S10932 CONGRESSIONAL RECORD — SENATE December 11, 2008 

Madam President, I apologize that I 

did not say something a minute ago. 

We have had a difficult Congress. We 

have had the staff who are so valiant, 

so good, who always make us look as 

good as we can look. Sometimes that is 

not very good. However good we look, 

it is because of the great staff we have. 

We have been through 95 filibusters 

this Congress. We have had many serious issues. Our country is in an economic meltdown. We had a series of 

important votes here. It seemed to 

never end. But always our staff is 

here—always. The Democratic staff on 

this side of the aisle, the Republican 

staff on the other side of the aisle, they 

are all very professional; the Parliamentarians, these wonderful pages, the 

court reporters. And, of course, the 

Capitol Police, these people—some of 

whom are in uniform, some not—are 

here to protect us as well as all the 

staff. 

So I want everyone to know, the four 

of you seated in front of the Presiding 

Officer, how much I appreciate the 

work you do. You are all very patient. 

You take abuse a lot of times that you 

should not because a lot of times we 

are busy and forget that we also have 

to be nice to everyone. If I have offended any of you over the past couple 

years, it certainly was not intentional. 

I am so grateful that my Democratic 

colleagues allow me to serve in the capacity I do, as amateurish as I am on 

occasion, but it is not because I am not 

trying. I have the greatest affection for 

every one of my Democratic Senators. 

They are always so good to me and 

work so hard. 

I look forward to the next year. We 

need a productive year. Our country is 

in big trouble. We have so many things 

happening to us, individuals, that it 

does not matter where you look in 

America today, there is very little 

good news economically. And what 

happened today is not going to help 

that. But I talked about that before. 

So I appreciate all that everyone 

does, including the Sergeant at Arms, 

the Secretary. They do such good 

work. We have all the committee 

chairs who work so hard, subcommittee chairs. I have been fighting 

for some words to express myself how 

appreciative I am. I am not forthcoming of them, so I will say thank 

you all very much for what you do for 

us and, of course, the country. 

The PRESIDING OFFICER. The Senator from California is recognized. 

f 

A BRIGHTER FUTURE 

Mrs. BOXER. Madam President, 

change is on the way, but it didn’t get 

here tonight. The American people said 

they wanted change in the Senate, but 

it is not here yet. I think it was proven 

tonight by this vote. The American 

people will see who stands with the 

middle class of this country and who 

doesn’t, who cares about working people and who doesn’t by this vote tonight. Anyone could have picked a 

number of reasons for voting no tonight, but as far as I am concerned, 

with this economy in crisis, we should 

have voted yes. 

All I wish to say is we are going 

through tough times and tomorrow 

things are going to be a whole lot 

tougher for a whole lot of people, unless Henry Paulson does the right 

thing. I wish to say to my colleagues, 

Senator LEVIN and Senator 

STABENOW—I know they are headed 

out, which is fine—that I am going to 

work as hard as I can to convince the 

Treasury Secretary to take action to 

save these 3 million jobs that could be 

on the line. 

People played Russian roulette with 

this recession tonight. We don’t know 

what is going to happen, but we do 

know that Hank Paulson can save 

these jobs. If he can save all those jobs 

in the white-collar industry, certainly 

he can save some jobs in the blue-collar industries. Everyone knows I have 

had problems with Detroit. I think the 

fact that they didn’t listen to those of 

us who felt they ought to produce clean 

cars and fuel-efficient cars, the fact 

that they didn’t listen to us led to, in 

many ways, the problems they face. To 

lose our manufacturing base, without 

even a helping hand to try and save it 

tonight, is shocking. 

So, in closing, I wish to say I have a 

heavy heart right now. I have 200,000 

workers in my State, second only to 

Detroit, who depend on a thriving auto 

industry. That is 200,000 families, 

frightened tonight, but I have a message for them: HELP is on the way. 

