consultants and automotive small businesses. 

The fact remains [and I will conclude with 

this] that the need for partnerships and the 

consistent leveraging of resources is critical 

for continued innovation, technological 

breakthroughs. American automotive original equipment manufacturers partnership 

with TARDEC in events such as [then she 

lists a whole lot of events] inspires young engineers to consider careers in math and 

science and helps to develop many needed 

automotive skill with applicability in DOD’s 

‘‘real’’ workforce environments. 

Automotive industry support has been crucial in developing the educational infrastructure that has allowed the development of an 

automotive engineering talent base here in 

the United States. And that talent base will 

be central to future efforts to create a safer 

Nation and a robust manufacturing environment. 

At this time, when we have to [these are 

her last words] at this time, when we have to 

break the dependency on foreign oil, provide 

energy security for the Nation, and increase 

soldier protection, it becomes even more 

critical, [even more critical] to leverage investments, exchange technical ideas to drive 

innovation, and provide the breakthroughs 

that are necessary to maintain the dominance of the American military. 

I very much appreciate the time that 

I have taken to share with this body 

the statement of the head of the organization in the Army which is responsible for the technologies in current vehicles and future vehicles. 

I have done this because there is kind 

of yet the unstated critical need for the 

survival of the big three. The stakes 

for our economy nationally are huge. 

The failure of the big three would send 

a tsunami through this already battered economy. 

Millions of workers would lose their 

jobs. Dealers in every town and on 

every Main Street are already reeling 

from the economy’s plunge. Automotive component suppliers, who are 

in fully half our States, are on the 

knife’s edge already, waiting for us to 

act. 

Men and women who work for steel 

mills and textile factories and glass 

factories and computer chip factories 

are waiting and hoping. 

The financial industry would be at 

risk as well. A collapsed auto industry 

would lead to defaults on over $1 billion in corporate bonds, credit default 

swaps and other financial instruments 

tied to the auto industry and could 

send the stock market into another, 

deeper tailspin. Major additional damage to U.S. financial institution balance sheets would result, throwing our 

credit markets into even deeper turmoil. 

Despite these facts, there are still 

some who say, ‘‘let them go bankrupt, 

let them go under,’’ even though 1 in 10 

jobs in this country are tied to the 

auto industry. In addition to hoping 

that they will ask themselves why no 

other government is allowing that to 

happen to their auto industry, I would 

also hope they would listen to some experts on the subject of bankruptcy for 

the auto industry. 

A recent report released by J.P. Morgan titled, ‘‘Cost of the Alternative,’’ 

described the scenario where one or 

S10908 CONGRESSIONAL RECORD — SENATE December 11, 2008 

more of the Big Three are left to file 

for bankruptcy as ‘‘Credit Crisis Part 

II.’’ It indicated that unemployment 

would shoot up by 2 percent if one of 

the Big Three failed, and this failure 

scenario would require the Pension 

Benefit Guarantee Corporation to take 

over more than $100 billion in obligations that the Big Three currently 

hold. It noted that Ford and GM and 

their financial arms ‘‘comprise over 

10% of the high-yield bond market and 

the auto sector represents one of the 

largest sectors in leverage finance for 

banks.’’ 

Another recent report by the Anderson Economic Group and BBK calculated the costs in the first year following the failure of two of the Big 

Three. Such a scenario would cost 

States $12 billion in tax revenues; it 

would cost the Federal Government $40 

billion in income and Social Security 

taxes, and it would cost an additional 

$8 billion in unemployment insurance 

and $5 billion in significantly increased 

costs to the Pension Benefit Guarantee 

Corporation. The report indicates a 

high risk that inaction by Congress 

would result in a permanent shift of 

manufacturing jobs out of the United 

States and a dependence on foreign 

technology. 

Mr. President, these are risks we cannot take. We must pass this legislation. Without this legislation, one or 

more of the Big Three will likely collapse in the coming weeks. The U.S. 

taxpayers would provide a bridge loan 

to avoid this catastrophe under this 

bill, but with important protections for 

their investment, including stock warrants for the Government; limits on excessive executive compensation; a prohibition on golden parachutes; and a 

prohibition on payments of dividends 

until the loans are fully repaid. And 

the so-called auto czar has the ultimate power under this legislation to 

enforce compliance with the long-term 

plans of the auto companies that accept these loans: he can call or cancel 

the loans if he disapproves the auto 

companies’ restructuring plans. 

