```

[Congressional Record Volume 154, Number 176 (Wednesday, November 19, 2008)]
[Senate]
[Pages S10610-S10613]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                           WASTEFUL SPENDING

  Mr. SESSIONS. Mr. President, I thank the Chair for the opportunity to 
speak. I appreciate the eloquent remarks of my colleague, Senator 
Mikulski. She is a passionate advocate for Middle America, and it is a 
pleasure to serve with her in the Senate.
  I have to say, it is a historic day that Senator Obama has resigned 
and will be on the road now to inauguration as

[[Page S10611]]

the President of the United States. People are happy about it. For so 
many people, you can feel their excitement about the possibilities. The 
country wanted change, and we have some change out there. I think we 
need to ask ourselves pretty clearly what kind of change it is they 
were demanding of Congress. We may well have some disagreements about 
that.
  The day after the election, I was doing a little exercise at the park 
back home in Alabama, and I met an African-American with an Army hat 
on. He and his friends were talking happily, and there was an 
excitement about this election. He said: You know, this is the first 
time I know my sacrifice in Vietnam meant something. He was sincere 
about that. There is a good feeling out there.
  I would say that one of the things the American people did not vote 
for, however, was wasteful Washington spending. It is just not so. One 
of the things they rejected in the Bush administration was reckless 
spending, unprincipled spending. That is something that has worried 
them. So in interpreting the results of the election, I think we need 
to take care.
  I noticed a recent Rasmussen Poll showed that 80 percent of Americans 
think the Government is too involved in the economy, that the 
Government is getting its nose too much in this and taking their money 
they sent here and spending it on somebody the Government wants to 
favor with Federal largess. I do not think that is what the election 
meant: that we ought to spend more.

  Also, on the question of the bailout, less than one-third of the 
American people in the Rasmussen Poll said they favored an automobile 
company bailout. This is contrary to our fundamental principles. We may 
have to, at certain times, do things that are a violation of principle. 
We ought to be very cautious about doing so. These are things that have 
served this country well for over 200 years. We need to be careful 
about it.
  So I do not think the change people voted for was to authorize 
Congress to go on a wild spending spree, throwing money at every 
problem. We have already had, this year, a $150 billion stimulus that 
was supposed to ward off the recession--sending out checks to 
everybody, and this was going to fix it.
  I hated to vote against that, but I could not vote for that $150 
billion, every penny of which went to the debt. We were already in 
deficit, so we added another $150 billion to the deficit in one fell 
swoop. What did we tell people to do? We told them to go out and spend. 
I know the Acting President pro tempore is from Nebraska. I know he was 
raised right. We have had a talk about families and how families work. 
When you have a financial problem, you do not tell your children to go 
out and see how much they can spend. You ask them to get smart about 
what they have been doing.
  When the economy goes into a recessionary period, people start 
watching their spending. They decide they do not eat out as much. They 
decide they cannot buy as fancy clothes. They decide they cannot afford 
a big, expensive house that has also been going up in price, and maybe 
it is not going up now, so they wisely decide to stay renting or stay 
in the house they have, which depresses the price of housing. This is 
the business cycle, I will just say.
  I feel like we work our way through that. As people get their debt 
paid down, they start buying more. In the meantime, certain companies 
get hurt. Companies that are selling big gas-guzzling vehicles and are 
committed to that product are going to be one of the groups that gets 
hit the hardest. I wish it were not so. I know this is not a matter of 
insignificance that domestic automobile companies are in financial 
trouble. But they have been promoting a product the American people do 
not want right now and they are committed to that product and it is 
troubling as to how we work our way out of it. But I think rewarding 
misbehavior is not the way to do it.
  So it is pretty clear now that we are in a recession and that credit 
had been too cheap in the years leading up to this. We had a bubble in 
housing. People thought prices would never go down, and they bought 
houses larger than they could afford, made payments that stressed them 
to the very limit to afford those big houses, pretty much on the theory 
that the housing prices were going to continue to go up and would never 
go down. Those of us who have been around a while should have known 
that is not a good way to go. We have known, and we have seen it in our 
very neighborhoods, the young couple buying huge automobiles, borrowing 
money to do so--$40,000, $50,000, $60,000--that they could not afford. 