Change is on the way. Change is coming to this Chamber. We are going to 

have people who are here for the right 

reason—what I consider the right reason—which is fighting for the middle 

class, fighting to make sure we have a 

clean environment, a strong economy, 

educated kids, peace in the world, all 

those things. That is what the election 

was about. This is a lameduck Senate, 

and they acted like a lameduck Senate. 

It is too bad. But we did get a majority 

vote, so the message to Mr. Paulson is: 

Listen to that. More than 51 people 

here voted to give a chance with a 

bridge loan, so I hope, Mr. Paulson, you 

are watching this, and I hope you will 

do it. Then, when we have our new 

President and our new Senate and our 

new House, we can get back to work. 

I see Senator DURBIN is on the floor 

and is about to speak. I wish to thank 

him, Senator DODD, and Senator REID, 

all those who worked so hard and those 

on the other side who tried—who actually tried—to do something. So I yield 

the floor, with a heavy heart, but I 

know that the future is going to be 

much brighter, much better. 

The PRESIDING OFFICER. The Senator from Illinois is recognized. 

f 

THE AUTOMOBILE INDUSTRY 

Mr. DURBIN. Madam President, just 

a few weeks ago on the floor of the 

Senate, we passed legislation to give 

$700 billion to this administration to 

try to rescue America from its economic crisis. That money was being 

spent by the Secretary of the Treasury, 

Mr. Paulson, whom I respect, and he 

made an effort to try to save a key element of our economy—the financial 

sector—investing literally billions of 

dollars and buying equity and capitalizing investment banks and other institutions, including insurance companies, in the hopes that it would turn 

this economy around. There is scant 

evidence of any success. 

Many questions have been raised 

about the wisdom and judgment of 

those investments, but the fact is literally hundreds of billions of dollars 

have been spent by this administration 

in an effort to rescue many financial 

institutions which had made fatal errors in judgment. They brought together rotten portfolios of bad investments on mortgage securities based on 

this subprime mortgage fiasco which 

we are now paying a bitter price for. 

Tonight, we had an opportunity to 

loan money—a bridge loan—to one of 

the most important sectors in our 

economy: the automobile industry. 

Now, let me tell my colleagues at the 

outset, I buy American cars. I do it out 

of a sense of patriotic duty, and I find 

that most of those cars are good. But I 

expect more out of Detroit than I have 

seen in the past two decades. I have 

been disappointed—bitterly disappointed—by the positions the big 

three have taken on critical issues involving the environment, energy efficiency. They didn’t seem to get it. 

When Toyota came out with its Prius, 

a hybrid car with great mileage, they 

were scoffed at by the leaders in Detroit. That is a car no Americans would 

want. Well, there is a waiting list now 

for those cars. When the price of gasoline reached $4 and beyond a gallon, 

many people started asking hard questions about the gas guzzlers Detroit 

put in the showrooms year after year. 

It seems Detroit was kind of caught in 

this mindset that they could make a 

profit by building more of their successful cars from last year. It ran out. 

It reached a point where they can’t sell 

their cars, and they are struggling. I 

have some sympathy for them but not 

a lot when it comes to management. I 

think they have made some technical 

and strategic errors that they have 

paid a heavy price for. 

I recall about a year and a half ago 

when the CEOs of the big three were 

just off this Senate floor in an office. 

We had a private meeting with about 

five or six Senators. They said: Do you 

have any questions? I said: I do. I said: 

I buy American cars. I have bought all 

your cars—GMs, Fords, Chryslers—I 

have owned them all, and I am pretty 

loyal to your companies. But I have a 

question to ask of you: Have any of you 

ever heard of the magazine Consumer 

Reports? There was this awkward silence in the room. Finally, a few of 

them said yes. I said: I read it, and I 

have been wondering for 20 years why 

December 11, 2008 CONGRESSIONAL RECORD — SENATE S10933 

the Japanese continue to build cars 

that are more reliable and more valuable at trade-in than American cars. 

How can that possibly be the case, in a 

country with the best engineering 

schools in the world and in a country 

that founded the automobile industry? 

