WASHINGTON (AP) — Congressional Democrats and the White House worked to resolve their last disputes yesterday over terms of a $15 billion bailout for U.S. auto makers — complete with a “car czar” to oversee the industry’s reinvention of itself — that’s expected to come to a vote as early as tomorrow.
Top Democrats gave the White House their proposal for rushing short-term loans to Detroit’s Big Three through a plan that requires that the industry remake itself in order to survive. The Bush administration gave a cool initial response, saying the measure didn’t do enough to ensure that only viable companies would get longer-term federal help. Negotiators worked into the night yesterday to resolve differences.
Martin Zimmerman, former Ford vice president and Ross School of Business Prof., said the $15 billion, once made available to GM and Chrysler, would keep the two financially viable only until the end of March.
“They’re coming up with a plan, which is better than not having a plan,” Zimmerman said.
Still, Zimmerman said he anticipates another loan would be negotiated around March if funds begin to run dry around that time.
“We’ve made a lot of progress in recent days to develop legislation to help automakers restructure and achieve long-term viability,” Dana Perino, the White House press secretary, said in a statement. “We’ll continue to work with members on both sides of the aisle to achieve legislation that protects the good faith investment by taxpayers.”
President George W. Bush himself said it was “hard to tell” if a deal was imminent because definite conditions had to be met. “These are important companies, but on the other hand, we just don’t want to put good money after bad,” he said in an interview with ABC’s “Nightline.”
Despite optimism on both sides that Congress and the White House could reach a swift agreement on the measure, it was still a tough sell on Capitol Hill.
“While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done,” said Senate Majority Leader Harry Reid, D-Nev. “This is no blank check or blind hope.”
The bill puts a government overseer named by Bush — a kind of “car czar” — in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the carmakers weren’t taking sufficient steps to reinvent themselves.
House Speaker Nancy Pelosi, D-Calif., said the restructuring would require tough concessions from management, labor, creditors and others.
“We call this the barbershop. Everybody’s getting a haircut here,” Pelosi said.
Still, the White House said a preliminary look at the draft didn’t appear to contain strict enough conditions to ensure that long-term financing would be available only to companies that could survive, according to officials who would comment on the continuing negotiations only on condition of anonymity.
The crux of the White House’s concern is that there may not be enough clear, immediate protection for taxpayers if a company is not meeting its own promises for long-term viability after review by the president’s overseer. The latest proposal suggests Congress may have to get involved again in a few months and pass a law to force a company to stick to its own plan — a potentially unwieldy political step.
Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman who is leading negotiations on the measure, said he was optimistic that the differences could be resolved.
“There are a couple of specific issues to be negotiated. I think they can be worked out,” Frank said Monday afternoon.
Sen. Carl Levin, D-Mich., a key ally of the auto industry, said getting the roughly 15 Republicans needed to support the plan was an uphill battle.
“This is a real hill to climb even if we can get agreement between the White House and congressional leaders,” he said.
Even sympathetic Republicans weren’t ready to sign on. Sen. George Voinovich, R-Ohio, has “numerous concerns” about the bill, including the strength of the taxpayer protections and the role of the so-called car czar, said spokesman Chris Paulitz.
There are lingering differences between the administration and Congress on details of the czar’s role and responsibilities, essentially a proxy fight between the White House and Democrats over whether Bush or President-elect Barack Obama should have the final say on who runs the auto industry restructuring.
Democrats are pressing to allow the president to choose other people beside the czar to help oversee the bailout, while the White House wants just one person tapped by Bush to have control.
Congress Republicans and the White House also are balking at a requirement Democrats included in their proposal that the carmakers drop their opposition to efforts by California and several other states to impose stricter emissions rules than the federal standard.
In a press release distributed yesterday, Rep. John Dingell (D-Mich.) said he believes the negotiations will end with some kind of aid for the auto industry.
“There is a lot of hard work left to do, but I am optimistic that these negotiations will produce legislation that will help us avert a crisis that will have a catastrophic consequences for our nation,” Dingell said.
Pelosi is seeking that bar at the behest of environmentalists who are angry that money to bail out the auto industry will be drawn from an existing loan program that was meant to help the Big Three build greener vehicles that burn less gasoline.
That’s just one of several restrictions the bill places on the automakers while they’re receiving the loans.
Among the requirements included in Democrats’ draft proposal is one that the carmakers getting federal help get rid of their corporate jets — which became a potent symbol of the industry’s ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government aid.
The automakers also would be subject to some of the same restrictions imposed on banks as part of the $700 billion Wall Street bailout, including limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
The special inspector general overseeing the Wall Street rescue also would keep tabs on the carmaker bailout. The Senate on Monday confirmed Neil M. Barofsky, a federal prosecutor in New York, for that post.
The proposed automakers’ bailout also gives the car czar say-so over any major business decisions by the companies while they’re taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more.
Under the plan, the carmakers’ could get emergency loans right away. Then the overseer would write guidelines, due on the first of the year, for restructuring the Big Three.
In testimony before Congress last week, General Motors Corp. and Chrysler LLC, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009. Ford Motor Co. has said it has enough money to stay afloat unless one of the other Big Three goes under or the economy deteriorates more sharply.
While the measure would put an administration official selected by Bush in charge of setting terms for restructuring, the decision about whether the terms were being met would not be made until Obama had been sworn in. Some Democrats were pushing to name Kenneth Feinberg, the lawyer who oversaw the federal Sept. 11 victims’ compensation fund, to the post, but top congressional officials said there had been no discussion of that.
In the latest gauge of public opinion, people were split about evenly over providing federal money to keep the car companies functioning.
Forty-five percent approved and 44 percent were opposed, according to a CBS News poll released Monday. Nearly six in 10 Democrats favored the aid, while nearly the same share of Republicans opposed it.
About seven in 10 said the government should have a say in managing the companies if taxpayers provide assistance, and nearly as many said requiring more alternative fuel vehicles should be a condition of such aid. Fifty-six percent blamed management for the companies’ problems, double the number who blamed uncontrollable economic problems.
– Daily Staff Reporter Thomas Chan contributed to this report.