With the Michigan primary coming up Tuesday, Democratic party front-runner Hillary Clinton is trying to paint her challenger, Bernie Sanders, as having been against the auto bailout in 2009. Chalk it up to election year nonsense. The truth is both candidates were in favor of the auto bailout.
In the world of Congressional votes, the truth is seldom seen, but much mischief can be made.
During the debate in Flint, Michigan, a visibly tired Sanders did a poor job of explaining the confusion. I am not a Sanders supporter, but the truth is always important.
Secretary Clinton is chastising Sanders in the Motor State for not voting for the bill that created the funding for an auto bailout. Except, it wasn't known that the Troubled Asset Relief Program (TARP) bill, designed to bail out Wall Street banks from their subprime mortgage loan debacle that was crashing the economy, would be used to rescue the auto industry at the time Senators Sanders and Clinton voted on it. Sanders voted against TARP because it was being used to bailout Wall Street. Clinton voted yay. Sanders voted nay. It was President Bush who signed the bill into law.
Later, in December 2008, the Senate took up a separate "clean" bill that would have provided rescue funds specifically for the auto industry. That bill failed to get the 60-vote filibuster-proof minimum when Republicans balked at saving
When the specific auto bailout bill failed, President Bush said he would use TARP funds to help out the auto industry with $13.4 billion and an additional $4 billion in January when a second $350 billion for TARP would be expected to pass a Congressional vote.
These monies for the auto companies and suppliers were financial patches for GM and Chrysler until a larger solution could be worked out. Sanders voted against the second tranche of the TARP, less than 2% of which was earmarked for the auto industry assistance. This is where the world of Congressional riders and earmarks come in. While Sanders was 100% in favor of aiding the auto industry, is a dogged supporter of labor unions and was a full-throated supporter of the December bill that died in the Senate, he balked at voting for more TARP funds for Wall Street. Clinton voted for the second tranche as she had voted for the first one. And there is no evidence that Clinton voted for TARP as a means to specifically help the auto industry. Rather, she was convinced that the economy could only be saved by bailing out the banks.
By January of 2009, it was already quite clear that GM and Chrysler were going to have to restructure themselves through some form of bankruptcy. It remained to be seen at that point what form it would take. Indeed, it would take a total of $79.68 billion to the auto industry to get it through the economic free-fall. Much of that was used in a "managed bankruptcy" of GM and Chrysler. It's a reach, at best, to say that Sanders' "No" vote on a $4 billion auto industry provision on a $350 billion TARP vote in January adds up to non-support of the auto industry or the bailout.
Additionally, it is not as if the $4 billion that was voted on in January was make-or-break money. Yes, Michigan Sen. Carl Levin's hair was on fire and was fighting for every penny he could get. And no one can blame him. But it was common knowledge that President-elect Barack Obama was not going to let GM and suppliers, or Ford (though Ford was not applying for money) go bankrupt. The TARP money was fungible for the President. And Obama used his authority as President to use the TARP money for the later bankruptcy assistance very much against the will of Republicans in Congress. None of the automakers or suppliers would have crashed without the $4 billion in January of 2009.
Moreover, it's pretty hard to argue that Clinton's support of NAFTA hasn't been far more detrimental to auto jobs in the U.S. than Sanders sticking to his principles on not bailing out Wall Street with tax-payer money.
Was the auto bailout worth it? Click here to read more.
This article was revised on March 8 to include the details of the January 2009 vote in which Bernie Sanders did not vote for a $350 billion TARP tranche that included a $4 billion support payout for the auto industry.