How do you explain it, I asked. They 

paused, and the man from Chrysler 

said: I think we are getting better. 

Well, that is a pretty weak answer. 

They could have done better. 

What broke down our effort this 

evening in trying to provide some sort 

of interim financing to the automobile 

companies so they will not go into 

bankruptcy—what broke down was a 

negotiation over one issue, and here is 

what it was, simply stated: There are 

those who believe automobile workers 

are paid too much money and get too 

many benefits such as health care. 

They think if those compensation 

packages were reduced, American cars 

would be more competitive against, for 

instance, Nissans or Toyota or Honda, 

even made in the United States. Well, 

they insisted in our negotiations that 

the wages of American autoworkers, 

all 130,000 of them, be brought down to 

the level of the workers at these foreign car companies in the United 

States by the end of March next year. 

A little over 3 months from now, they 

wanted a substantial reduction in salaries for these workers. 

Now, United Auto Workers, which 

represents most of them, has already 

reached an agreement that as workers 

are bought out and retired, newer 

workers will come in at a lower wage 

scale. So, eventually, their workforce 

will have a lower wage but it will not 

work to the disadvantage of current 

workers. That is the plan. The Republican side of the aisle rejected that and 

said: You have to bring down their 

wages now. Think about that, in this 

economy. Think about that at a time 

when most American families are 

struggling—struggling to pay utility 

bills and for gasoline when it goes up 

high and all the other costs of living 

we face. The Republican answer was: 

Bring down those autoworkers’ salaries 

and do it in a little over 90 days. I 

thought that was unfair. 

Alan Reuther was in the room when 

we talked about it. He represents the 

United Auto Workers. He, of course, 

comes from the historic lineage of Walter Reuther, who helped found the 

United Auto Workers, and he explained 

what this would mean to so many of 

those families who count on those 

wages to put kids through college, to 

make sure they can get by and pay 

medical bills and things that are important to them, but we didn’t have 

much luck in persuading those on the 

other side of the table. 

There was an exception. Senator 

CORKER of Tennessee—a Republican 

who did a magnificent job today—spent 

5 hours that I was with him in negotiations doing his best to try to find a solution. He worked at it, and I admire 

him for it. In the end, he took his best 

work product to the Republican caucus 

and it was rejected. We came to the 

floor tonight and unfortunately saw 

the last remaining opportunity to help 

the auto industry die in a procedural 

vote that occurred a few minutes ago. 

It is going to be hard for a lot of people 

who voted against helping the automobile companies with a $14 billion 

loan to avoid losing 2.5 million American jobs to explain how just a few 

weeks ago they voted for $700 billion to 

bail out the biggest banks in America. 

They shed copious tears for Wall Street 

but couldn’t bring themselves to 

empathize or be concerned enough to 

help the autoworkers and give them a 

vote today. I think that is unfortunate. 

It is beyond that. It is tragic. If the administration doesn’t respond, through 

the Secretary of the Treasury and others, to help this industry, we may see 

some terrible days ahead when some of 

the biggest names in American business—some of the biggest employers in 

the American economy—are forced into 

bankruptcy. It will be a sad day. 

I don’t know if this rescue package 

would have worked. I am not sure. I 

don’t know if it would have been 

enough, or whether it would have 

failed, but I thought we owed our best 

efforts to try to save an industry that 

means so much to America in so many 

States, whether it is Michigan or Indiana or Ohio or Illinois, thousands of 

workers, in Missouri, 55,000 workers; so 

many workers depend on this industry. 

We had a chance to do something for 

them tonight and we failed. We failed 

because we couldn’t bring over enough 

votes from the other side of the aisle to 

come to the magic number of 60. 