We cannot afford to further destabilize Wall Street, and we cannot afford 

to allow millions of jobs on Main 

Streets in communities across the 

country to disappear. The domino effect of failure would ripple across our 

entire Nation and add untold suffering 

to an already dire situation. 

I urge my colleagues to support this 

critical legislation. 

As chairman of the Armed Services 

Committee, I wanted to focus on an aspect of this debate that has not 

achieved adequate attention. That is 

the tight, important connection between our domestic auto industry and 

the future security of this Nation and 

our men and women in uniform. 

We have no greater responsibility 

than that. That factor, that synergy, 

that relationship, that connection, is 

an essential component of this debate. 

I hope when our colleagues look at 

all of the factors, they will consider 

that important reason for sustaining 

and supporting an automobile industry 

in this country. Again, no other Nation 

is allowing their automotive industry 

to go down in this global economic disaster we are all in. They have all taken 

steps to support their industry. 

We should too, for many reasons. But 

one of those reasons, one of the most 

important reasons we are here in the 

Senate is to make sure that our men 

and women in uniform always have the 

best equipment that can be produced in 

the world. They put their lives at risk. 

They are entitled to every advanced 

technology we can give them. 

Part of the production of those technologies the big three is playing today, 

tomorrow, and hopefully in the future, 

is a critical role. 

Mr. WARNER. Would the Senator entertain a question? 

Mr. LEVIN. I did not see my dear 

friend from Virginia come to the floor. 

I wish I had, because I wanted to put 

those parts of my remarks—and they 

were lengthy, but at a time when he 

might be hearing them either here or 

in his office. 

Mr. WARNER. Mr. President, we had 

the opportunity to speak on this subject earlier today. And I reminded my 

good friend of the extraordinary chapter in American history that was performed by the industrial base in your 

State and elsewhere across America 

under the leadership and guidance of 

those companies manufacturing automobiles after Pearl Harbor, I mean who 

were in the business of manufacturing 

at the time of Pearl Harbor. They shut 

those lines down very quickly and 

turned to full military production. 

That is a great chapter in American 

history. And, fortunately, I am old 

enough to remember it quite well as a 

young man. 

But today, it is a different industrial 

base in the automobile industry. 

Whereas they had a very dominant position in the production of vehicles, 

particularly tanks, and they did some 

aircraft and so forth, that has given 

way to the high-tech aspects which the 

Senator from Michigan addresses here 

on the floor for the benefit of our colleagues. 

That is a great chapter in American 

history. I would hope this Nation 

would never again be faced with as serious a problem as it was in World War 

II, namely that we had let our Armed 

Forces get down to very small levels 

and the equipment was old and tired. 

You remember the pictures that they 

used broomsticks to practice their 

military maneuvers with and the 

Model T and Model A automobiles that 

were used for tanks. But that chapter 

reflects the potential of not just the 

companies themselves but the workers 

and how quickly they took their 

knowledge and their skilled hands to 

swing into action and produce the war 

materials that we needed very quickly. 

Today our military is much stronger, 

well equipped, thanks to the distinguished chairman and others who have 

served with us on that committee. I 

think the likelihood of our Nation ever 

being confronted with a conflict that 

would have to require that enormous 

buildup is not, hopefully not there, but 

nevertheless we should remember that 

chapter. 

It documents the capabilities of the 

workers and the families in this industry. I think you pointed with great 

pride to that era. I might add to my 

colleague’s comment, he closed by asking all Senators to consider this very 

carefully. As I finish up my 30 years, I 

have been to a lot of Republican caucuses. We had one yesterday at noon. 

We just completed another. And the 

gravity of this issue is reflected in the 

gravity of the careful, very careful consideration being given by every member in our caucus. I can tell you that 

without any question. I am not suggesting exactly which way they are 

going to go. But I know that they have 

the best interests of the country in 

mind, and the gravity of the situation 

is enormous. You can detect it as you 

hear the colloquies going on on our 

side. I am sure the same is taking place 

the Senator’s. 

Mr. LEVIN. Mr. President, first, I 

thank my dear friend from Virginia. 

This will probably be, we keep saying, 

the last opportunity we have to speak 

with each other on the floor of the Senate. It may be, it may not be, as it 

turns out. But I know of no Member of 

this body who has put the interests of 

this Nation more deeply in his heart 

than the Senator from Virginia. 

