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Congress works on bailout for automakers

A draft proposal for short-term aid offers the Big Three $15 billion with tight restrictions.

Ron Gettelfinger, presidentof the United Auto Workers, testifying Friday on Capitol Hill. Automakers pleaded anew for $34 billion in loans.
Ron Gettelfinger, presidentof the United Auto Workers, testifying Friday on Capitol Hill. Automakers pleaded anew for $34 billion in loans.Read moreGERALD HERBERT / Associated Press

WASHINGTON - Racing to seal a deal with the White House, Democratic congressional leaders dispatched aides yesterday to draft an emergency $15 billion aid package to pull Detroit's Big Three automakers from the brink of collapse.

Capitol Hill leaders prepared to sell yet another bailout to a skeptical Congress. It is an uphill battle: The anger is fresh over how the Bush administration used the $700 billion Wall Street rescue fund and lawmakers are questioning whether the once-mighty auto giants actually can survive.

Still, with Washington spooked by massive job losses that provided the latest evidence of a deepening recession, the White House said it was in "constructive discussions" with lawmakers in both parties on the assistance. House and Senate Democratic staff aides worked to hammer out details, with votes on the plan expected in the week ahead.

The emerging measure would speed short-term help to General Motors Corp., Ford Motor Co. and Chrysler L.L.C., while empowering the government to order a wholesale restructuring of the industry and imposing tight restrictions on the Big Three, according to congressional officials and others close to the talks. They described the developing plan on condition of anonymity because the details are not final.

It is designed to tide over the companies - particularly GM and Chrysler, which have warned they are just weeks from going bust - into March, when Barack Obama is president and a new Congress could consider a longer-term solution.

A breakthrough on the long-stalled rescue came Friday when House Speaker Nancy Pelosi (D., Calif.) yielded to President Bush on a key point: allowing the aid to come from an existing fund set aside for the production of environmentally friendlier cars.

White House press secretary Dana Perino said that was central to any agreement, along with requirements that the carmakers swallow tough business decisions and taxpayers be protected.

Pelosi said the House would consider legislation this week that would include rigorous oversight and strong taxpayer protections. Senate Majority Leader Harry Reid (D., Nev.) said he aimed for votes on "a responsible plan to help the millions of Americans who rely on a healthy auto industry for their livelihoods."

"We will need support and cooperation from Republicans to determine when that vote happens and whether it will succeed," Reid said in a statement.

But no Republicans were participating in the weekend negotiating sessions, led by aides to Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, and Sen. Christopher J. Dodd (D., Conn.), chairman of the Senate Banking, Housing and Urban Affairs Committee.

The emerging plan remained a tough sell. Sen. Bob Corker (R., Tenn.) said yesterday that he was "disappointed" with the still-unwritten rescue because it did not require major union givebacks or debt restructuring moves.

"Before we even contemplate making a loan to these companies, we need to put in place specific and rigorous measures," Corker said.