Tomorrow is another day. If the 

automobile companies can hang on 

until a new administration arrives, 

then perhaps we can find another way 

to help, a sensible way to give this industry a fighting chance. I hope they 

will use that time to think about the 

products for America’s future, products 

that will be profitable but serve the 

needs of families and businesses and individuals, products that will protect 

our environment, save energy, move us 

in the right direction in technology. I 

know they can do it. Facing the challenge, I believe they will. Those managers and people who are the scientists 

and engineers at each of these companies can count on those men and 

women out there on the plant floor 

who have stood by them year after 

weary year doing their part to build 

the cars to try to keep their companies 

in business. We stood by those men and 

women tonight, those of us who voted 

to move forward. I am sorry we didn’t 

come through. 

I wish to especially thank my colleague, Senator DODD, who worked so 

hard. I wish to also thank Senator 

CORKER, as I mentioned earlier, and 

many others who played an important 

role. I wish to say, as I have said to 

them personally, how sorry I am to 

Senators LEVIN and STABENOW. That 

great State of Michigan has taken 

quite a beating when it comes to its 

economy, and tonight was not good 

news, but tomorrow is another day. 

I yield the floor. 

The PRESIDING OFFICER. The Senator from Pennsylvania is recognized. 

Mr. SPECTER. Madam President, I 

have sought recognition to comment 

on the cloture vote and to give my reasons for voting in support of cloture. 

Before I do, however, I wish to comment about where the responsibility 

lies for failure to invoke cloture to 

move this bill forward, and my hope 

that we would avoid fingerpointing and 

trying to assess blame, each on the 

other side, as has become the pattern 

in this body during the course of the 

last 2 years of the 110th Congress and 

beyond. 

The Senator from Illinois said there 

were not sufficient votes on the Republican side of the aisle. Well, there were 

sufficient votes on the Republican side 

of the aisle, had they been joined with 

sufficient votes on the Democratic side 

of the aisle. There were 10 Republican 

Senators who voted to invoke cloture: 

Senator BOND, Senator BROWNBACK, 

Senator COLLINS, Senator LUGAR, Senator VOINOVICH, Senator WARNER, Senator DOLE, Senator DOMENICI, Senator 

SNOWE, and myself. 

There are 51 Senators on the other 

side of the aisle. Had those 51 Senators—or 50 of them joined with the 10 

Republican Senators, cloture would 

have been invoked. But it would be my 

hope that we would leave this evening 

without partisan blame and still seek 

some way to get the kind of economic 

assistance that would enable the Big 

Three to continue to operate. 

The issue that we face has enormous 

potential adverse economic consequences. I will read from a portion of 

a statement I had prepared in a little 

different direction, but this portion of 

the statement I had prepared specifies 

the scope of the economic problem, 

which is potentially present if the 

three big automobile manufacturers do 

not stay in business. 

A failure of the automakers could 

have a cataclysmic impact on the 

broader economy. The Big Three employ 240,000 workers directly and, more 

broadly, the U.S. auto industry represents almost 4 percent of the gross 

domestic product and impacts 1 out of 

every 10 U.S. jobs in some form, directly or indirectly. These jobs are at 

part suppliers, dealerships, banks, and 

many other lines. 

According to the Center for Automotive Research, 3 million jobs would 

be lost if the Big Three were to fail. 

They estimated that the Government 

could stand to lose up to $156 billion 

over 3 years in terms of reductions in 

Social Security receipts, personal income taxes paid, and an increase in 

transfer payments. 

According to the Anderson Economic 

Group, if at least two of the three were 

to file for bankruptcy, it would cost 

the taxpayers up to four times the 

amount of the proposed bridge loans in 

S10934 CONGRESSIONAL RECORD — SENATE December 11, 2008 

the form of lost income and tax revenue resulting from the massive employment losses. They estimate that 

more than 1.8 million auto-related jobs 

would be lost in the first year, and 

there would be nearly $70 billion less in 

Federal and State tax revenue over a 2- 

year period. Credit and related markets 

would be further disrupted, more U.S. 

manufacturing would move overseas, 

and foreign automakers would gain an 

even greater advantage. 

