Not surprisingly, there is a lot of skepticism when it comes to the auto industry bailout that is now before the Congress. Many are quick to point out the mistakes that our domestic auto industry has made in past decades. Some prominent economists have gone so far as to say that bankruptcy court could actually force a beneficial reorganization.

If our economy was doing well and credit markets were not frozen, it is possible that those economists might be right. But as things stand today, bankruptcy court is not the answer. 

General Motors apparently does not have the money to reorganize, nor is there credit available.

That means we are not talking about a Chapter 11 process, but Chapter 7 – in other words, liquidation. And, that means the prospective loss of more than a million American jobs at the worst possible moment. 

SImply put, our economy is far too vulnerable today. It simply cannot stand the kind of body blow that a GM liquidation would bring.

The Big 3 automakers are already taking steps we would want them to take. They have reached an agreement with the UAW to bring labor costs down dramatically by 2010 and to reduce legacy costs by moving retiree health benefits to a private trust managed by the union. 

Further, as painful as it is, the Big 3 have closed plants to bring their production more in line with U.S. demand.

Plus, they are developing new, exciting vehicles like the Chevy Volt, which will go 40 miles without using a drop of gasoline.

But in the midst of all of these positive steps, the automakers were hit by high gas prices, followed quickly by the complete paralysis of credit and a recession.

The challenge now is to get our domestic automakers through the next year while they finish the reorganization and modernization that everyone has agreed is good for them and the country.

As policymakers, it is our job to design an assistance package that will lead to a successful outcome for the auto companies while protecting taxpayers’ investment.

To do so, such a package could include curbs on excessive executive compensation and the inclusion of preferred stock and warrants in each of the companies receiving bridge loans. 

This is not an unprecedented situation. In 1979, Chrysler sought help from the government to avoid bankruptcy and Congress responded by providing $1.5 billion in loan guarantees. The result was a success for both sides: Chrysler returned to profitability, and the federal government made $311 million when it exercised its warrents, perchasing Chrysler stock for $13 per share and selling it for $30.

Although saving the auto companies is important for the overall health of our economy, in Delaware auto workers – like many others around the country – are losing jobs now.  In fact, our Newark Chrysler plant will close at the end of this year.

So while we talk about another industry bailout, I hope we can take some time to ensure assistance to those who will be left behind whether or not the companies are saved.

Those people who are losing their jobs today need to know they will have unemployment benefits tomorrow, as well as job retraining, job placement help and possible relocation support. 

We also cannot forget the communities who are facing the challenge of redeveloping closed auto plant sites at a time when new investment is scarce.

We need to provide assistance to ensure that plant sites do not become blighted but, instead, offer new opportunities and create new jobs.

I am pleased that Chairman Dodd called this hearing, but I am not pleased that it was necessary – nor do I suspect, are our witnesses.

However, I am interested in hearing what they have to say, and I stand ready to work with my colleagues to quickly determine the best course of action for automakers, their employees, taxpayers and the economy.

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