It also guzzled fuel, cost them more at the pump, and each month they 
ran up debts on their credit card, including gasoline. When you get to 
the maximum limit, you have to cut back.
  So what do you do? You do not buy as many of these things, you do not 
add as much, you do not buy the big cars, some people cannot afford to 
hold on to their big houses, and you go through a recessionary period. 
It is not a matter we ought to treat lightly. I certainly recognize 
that.
  But as USA Today said a month or so ago, an economy founded on 
excessive personal debt, excessive Government debt, and huge trade 
deficits, is not sound. That is just it. We have to change our ways. We 
cannot buy our way out of this situation. There is no free lunch. For 
anything that somebody puts in front of you to eat, somebody has had to 
pay for it to get it there. Debts have to be repaid. We have to be 
honest about it. We cannot continue to throw money at this problem. We 
are going to have to take our lumps now and come out of it stronger 
rather than trying to postpone the problem, kicking the can down the 
road in some desperate attempt at stimulus to avoid any pain in a 
normal recessionary cycle.

  So I worry about it. Let me tell my colleagues about the deficit. The 
deficit surged after 9/11. We had increased spending at airports and we 
did all kinds of things and the deficit went up to almost $420 
billion--one of the biggest deficits in dollar terms we have ever had, 
not as a percentage of GDP, but a huge deficit and a reversal of the 
situation prior to that. That deficit has gone down. A year ago 
September 30, our deficit for the year was $161 billion; still large, 
too large, but going in the right direction. As of September 30 of this 
year, after we popped $150 billion earlier this year directly into the 
deficit to fund the stimulus that was supposed to avoid a recession, 
now the deficit this year was $455 billion. And the one we are in 
today, I saw an article recently that said the deficit will clearly be 
in excess of $750 billion, the largest deficit in the history of our 
country and, probably, as a percentage of GDP, one of the largest we 
have ever had. Now we are talking about more spending, more spending, 
more, more, more; we have to bail out this industry, that industry, the 
other industry.
  Alabama was heavily reliant on textiles. Now, seventy percent of our 
textile industry is gone. You can go to town after town where sewing 
plants existed--no longer there. Should the Federal Government have 
stopped that? The little community in which I grew up, the original 
community was on the river where steamboats plied the river. After 
railroads came, the community sort of moved a few miles over to the 
railroad. That is where I grew up, in a little railroad community. Then 
the passenger trains stopped, and the freight trains stopped and people 
had interstates and other ways to communicate and travel and airplanes 
came along. Should we have passed--we had a railroad depot there, and 
my friend's dad ran it. Well, it is closed. Should we have passed a law 
to keep the railroads just as they always were and all the depots out 
there? Years ago you remember the debate over whether the union should 
require a fireman, who used to shovel coal into the steam engines, to 
sit on a diesel train. That was part of the union contract. For decades 
after we ended steam engines, the union contracts required a person 
named a fireman to sit on a diesel train with the engineer. This is not 
sound.
  Change is inevitable. We have to adjust to it. That is what we need 
to do. Maybe there are ways we can help the automobile industry--I 
assume there are, and I would be prepared to discuss that--but we have 
to be realistic and honest. When we start throwing money at private 
corporations to save them from the forces that are at work in our 
economy, we are taking on a big challenge.

[[Page S10612]]

  This is a metaphor I have in my mind. Do my colleagues remember the 
story of the folks who flew airplanes over the hurricanes and threw out 
dry ice and they believed if they could just throw out enough dry ice, 
they could stop the hurricane? Well, we can't throw money into this 
financial hurricane and stop it either. We have to hunker down and do 
what we have always done to work through difficult financial 
circumstances. We can be sophisticated and come up with some good ideas 
that can help--and I am certainly for that--but I would tell my 
colleagues as a matter of principle we need to be very cautious about 
picking and choosing who we are going to reward with Federal taxpayer 
money.