According to the Economic Policy Institute, a bankruptcy of one or more of 

the Big Three would result in losses of 

up to 3.3 million jobs. The U.S. trade 

deficit could rise by at least $110 billion 

per year as imported vehicles displace 

domestic brands, increasing the trade 

deficit by 16 percent and putting additional downward pressure on the U.S. 

dollar and living standards. An increase in Government payments and 

tax losses alone would exceed $150 billion in the first 3 years following bankruptcy. 

I recite that in some detail to articulate the scope of the potential devastating impact if the three major auto 

manufacturers in the United States are 

unsuccessful. In voting to invoke cloture, I think it should be understood 

that I was not voting in favor of the 

House bill. I think the House bill needed vast improvement. But had we 

taken up the bill, that would have 

given us an opportunity to offer 

amendments, to debate, and to function as the world’s greatest deliberative body. The House bill, in my judgment, didn’t give sufficient authority 

to the so-called car czar. The House bill 

added to it, beyond what was agreed to 

by the Democrats in the Senate and 

the White House, a provision which 

would have terminated the litigation 

brought by the automotive industry 

against the State of California on the 

issue of toxic emissions. 

I do not know who would have prevailed in that suit, but I think there 

ought not to be congressional action to 

get off that litigation. That is a matter 

for the courts. Under our well-established doctrine of separation of powers, 

that should have been in the bill. At 

any rate, had the Senate taken up the 

bill, which is what the cloture motion 

meant—people may be watching on C– 

SPAN 2 and don’t understand all of the 

arcane Senate talk, but a cloture motion is a motion to cut off debate on a 

motion to proceed. It simply means 

that the Senate will proceed to consider the issue as formulated in the 

House bill, as formulated in the vehicle 

laid down by the majority leader, and 

then the Senate has the opportunity to 

offer amendments and to debate. 

We have been in session, as the distinguished Presiding Officer knows, 

since 3 o’clock on Monday. We were 

here a good part of Monday, all day 

Tuesday, all day Wednesday, and it is 

now 11:36 p.m. eastern time on Thursday. The first time we came to the 

floor to have a discussion on this matter was a short time ago. The deliberations were carried on behind closed 

doors. Well, deliberations ought to be 

carried on behind closed doors to try to 

work through and find compromises 

and have free-wheeling discussion. But 

it would be appropriate, it seems to 

me, for the Senate to come to the floor 

and talk about what has been decided. 

The discussion started on the Senate 

floor a little after 9 o’clock and came 

to a conclusion a little more than an 

hour later. At 10:45, we had the motion 

to invoke cloture—that is, to cut off 

debate. 

We pride ourselves in the Senate as 

being the world’s greatest deliberative 

body. Well, why not deliberate—deliberate in public? There is nobody in the 

galleries at the present time, but why 

not deliberate in public? We are now 

carried on C–SPAN 2, on television 

across the country, and across the 

world perhaps. So people can see what 

we are doing, and they can see what 

the considerations are. 

The Senator from Illinois made a 

statement that it was required under 

the proposal of the Republicans to have 

the concessions made on wages within 

a little more than 90 days in March. 

The Senator from Tennessee, who has 

been applauded in this body for the 

outstanding work he has done, said any 

time during the year 2009. Well, had the 

two Senators been on the floor and 

been discussing the matter, perhaps we 

would know exactly what went on behind those closed doors, what the arrangement was. 

I compliment my colleagues for the 

hard work that went into the efforts to 

try to reach a compromise. They did 

work hard. But it seems to me that we 

all ought to be working harder. We 

have more time. As the Senator from 

Tennessee outlined the situation, we 

were very close, as he put it, with three 

words separating the parties. Perhaps 

if we debated the issue, somebody 

would have changed a position a little. 

Senator CORKER was correct that there 

didn’t need to be a very big change. 

Also, when you make the arguments in 

public, you are under a little more 

scrutiny than making them in a back 

room behind closed doors where very 

few people can hear what you are saying, a few people can evaluate what 

you are saying, and there is little room 

for criticism, as opposed to making it 

on the floor of the Senate where everybody can see and hear what you are 

doing and you have to stand behind 

what you are doing. Or perhaps the parties who could not come to an agreement by tomorrow morning overnight 

would change their positions. 

