Fact-checking Clinton vs. Sanders on 2008 auto industry bailout
Democratic presidential candidate Hillary Clinton said during a heated debate exchange that rival Bernie Sanders would have allowed the U.S. auto industry to collapse if he had his way.
Clinton and Sanders sparred over the auto bailout, which began in 2008, during Sunday’s CNN presidential debate in Flint, Mich. Clinton, then a New York senator, said she stood with Michigan’s two U.S. senators and President-elect Barack Obama in supporting the bailout funds while Sanders rejected them.
“He voted against the money that ended up saving the auto industry,” Clinton said.
While it is true Sanders voted against the bailout funds that were ultimately used to rescue General Motors and Chrysler, the full story is a bit murkier.
Sanders, then an independent U.S. senator from Vermont, supported a 2008 measure that would have provided $14 billion in relief to the automakers. The bill, which passed the House, failed in December of that year to reach the 60 votes needed under Senate rules to consider the measure.
President George W. Bush then tapped about $17.4 billion in funds from the Troubled Asset Relief Program -- the Wall Street bailout Clinton voted for and Sanders voted against in October 2008 -- to keep GM and Chrysler alive through the beginning of Obama’s term.
The Senate then voted in January 2009, five days before Obama took office, on a measure that would have blocked $350 billion of the $700 billion in TARP funds from being disbursed. The resolution, which Sanders supported and Clinton opposed, would have blocked some of the money Bush promised for the auto industry.
As FactCheck.org points out, Obama urged Senate Democrats to oppose the measure, but he never referred to the auto funds as a reason why. Larry Summers, then Obama’s top economic adviser, used the foreclosure crisis in a letter to congressional leaders as the main justification for releasing the funds and only briefly referenced the auto industry.
The measure failed and the funds were released. Obama would eventually increase the size of the auto bailout under TARP to about $80 billion, but there was no indication that would be the case in January 2009, when Clinton and Sanders voted.
Clinton also referred during the debate to auto parts supplier Johnson Controls’ plans to merge with Ireland-based Tyco International, saving about $150 million per year in taxes after moving its headquarters overseas. The merger calls for an inversion, which involves changing the company’s formal tax domicile from the U.S. to a country with a lower corporate tax rate.
“They came and got part of the bailout because they were an auto parts supplier, and now they want to move headquarters to Europe,” Clinton said. “They are going to have to pay an exit fee. We are going to stop this kind of job exporting, and we are going to start importing and growing jobs again in our country.”
The truth is that while Johnson Controls did urge federal lawmakers to bail out the U.S. auto industry, the company never asked for or directly received funds from the government.
The company did, however, acknowledge that then-COO Keith Wandell testified before the Senate Banking Committee in December 2008, urging lawmakers to approve bailout funds for U.S. automakers.
“Should one of the Detroit 3 fail, a significant number of supplier failures would occur and become unmanageable,” Wandell said during his testimony.
JCI spokesman Fraser Engerman said Wandell was asked to testify on behalf of the “supplier community” and took issue with Clinton’s suggestion that the company was on the brink of bankruptcy and requested federal funds.
Engerman acknowledged that JCI, despite taking no federal money, benefited from the auto bailouts, which prevented GM and Chrysler from going under and triggering a devastating ripple effect on the supply chain.
“Did we benefit from the bailout? The entire industry did,” Engerman said.
Since the Tyco merger announcement in January, both Clinton and Sanders have criticized Johnson Controls’ inversion
Clinton has also blasted JCI on the campaign trail and in a television advertisement in which the former U.S. secretary of state says suppliers “like them begged taxpayers for a bailout, and they got one.”
Leslie Allen and Bloomberg contributed to this report.
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