  In a meeting yesterday, Secretary Paulson was quite correct. He said: 
Look, any time you take Federal money and insert it into the 
marketplace--and he was talking about the automobile industry and the 
banking industry at the time--you distort the market. You help some 
companies and industries and you hurt others. I would just add, you do 
so with taxpayer money, you are taking sides in the process. That is 
dangerous, and we need to be as careful about it as we possibly can. So 
I would just raise those points.
  Do my colleagues know our savings rate in America fell below zero at 
the height of this boom, at the height of this housing bubble, this 
automobile bubble? Gasoline prices were through the roof, commodity 
prices through the roof, farm prices surging, gold and other metals 
going up at incredible rates. They are all falling now, but during that 
time we didn't have any savings. Our savings rates fell below zero. Now 
that we are going into a recessionary period--and we are in a 
recession--people are saving. The savings rate I saw recently was about 
3 percent. So people are not consuming as much. Is that all bad?
  When people don't consume as much and don't travel as much, the 
hotels are not as full, the restaurants are not as full, the automobile 
companies can't sell as many automobiles, and they are going through 
tough times. But when you have an excessive boom, this is the kind of 
thing that is bound to happen.
  One observer of the scene made this comment in 2006 about the housing 
market. He said:

       Housing prices cannot continue to increase at twice the 
     rate of the growth of GDP, and they cannot continue to 
     increase at this rate when wages are basically flat.

  Now, doesn't that make sense? Didn't we know people who couldn't 
afford a house because the prices were outrageous? There are some 
benefits from the collapse and the boom on housing prices. An average 
person now may be able to buy a house at a more reasonable price than 
they were before. So these are the cycles we go through.
  The timber industry in my State depends on home building. When 
construction is down, our saw mills are shutting down in small towns, 
and that is the only business they have. Are we going to bail out the 
saw mills today? Is anybody proposing that? Then, the people who work 
in the woods to harvest the timber--good, honest, hard-working 
Americans--if the saw mills can't buy the lumber--are they getting an 
hourly wage? Are they being laid off? Yes, they are, as part of this 
tough cycle that we are going through.
  I wish to ask this fundamental question: Who is going to bail out the 
American Government? Who is going to bail out the American taxpayers 
for the expenditures that we are increasing? I ask this: Isn't it true 
there are three basic ways to deal with money we are borrowing today, 
perhaps $1 trillion this fiscal year? When I say $750 billion to $1 
trillion, I am not counting the $700 billion bailout. That has not been 
scored yet. I am talking about other spending, including some of these 
bailout proposals.
  So there are three ways we could do it. We could cut spending. Our 
Democratic colleagues were pretty hard on Republicans for, they said, 
spending too much, and they were right more than I would like to admit. 
I would just say this: Are we getting any better now? The talk we are 
hearing today, is it spend more, more, more, more, or is it a 
discussion about a contained spending? No. What we are hearing from the 
change group, I am afraid, is spend more.
  Well, that is one way to pay off your debts. Another way would be to 
raise taxes. None of us want to see taxes raised, for heaven's sake, 
especially not in a time of economic slowdown, so taxes is not a likely 
way to pay off the debt.
  What has happened throughout history? Fundamentally, the way debts 
are paid off is by debasing the currency.
  The PRESIDING OFFICER (Mr. Cardin). The Senator's time has expired.
  Mr. SESSIONS. Is that 10 minutes, I believe?
  The PRESIDING OFFICER. Yes.
  Mr. SESSIONS. Mr. President, I would ask unanimous consent for 5 
additional minutes.
  The PRESIDING OFFICER. Is there objection? Hearing no objection, the 
Senator is recognized.
  Mr. SESSIONS. So I am afraid of inflating the currency, reducing the 
value of currency so that when the government has to pay back debts, it 
pays back in dollars less valuable than the ones it borrowed, and we 
basically cheat the people who loaned money. When that happens, they 
are going to demand a higher rate of interest on the trillions of 
dollars of debt we have today.
