Congress, White House talking $15B auto bailout
WASHINGTON — Stunned by the loss of 500,000 jobs, congressional Democrats and the White House reached for agreement Friday on about $15 billion in bailout loans for the beleaguered auto industry. President George W. Bush warned that at least one of the Big Three carmakers might not survive the current economic crisis.
Several officials in both parties said a key breakthrough on the long-stalled bailout came when House Speaker Nancy Pelosi bowed to Bush's demand that the aid come from a fund set aside for the production of environmentally friendlier cars. The California Democrat spoke to White House chief of staff Josh Bolten during the day to signal her change in position, they added.
The developments unfolded as desperate auto executives pleaded for a second day with lawmakers for loans to help them survive, and the government reported the worst single month's job loss in 34 years.
Pelosi's office issued a statement saying legislation would come to a vote in the House next week. The Senate is also scheduled to be in session to consider steps to aid Detroit's Big Three.
"Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected and that resources are directed to ensure the long-term viability and competitiveness of the American automobile industry," Pelosi's statement said.
In a subsequent statement, she added that the billions originally ticketed for development of more environmentally friendly cars would be repaid "within a matter of weeks." Democrats said her hope was to include the funds in an economic recovery bill that lawmakers are expected to prepare for President-elect Barack Obama's signature shortly after he takes office.
Officials in both parties also said the legislation would include creation of a trustee or group of industry overseers to make sure the bailout funds were used by General Motors Corp., Ford Motor Co. and Chrysler LLC for their intended purpose. The funds are designed to last until March, giving the incoming Obama administration and the new Congress time to consider the issue anew.
One senior Democratic aide also said Pelosi was seeking a provision that would bar the automakers from using any of the funds to pursue a legal challenge to states seeking to implement tougher auto emission standards. The aide spoke on condition of anonymity because the legislation was not yet drafted.
At the White House, Bush declared the economy was in a recession, and he urged a gridlocked Congress to act quickly on a multibillion-dollar industry bailout _ with taxpayer protections.
"We are going to have to have some give here," replied Massachusetts Rep. Barney Frank, a senior House Democrat, expressing optimism that compromise might be possible. It wasn't clear whether he was prodding Bush or Pelosi with his comments, but Republicans said there had been no lessening in Bush's refusal to tap the $700 billion financial industry bailout fund to help the automakers.
There were also fresh calls during the day for the Federal Reserve to come to the rescue of the Big Three, possibly in the form of low-cost loans. And Frank said he had talked with Tim Geithner, President-elect Barack Obama's choice for treasury secretary, a possible sign of involvement by the incoming administration.
"I am concerned about the viability of the automobile companies," a somber Bush said as a fresh report showed that employers slashed 533,000 jobs in November.
The president added, "I'm concerned about those who work for the automobile companies and their families. And likewise, I am concerned about taxpayer money being provided to those companies that may not survive." Bush did not elaborate, but executives at both GM and Chrysler have warned that their storied corporations could collapse by year's end.
In addition to the November layoffs, GM announced it will cut shifts at factories in Lordstown, Ohio, Orion Township, Mich., and Oshawa, Ontario, in February as a result of slumping auto sales. About 2,000 jobs were involved, bringing the year's total to 11,000.
The chief executives of GM, Ford and Chrysler, testified for a second day before Congress in support of their plea for a $34 billion bailout in the form of loans. "We believe this is the least costly alternative," Chrysler LLC chief executive Bob Nardelli said.
For the day, at least, their appeals were overtaken by the severity of the job loss figures, the worst in 34 years.
Frank said repeatedly that the unemployment statistics had quieted talk of allowing one or more of the automakers to go bankrupt.
"I think it's fair to say that the jobs report today, this disastrous jobs report, has heightened the interest in doing something." With trademark wit, he added, "If we are lucky we will come out with a bill here that nobody likes, because any bill that any individual liked couldn't pass."
Bush renewed his call for Congress to rewrite an existing $25 billion program intended to help the industry make more fuel-efficient vehicles. But the president did not explicitly foreclose other options, and Republican aides said the White House might be open to some sort of compromise.
Congressional budget analysts have said tapping the fuel-efficiency program for a broader auto bailout would net only $7.5 billion in short-term cash but amended that to say adjustments were possible that could double that amount. Pelosi and environmentalists had opposed making use of those funds. Instead, they wanted the administration to take money from a $700 billion financial industry bailout that cleared Congress last fall.
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DAVID ESPO | December 5, 2008 11:48 PM EST |
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