It seems to me that there would be 

nothing to be lost by invoking cloture 

and by debating the matter further and 

by seeing if we can’t come to some 

compromise and some adjustment. 

There is simply too much involved as 

the facts that I have cited earlier in 

this brief statement reflect on the potential economic destruction and 

losses. 

I concur with the Senator from Illinois about the hardship on the workers 

and the loss of salary and the loss of 

opportunity to support their families 

and pay tuition and monthly payments 

on the mortgage, et cetera, et cetera. 

No doubt about that. It is my view that 

we have a duty to go beyond the cloture vote and to take up the matter. I 

have not given up hope that something 

may yet be done. The President had 

backed—and I think still would—the 

bill that was submitted for consideration—the House bill—absent the issue 

with respect to the litigation, and perhaps there will be a way yet to find 

these bridge loans. Certainly, the 

amount of money involved, while not 

unsubstantial, is not enormous compared to the other bailouts that have 

occurred, compared to the total 

amount which the Congress authorized—the $700 billion figure. In supporting the legislation which Senators 

LEVIN, STABENOW, BOND, VOINOVICH, 

BROWN, and I had proposed back on November 20, that was an effort to try to 

have some deliberation. I was not committed to that bill. 

I am certainly not committed to any 

of the proposals that have yet been offered. But it would have been my hope 

that in the course of the debate and 

discussion, and an opportunity by others and myself to offer amendments, 

that we could have worked the will of 

the Senate to find our way through to 

move ahead on a short-term basis, a 

plan could be constructed that was realistically calculated to succeed. 

I am not in favor of throwing good 

money after bad. I believe philosophically as a matter of public policy that 

the Government ought not to pick winners and losers. That ought to be the 

decision of the market. The Government ought to intervene on economic 

aid or bailout only where the consequences are potentially so disastrous 

that they would deviate from that 

principle. 

As we conclude this situation, I 

think this Senate could have done considerably better. I know many of us 

will continue to work with the administration and with the parties involved. 

I convened on December 2 a meeting 

in Philadelphia with high-ranking executives from Ford, Chrysler, General 

Motors, and labor leaders in Pennsylvania, the United Auto Workers, the 

AFL–CIO statewide, and the Philadelphia Labor Council; and auto dealers 

and suppliers and economists and 

bankers came together to describe the 

scope of the problem. 

We had a meeting in the Lehigh Valley to grapple with the issue. Certainly, the impact on my State as a 

microcosm reflects the tremendous potential impact on the Nation as a 

whole. So we need to continue to work 

to do our best to find some answer administratively to avoid the potential 

disastrous consequences which I have 

enumerated. 

I yield the floor. 

Mr. DURBIN. Madam President, I salute my colleague from Pennsylvania 

for joining us in voting for cloture. He 

December 11, 2008 CONGRESSIONAL RECORD — SENATE S10935 

was 1 of 10 Republicans who did this 

evening. They were Senators BOND, 

BROWNBACK, COLLINS, DOLE, DOMENICI, 

LUGAR, SNOWE, SPECTER, VOINOVICH, 

and WARNER. The motion required 60 

votes. It had 53. It was seven votes 

short. The Senator from Pennsylvania 

took exception to my characterization 

earlier that the Republicans could have 

done more and helped us pass that. I 

want the RECORD to reflect that on the 

final vote, before Senator REID changed 

his vote for procedural reasons, 43 of 

the 46 Democrats voted in favor of the 

motion. Ten Republicans voted in 

favor. 

It is clear we could have had more, 

certainly, but it would not have been 

enough to make up the seven-vote deficit. When less than a third of the Republicans voted in favor of it, it is pretty clear that most of those on the 

other side of the aisle did not support 

that motion, despite the heroic vote by 

the Senator from Pennsylvania. 

f 

(At the request of Mr. REID, the following statement was ordered to be 

printed in the RECORD.) 

