Democrats, Bush in pact on a bailout; GOP wary
Lawmakers and the White House worked on final details. But with a vote possibly today, Republican doubts could halt a deal.
WASHINGTON - Weary Democratic congressional leaders and White House officials agreed in principle yesterday on a $15 billion bailout of U.S. automakers that would give the government extraordinary power to restructure the floundering industry. But the rescue faced snags as Republicans raised deep concerns.
Congressional aides and a senior administration official said the proposed deal would speed the loans to Detroit's struggling car companies and place a "car czar" named by President Bush in charge of overhauling the industry.
Congress could vote on the plan as early as today, and the money could be disbursed within days.
A breakthrough came when negotiators reached a compromise to require the czar to revoke the loans and deny any further federal aid to automakers that fail to strike a deal with labor unions, creditors and others to ensure their survival by next spring - essentially pushing them into bankruptcy.
White House press secretary Dana Perino said late yesterday: "A great deal of progress has been made on auto legislation that will protect the taxpayer and ensure that short-term financing is available only to companies prepared to undertake the dramatic restructuring necessary to become viable and competitive."
Earlier in the day, Rep. Barney Frank (D., Mass.), the Financial Services Committee chairman, said the remaining issues were minor.
Still, staff aides worked into the night fine-tuning legislative details. It could face substantial obstacles from congressional Republicans, who remained skeptical of the White House-negotiated plan. A group of conservatives led by Sen. John Ensign (R., Nev.) has threatened to block the measure.
A further stumbling block was Democrats' refusal to scrap language, vehemently opposed by the White House, that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.
That measure "kills the deal," said Dan Meyer, Bush's top lobbyist.
Senior Democratic aides acknowledged as much and said they expected the provision to ultimately be dropped.
Environmentalists were already irate that the bailout uses money set aside for a program to help automakers finance the retooling of their factories so they could produce greener vehicles.
Another remaining hang-up was over ensuring that Cerberus, the private equity firm that owns Chrysler L.L.C., would reimburse the government if Chrysler defaulted on its loan, said a congressional negotiator who spoke on condition of anonymity because he was not authorized to disclose details of the emerging deal.
But the White House and congressional Democrats resolved other major conflicts. Democrats said they were willing to toughen the bill to require that the czar revoke loans from automakers that could not show they were viable by the end of March - rather than simply letting the overseer take back the money. That would essentially let the czar force an automaker into bankruptcy if it did not present a feasible restructuring plan.
Even if they seal the deal, conservative Republicans warned they might try to block it, virtually guaranteeing it will need a 60-vote majority to pass.
The measure is expected to provide emergency loans only to General Motors Corp. and Chrysler, which have said they could collapse within weeks absent federal help. Ford Motor Co. has said it does not need an immediate cash infusion but wants a $9 billion line of credit to insulate against further deterioration in the economy.
The legislation would attach conditions to the bailout money, including some of the same restrictions imposed on banks as part of the Wall Street rescue. Among them are limits on executive compensation, a ban on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
Also included is a requirement that the carmakers taking federal aid get rid of their corporate jets - which became a potent symbol when the Big Three CEOs used them for their initial trips to Washington to plead for government assistance.