Rejecting Burris: Democrats do battle over Blagojevich's appointment of Roland Burris to fill Obama's Senate seat
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The question everyone in Washington and Chicago has on their minds this New Years Eve is whether or not the Senate Democrats, led by Senate Majority Leader Harry Reid, have the authority under the Constitution to reject the appointment of Roland Burris to fill Barack Obama's vacated seat by Illinois Governor Rod Blogojevich?
I am of the opinion that Senator Reid and his fellow Democratic Senators would be well within their rights under Article 1, Section 5 of the US Constitution, which states each chamber "shall be the judge of the elections, returns and qualifications of its own members", to reject Mr. Burris when Congress reconvenes after the first of the year.
There are several constitutional provisions which the Majority Leader can use to prevent Burris from being seated, but it is unclear which makes the most sense considering the extenuating circumstances of the federal investigation into the integrity of the appointment process and the pay-to-play politics practiced by the Blagojevich administration. In his defense, the Illinois Governor and Burris can cite recent precedent of the courts rejecting such measures by Congressional leaders to assert such authority.
Adam Clayton Powell Jr. (See photo on right) was refused his seat in the chamber in 1967 over corruption allegations, but the Supreme Court overruled the House of Representatives, finding the lower house was in violation of its constitutional authority when refusing to seat a member elected and qualified to serve. Reid rightly argues the Powell case does not apply under the current circumstances because the candidate is himself not questioned, but rather the integrity of the process itself that was in question. It seems clear that Blago chose a man well qualified and fit to serve as Illinois' junior senator, but Burris was not elected by the voters of Illinois. Ultimately, the question will be the conduct of the governor, making this appointment now under a cloud of suspicion stemming from the highly publicized federal investigation into his corrupt way of conducting business.
It is unclear how the president-elect feels about the situation as Obama takes a much deserved vacation in Honolulu, but I would bet he will probably want to put this whole ordeal behind him and his administration as quickly as possible. He and Burris are close political allies and Burris does not carry a lot of political bagage himself, so if the former-Illinois Comptroller and Attorney General can charm the brass on Capitol Hill, Barack may be able to give him the political leverage he needs to secure his place in the upper chamber of the legislative branch.
Meanwhile the Federal prosecutor has filed for a rare 90-day extension of the Blagojevich grand jury, so maybe the drama won't be so easily put behind the president-elect as he seeks to implement his agenda in the first 100 days of his administration. That said, he does already have a near filibuster-proof majority with or without Burris, so the newly inaugurated President Obama better take care of it fast if he hopes to keep it from becoming a convenient distraction as the Governor continues to drag Chicago politics to even lower lows.
Below are the facts of the deal made by the Bush Administration with GM and Chrysler to lend them $17.4B to meet their obligations for the next three months, at which time the two companies must show they have restructured into "viable companies".
Fact Sheet: Financing Assistance to Facilitate the
Restructuring of Automobile Manufacturers to Attain Financial Viability
Purpose: The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry,prevent disorderly bankruptcies during a time of economic difficulty,and protect the taxpayer by ensuring that only financially viable firms receive financing.
Amount: Auto manufacturers will be provided with $13.4B in short-term financing from the TARP, with an additional $4B available in February, contingent upon drawing down the second tranche of TARP funds.
Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.
Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.
Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:
- Firms must provide warrants for non-voting stock.
- Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
- Debt owed to the government would be senior to other debts, to the extent permitted by law.
- Firms must allow the government to examine their books and records.
- Firms must report and the government has the power to block any large transactions (> $100 M).
- Firms must comply with applicable Federal fuel efficiency and emissions requirements.
- Firms must not issue new dividends while they owe government debt.
Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:
- Reduce debts by 2/3 via a debt for equity exchange.
- Make one-half of VEBA payments in the form of stock.
- Eliminate the jobs bank.
- Work rules that are competitive with transplant auto manufacturers by 12/31/09.
- Wages that are competitive with those of transplant auto manufacturers by 12/31/09.
These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.
In addition, the firm will be required to conclude new agreements with its other major stakeholders, including dealers and suppliers, by March 31, 2009.
I have not supported the bailout from the day it was proposed. The airlines have almost all gone out of business in the past and for the most part were able to achieve viability at a certain level after emerging from structured bankruptcy (competitiveness in an entirely different question). There are some circumstances that make the auto makers a unique situation, such as their highly interdependent network of suppliers, but that only makes me think that most of these unique circumstances are exacerbating the issue and cannot be allowed to exist independently or considered to be unaccountable for the situation we find ourselves in today. However,after seeing the final terms it has become more clear where Bush is coming from and why this is probably more out of respect for Obama and likely only even a consideration because of requests made by his transition team.
Essentially I read these terms to be a decision by Bush that if he has to do do something now to keep unemployment from rising above 10% on the last Friday in January (days after Obama's inauguration), he will be giving Obama and the Democrats a tremendous burden to bear when the auto companies fail to live up to the obligations under this agreement and people start to literally panic and confidence in the marketplace deteriorates even further. This may happen regardless, but it almost certainly would if GM and Chrysler are forced into Chapter 11 now, and that would seriously undermine the new president's ability to implement the stimulus he has boldly and correctly pledged.
There are several reasons why the auto companies are unlikely to achieve viability as it is defined; (1) the UAW is highly unlikely in my opinion to significantly renegotiate the terms of their labor agreements; (2) car sales have hit a saturation point in the US, with17m cars sold in 2001 down to about 10m in 2007; (3) emerging markets,which have been the sole bright spot for GM recently, are doomed to suffer badly as the recession in the US and Europe continues to worsen;(4) credit markets aren't going to begin recovering until confidence can be restored and an end-game can be seen on the horizon and as Obama keeps reminding us, it is only going to get worse before it gets better; (5) people are not going to start buying cars again anytime soon, and sales figures are likely to go down before they go up no matter what the Big Three do about it.
People are losing their jobs and companies are freezing wages because they really are unable to secure financing under current conditions, so unless GM and Chrysler have a secret plan up their sleeves there is little reason to believe that anything they do will change their destiny.
I admit I have no idea what the plan is exactly, but the "targets"listed in the attached document are ambitious considering the perfect storm of market failures and anomalies we are currently experiencing with such regularity. Most of the testimony given by Big 3 executives covered the urgency of the circumstances and the potential reverberations of the alternatives, but details on plans for restructuring and potential deals with competitors or the UAW were put off as only relevant if money was extended- which happens to be very true. If all the executives really need is three months and $17Billion to close deals with each other or a foreign competitor with an already "viable" business model.
Love to hear everyone's thoughts.