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Archive for Sunday, December 7, 2008

Time short, Congress tries to seal $15B auto bailout deal

December 7, 2008

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On the street

If one of the Big Three automakers went bankrupt, would that affect your car-buying decision?

No, it wouldn’t, because I think it would be a temporary-type situation.

More responses

— Racing to seal a deal with the White House, Democratic congressional leaders dispatched aides Saturday 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 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 through the weekend 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 LLC, 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 were not final.

It is designed to tide over the companies — particularly GM and Chrysler, which have warned that they are just weeks from going bust — through 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 George W. 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.

“Taxpayers should not be asked to finance assistance for automakers without a strong likelihood that they will be paid back,” Perino said in a statement Saturday.

Pelosi said the House would consider legislation in the upcoming 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.

Pelosi, a close ally of environmentalists, had steadfastly refused to tap an existing $25 billion auto loan program — meant to finance the production of more fuel-efficient vehicles — for emergency aid to the carmakers. But Bush would not agree to use money from the $700 billion Wall Street bailout to help the Big Three.

Pelosi was seeking concessions in return for changing her position, people close to the talks said. She wanted legislative language insuring that the program to modernize plants and develop green cars would be replenished early next year — perhaps in an economic recovery bill that lawmakers are expected to prepare for Obama shortly after he takes office Jan. 20.

Comments

jafs 6 years ago

According to testimony to Congress, union wages and benefits account for about 10% of expenses.

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