There are others who probably share 

that with him; I know there are, but 

the focus which I gave here today outlining the current relationship between 

the big three and the technologies that 

are embedded right now in our vehicles, and the effort in a collaborative 

way between our domestic automobile 

industry and our Army vehicle industry, to give us lighter vehicles, more 

survivable vehicles, crashworthy vehicles, vehicles that use less gasoline, vehicles that have the global positioning 

devices that can say exactly where 

they are and communicate that, these 

technologies are embedded now and 

will continue hopefully to always be at 

the forefront, at the cutting edge of 

technology to give our troops what I 

know the Senator from Virginia has 

devoted his life to; that is, to giving 

our troops every edge we can. 

The big three not only has been part 

of that on the vehicles, as the Senator 

notably points out in terms of looking 

back, but that is the current situation—deep connections, synergies, collaboration going on as we speak, and 

planned for the years ahead. 

If we rip apart that connection, by 

allowing the big three to go under, that 

tremendous capability they have to 

join with the Army on vehicles, particularly, will be rendered useless or 

will no longer exist. That would be a 

terrible tragedy for our Nation’s security. 

Again, I am glad my great friend 

from Virginia was able to come to the 

December 11, 2008 CONGRESSIONAL RECORD — SENATE S10909 

floor to share with me some thoughts 

about this relationship that is not only 

historical and one which we take great 

pride in as a nation, that ability to 

quickly expand, to turn a manufacturing, an industrial base into an arsenal of democracy. 

That hopefully will not happen, as 

the Senator points out. Maybe it is less 

likely to happen. But we must be there 

when it does. That aspect has been focused on by others, the need to be able 

to have a manufacturing base for our 

national security and to have a base of 

suppliers for our national security. I 

have tried to add another aspect to this 

argument that points to the relationship between the survival of our big 

three and our national security by 

pointing out the ongoing relationship 

in the area of research and development, which has produced critically 

important technologies currently in 

our vehicles and developing today the 

technologies which will make future 

vehicles. 

Mr. WARNER. Our military vehicles. 

Mr. LEVIN. Absolutely. 

Mr. WARNER. I wish to make that 

clear because that technology has been 

available in the open market to those 

manufacturers, other than the oil industry, which have, in a remarkable 

way, taken these up-armored vehicles, 

that general category we have today, 

very quickly, to the great credit of the 

Secretary of Defense, Secretary Gates, 

he put together a structure of five companies to get into immediate production of those vehicles and into those 

vehicles has gone the development and 

technology that our distinguished colleague from Michigan has described. 

Mr. LEVIN. Thankfully, we still have 

a few colleagues, including the great 

Senator from Virginia, who have a personal connection to that war. 

Mr. WARNER. It was very minor, but 

it was a privilege to have been associated with that generation. 

Mr. LEVIN. I thank my friend from 

Virginia. 

f 

RECESS 

The PRESIDING OFFICER. Under 

the previous order, the Senate stands 

in recess until 3 o’clock. 

Thereupon, at 2:17 p.m., the Senate 

recessed until 3:03 p.m. and reassembled when called to order by the Presiding Officer (Ms. KLOBUCHAR). 

The PRESIDING OFFICER. In my 

capacity as a Senator from the State of 

Minnesota, I suggest the absence of a 

quorum. 

The clerk will call the roll. 

The legislative clerk proceeded to 

call the roll. 

Ms. MIKULSKI. Madam President, I 

ask unanimous consent that the order 

for the quorum call be rescinded. 

The PRESIDING OFFICER. Without 

objection, it is so ordered. 

f 

EXTENSION OF MORNING 

BUSINESS 

Ms. MIKULSKI. Madam President, I 

ask unanimous consent that the period 

for the transaction of morning business 

be extended until 5 p.m., with Senators 

permitted to speak for up to 10 minutes 

each. 

The PRESIDING OFFICER. Without 

objection, it is so ordered. 

Ms. MIKULSKI. Madam President, I 

suggest the absence of a quorum. 

The PRESIDING OFFICER. The 

clerk will call the roll. 

The legislative clerk proceeded to 

call the roll. 

f 

SILO TAX SHELTER 

Mr. BAUCUS. Madam President, the 

House bill before us contains a provision that causes me great concern. The 

provision would make the U.S. Government an active participant in an abusive tax shelter transaction. 