VOTE EXPLANATION 

∑ Mr. KERRY. Madam President, I am 

necessarily absent for the cloture vote 

today on the AMT bill which is the vehicle for the auto stabilization legislation. If I were able to attend today’s 

session, I would have supported cloture 

on the bill.∑ 

f 

U.S. TRADE AND MANUFACTURING 

POLICY 

Mr. REID. Madam President, my 

good friend Senator Ernest Hollings 

contacted me and asked if I could have 

printed in the RECORD a statement he 

has written about U.S. trade and manufacturing policy. It is my pleasure to 

do so. 

Senator Hollings was a longtime 

chair of the Senate Commerce Committee and a champion of American 

manufacturing. His statement contains 

some insightful and provocative 

thoughts of his and I encourage all of 

my colleagues to read it. 

Madam President. I ask unanimous 

ocnsent to have printed in the RECORD

Senator Hollings’ statement. 

There being no objection, the material was ordered to be printed in the 

RECORD, as follows: 

ECONOMISTS AND FREE TRADE

(By former Senator Ernest F. Hollings (D– 

SC)) 

The trouble with the economy is too often 

the economists who advise, oversee and, in 

some cases, even manipulate it. 

This is the crowd that advised on and overly embraced sub-prime mortgages, derivatives and credit default swaps. The crowd 

that advised on deregulating the financial 

industry. And the crowd that, after over 

stimulating the economy for the past eight 

years to the tune of $5 trillion of deficit 

spending, is now calling for, you guessed it, 

even more financial stimulus! 

According to the Congressional Budget Office, last year’s deficit or financial stimulus 

was $1.035 trillion. And as the economists try 

to decide on the amount of stimulus sufficient to jolt our clearly broken economy, we 

have already spent $691 [12/5/08] billion on additional financial stimulus just since October 1st—and it is not working. 

To really prime the pump of the economy, 

it should be ‘‘billions for immediate infrastructure—and not much more for financial 

stimulus.’’ 

The need now is to create jobs and to stop 

increasing the interest costs on the federal 

debt, costs that already exceeds $500 billion a 

year—$500 billion which we should be spending on universal health care and not on economic steroids. More of the wrong kind of 

stimulus will only serve to stimulate more 

production in China, at the expense of more 

jobs being lost here at home. 

Of course, the economists for the global financial institutions and the big multinational corporations know this, but because 

their loyalties are more to their institutions 

and less to our nation, they continue their 

calls for ever more ‘‘free trade’’ and for continuing U.S. trade and current account deficits. 

The irony is that economists learn in their 

very first class in school that it was a trade 

war which brought us our initial freedom as 

a country, and that semi-protectionism later 

helped build the United States. England 

started a ‘‘trade war’’ with the Colonies by 

adopting the Navigation Act of 1651 that required all trade be carried in British vessels. 

Manufacturing was forbidden in the Colonies, even the printing of the Bible, and then 

the Townsend Acts drafted by Adam Smith 

placed heavy import duties on a wide range 

of items. All of this precipitated the Boston 

Tea Party that started the Revolution. 

While we obtained our freedom in 1776, it 

wasn’t until 1787 that we empowered Congress, in Article I, Section 8, of the Constitution, to regulate commerce, both domestic 

and foreign. President George Washington’s 

first message to the first Congress in 1789 

warned that, ‘‘A free people should promote 

manufactories to render them independent of 

essential, particularly military, supplies.’’ 

Thereafter, the United States was financed 

and built for 100 years with semi-protectionism, and we didn’t even pass the income 

tax until 1913. At the advent of the Transcontinental Railroad, it was suggested that 

the needed steel be obtained from England— 

but President Abraham Lincoln strongly objected and required the steel to be produced 

in the United States. And Edmund Morris, 

describes how the U.S. won the trade war 

with England in his remarkable book ‘‘Theodore Rex’’ about President Teddy Roosevelt. 

President Roosevelt exclaimed at the time, 

‘‘Thank God I am not a free trader.’’ 