  Let me briefly share with my colleagues some thoughts about the 
bailout and why I cannot support the plan that is being proposed and 
offered by Senator Reid, the Democratic leader. I commend to my 
colleagues the article by Michael E. Levine entitled, ``Why Bankruptcy 
Is The Best Option For GM.'' He is a former airline executive and is a 
distinguished research scholar and senior lecturer at NYU School of 
Law. He just points out this fact--and as a lawyer, I think he is 
absolutely correct. Regarding contracts and ways that would really 
reform and streamline and make these companies competitive, he said 
this:

       Contracts would have to be bought out. The company would 
     have to shed many of its fixed obligations. Some obligations 
     will be impossible to cut by voluntary agreement.

  Why would somebody agree to have you not pay them what you have been 
paying?
  Then he said: ``GM will run out of cash and out of time.'' That is 
even if we give them $25 billion. They cannot fix themselves until they 
confront their costs that are pulling them down.
  Mitt Romney, whose father was a CEO at American Motors, in his recent 
op-ed estimates that the average American automobile is carrying a 
$2,000-per-car excess cost. If you wonder why foreign automobiles are 
better, it is because they can put 2,000 more dollars in it. So how do 
you get out of that? You have to get out of these contracts.

       Mr. Levine fundamentally points out that through the 
     process of reorganization--not chapter VII liquidation but 
     the process that Delta Airlines used to reorganize itself--is 
     the one way you can get out of these contracts and 
     restructure the company, reduce some of its burdens, and come 
     back again as a fighting, competitive company, producing 
     automobiles that people will buy in large numbers. I think 
     that is very possible.

  So in bankruptcy, those kinds of things can occur that can occur 
outside. Mitt Romney, in his editorial, said:

       A managed bankruptcy may be the only path to the 
     fundamental restructuring the industry needs. It would permit 
     the company to shed excess labor, pension, and real estate 
     costs. The Federal Government should provide guarantees for 
     post-bankruptcy financing and assure car buyers that their 
     warranties are not at risk.

  Now, those are the kinds of suggestions that come close to making 
sense to me.
  He talked about his father, George Romney, the Governor of Michigan, 
who also ran for President at one point. This is what he said his 
father did when he saved American Motors at the time:

       My dad cut his pay and that of his executive team, he 
     bought stock at his company--

  To show faith in it--

     and he went out to the factories to talk to workers directly. 
     Get rid of the planes, the executive dining rooms--all the 
     symbols that breed resentment among the hundreds of thousands 
     who will also be sacrificing to keep the companies afloat.

  I think that is the right way to do it. I think we can do that. I 
really would urge my colleagues to look for ways for this to happen.
  Now, you cannot trust the automobile dealers when they come forward 
and say: Well, we are doing all of these things.

[[Page S10613]]

  They don't have the power to do these things. I know they don't want 
to go into reorganization and bankruptcy as Delta Airlines did. But it 
is not going to be a horrible thing. Delta went in and emerged about a 
year and a half later. They reorganized, reduced expenses, altered and 
amended contracts and obligations, and they recently bought Northwest. 
They went bankrupt in 2005, and they came out leaner and more 
competitive and are now a viable company. But these CEOs--if you give 
them money, they are going to have less leverage with the unions, less 
leverage with their 7,000 automobile dealers, when Toyota has 1,500 
automobile dealers. They are going to have less leverage with the lease 
agreements and health care agreements they entered into years ago, in a 
different situation, to deal with people's health care requests and 
demands at that time. They are stuck with that until they can break 
loose from it.
  A bankruptcy judge whose motive would be to help them become leaner 
and more effective and sends them out as a viable entity so that jobs 
are saved and debts are fundamentally repaid--that would be the goal of 
reorganization and bankruptcy. I don't think we ought to be putting a 
lot of money into this company until we see it in a position that would 
actually break the chains of $2,000 per car that is slowing them down, 
actually pulling them down hopelessly.
  I thank the Chair for the opportunity to share some of my thoughts. I 
believe when we violate the principles of intervening in the free 
market and picking winners and losers, we are taking a great risk. If 
we do so, it ought to be done with the greatest of care, the least 
exposure to the taxpayer, and with the greatest potential for creating 
a successful company in the end.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.

                          ____________________
```