In the past, Congress has voted to 

shut that tax shelter down. And this 

week, I sought to offer an amendment 

to strike the provision from this bill. 

But I have been prevented from offering that amendment. That this provision will remain in the bill makes this 

bill a far less attractive measure. 

Section 18 of the bill requires the 

United States to serve as a guarantor 

of obligations incurred by domestic 

subway and other transportation systems. These obligations arise from the 

systems’ participation in leasing arrangements called lease in/lease out, or 

LILOs, and sale in/lease out, or SILOs. 

LILOs and SILOs are sham transactions. The IRS has designated them 

as ‘‘listed’’ tax shelters. That means 

that these tax shelters are among the 

most egregious abuses of the tax law. 

LILOs and SILOs are very complicated deals, designed to look like legitimate leasing transactions. But in 

reality, they are shams. 

In a SILO, a tax-exempt entity nominally ‘‘sells’’ an asset, like a subway 

system. The other party to the deal is 

an investor who is subject to taxation 

and who needs a tax write-off. The investor nominally ‘‘buys’’ the asset. The 

investor then nominally ‘‘leases’’ the 

asset back to the tax-exempt entity. 

In truth, the benefits and burdens of 

ownership never shift. And the sale and 

the lease have no economic reality. 

These parties purport to make purchase payments and rent payments. 

But in reality, these payments are just 

paper entries, facilitated by a bank 

that is in on the deal. The investor 

pays the tax exempt entity an up-front 

fee in exchange for its willingness to 

participate in the deal. But other than 

that, no real money changes hands. 

There is little, if any, risk to any 

party to these transactions. That is because the deal is cooked from the beginning. It is planned so as to eliminate any risk. 

But there are significant tax benefits 

to the investor. The investor gets interest and depreciation deductions. 

And those deductions generate tax 

losses. Employing these tax losses, the 

investor pays less tax on income that 

the investor earns elsewhere. 

This chart illustrates how a SILO 

transaction works. You do not have to 

understand all the details to see how 

complicated the transaction is. 

As Chairman of the Finance Committee, I have had these deals on my 

radar screen for quite some time. In 

2003, the Finance Committee held a 

hearing with a confidential informant. 

The witness risked his professional reputation to tell us how abusive LILO 

and SILO transactions are. 

I pushed for legislation to shut these 

deals down. The 2004 Jobs Act eliminated the tax benefits for most of the 

investors who had entered into these 

transactions. 

Since 2005, I have worked to shut 

down the remaining deals that the Jobs 

Act failed to address. Unfortunately, 

our efforts have met with resistance. 

Some argue that shutting down these 

transactions would be applying law 

retroactively. But I believe that these 

transactions always violated the law, 

as they lack any economic substance. 

In the Tax Increase Prevention and 

Reconciliation Act of 2005, Congress 

imposed excise taxes on tax-exempt entities and their managers who entered 

into tax shelter transactions. That law 

recognized the role that some tax exempt entities, including transit agencies, played as ‘‘accommodating parties’’ to tax shelter deals. 

Since 1999, the IRS has devoted considerable resources to shutting down 

these deals. The IRS has designated 

both LILOs and SILOs as ‘‘listed’’ tax 

shelter transactions. The IRS has audited every one of these transactions 

that it could find. The IRS has litigated four cases, and won every time. 

Recently, the IRS announced a settlement initiative to shut down the remaining cases and reports an 80-percent participation rate. 

We have been trying to stop these tax 

shelters for years. So how does the 

Government end up guaranteeing this 

kind of tax shelter? The complicated 

structure of LILOs and SILOs plays a 

part. 

Under the terms of the agreements, 

transit agencies are required to obtain 

a guarantee from an insurer. The insurer guarantees that the agencies will 

be able to buy back the subway at the 

end of the lease period. The agreements 

require that the insurer have a very 

high credit rating. 

The current economic crisis has 

caused downgrades of insurers’ credit 

ratings. That has put the tax-exempt 

entities into technical default on their 

agreements. Under the agreements, 

when the tax-exempt entities default, 

the investors have a right to terminate 

the lease. 

The investors are taking advantage 

of this legal opportunity. They are trying to cash in. The investors are attempting not just to recoup the nominal purchase price of the assets. They 

are also demanding that the transit 

agencies pay over the value of the tax 

benefits that the investor will lose as a 

result of the premature unwinding of