Under the new phenomenon called 

‘‘globalization’’, the so-called ‘‘comparative 

advantage’’ which underpinned the early 

centuries is no longer God-given or determined by the weather, as was the case, two 

centuries ago, with David Ricardo’s English 

woolens and Portuguese wine. Now commercial success is largely created, or not, by 

government policies, and the United States 

government refuses to compete for such success, even though, as The Economist magazine reported recently, ‘‘Business these days 

is all about competing with everyone from 

everywhere for everything.’’ 

Right after World War II, Japan started its 

trade war by competing in international 

trade for market share rather than profit. 

Japan closed its domestic market and sold 

its exports at cost, making up the profit in 

its closed market. It subsidized production 

and targeted certain items in trade—first 

textiles, then electronics, machine tools, robots and, finally, automobiles. As a consequence, Toyota is today #1 as General Motors, Chrysler and Ford struggle just to survive. 

China’s post-WWII trade war began when it 

closed its domestic market to articles domestically produced, but opened it to foreign 

production in exchange for research and 

technology. General Motors, Intel and Microsoft, among others, have established major 

research facilities in China, and the U.S. is 

now running well more than a $1 billion per 

month trade deficit with China in just advanced technology products. China has accumulated dollar reserves in excess of $1.3 trillion, and it is now far and away the world’s 

superpower in trade. 

These behaviors by Japan, China, India and 

others are manifest in almost all of America’s imports, but they are most manifest in 

automobiles, where the focus and the consequences are crystal clear. 

The United States Congress looks at the 

BMW plant in South Carolina, my home 

State, and the Nissan plant in Mississippi as 

examples of relative success and wonders 

what’s the matter with Detroit? 

Yet BMW received a tax deferral benefit of 

$100 million to locate in South Carolina and 

Nissan received over $300 million to locate in 

Mississippi. And all Detroit got—Ford, GM 

and Chrysler alike—was tax incentives to 

leave the United States and offshore its jobs 

and production. 

The supervisory personnel from Germany 

and Japan who run BMW’s and Nissan’s 

plants have health care and retirement benefits paid for by Germany and Japan. Detroit 

has to pay for the health care and retirement 

benefits of its supervisory personnel. 

BMW and Nissan have deductible health 

care for its employees. Detroit has to pay 

full health costs on its employees. 

BMW and Nissan hire forty-five year olds 

and under in order to minimize health costs. 

Detroit has a lot of senior people and legacy 

costs. 

The major parts that BMW and Nissan use 

to assemble cars in the United States are 

produced 19% cheaper in Germany and 5% 

cheaper in Japan because BMW’s and Nissan’s VAT taxes are rebated when parts are 

shipped for assembly in the United States. 

Detroit pays all local, state and federal taxes 

on its parts. 

Nissan, with a largely closed domestic 

market, does not have to make a profit, and 

thus located in the United States for market 

share. Detroit needs to make profits. 

BMW and Nissan high-ball the costs of 

their imported parts so as to minimize profits and taxes to the United States. Detroit 

has to pay taxes on its profits. 

And now, no surprise, the U.S. has a net 

deficit of $10 billion a month in foreign car 

imports, or more than $1 trillion in the last 

eight years, all because of highly and in 

some cases illegally subsidized competition 

with Detroit. 

And yet some influential economists still 

call this ‘‘free trade’’. 

Senate Majority Leader Harry Reid 

charged Ford, General Motors and Chrysler 

‘‘to get their act together [and] to come up 

with something.’’ But Detroit can’t do it 

alone. The new President and Congress must 

come up with something at the same time 

for Detroit to recover long-range. Using his 

authority to protect our national security, 

President John F. Kennedy instituted his 

seven-point policy of protection for textiles 

in 1961. Under Section 201 of the Trade Act, 

President Ronald Reagan threatened quotas 

on automobile imports in order to get Voluntary Restraint Agreements from Japan. 

So clearly the authority is there for President-elect Obama and Congress to impose 

quotas on imported cars so that Detroit can 

recover long-term long-range.