Bush Cuts Deal With Democrats for Auto-Industry Bailout and Federal ‘Car Czar’
The White House did not go as far as to say the deal was final, although it did report "very good progress." The measure could see a House vote later Wednesday and be enacted by week's end. Then, money could be disbursed within days to cash-starved General Motors Corp. and Chrysler LLC, while Ford Motor Co.--which has said it has enough liquidity to stay afloat--would be eligible for federal aid.
It would create a government "car czar" named by President George W. Bush to dole out the loans, with the power to force the carmakers into bankruptcy next spring if they didn't cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.
Congressional Republicans, left out of negotiations on the package, expressed grave reservations and may seek to block it.
Sen. David Vitter, R-La., promised to filibuster the measure, which could delay a final vote for days.
He said the package has an "ass-backwards" approach to curing what ails the U.S. auto industry--giving carmakers money immediately, and only later demanding that they restructure.
Sen. Mitch McConnell, the GOP leader, said his side hadn't seen the measure yet and wouldn't agree to votes on the measure Wednesday. "Republicans will not allow taxpayers to subsidize failure," he said, although McConnell added that the auto situation would be addressed by the end of the week.
Democratic leaders were confident enough that a bill could advance that they released the text of the 37-page measure and set a procedural vote for the House floor later Wednesday.
The congressional officials revealed agreement on a bill only on grounds of anonymity because the deal has not been formally announced.
The scene so far has been eerily reminiscent of the tense atmosphere of early October on Capitol Hill, where lawmakers variously argued, cajoled, threatened and lobbied one another, ultimately passing a much-debated $700 billion bailout plan that Bush signed into law for the strapped financial industry.
At the White House Wednesday, Deputy Chief of Staff Joel Kaplan said the administration had yet to read the fine print of its "conceptual agreement" with congressional Democrats.
Fine print, indeed, is what had many Republicans on the Hill angry,
For his part, Kaplan said: "We have not seen final text of legislation that we have agreed to."
He indicated clear support for it, saying Bush would personally lobby Republicans to back it and was dispatching Chief of Staff Josh Bolten to Capitol Hill to make the case for it.
"We'll be talking retail to individual senators to try to win their support," Kaplan said, adding that it's critical that the legislation have a clear definition of what is long-term viability for the companies.
The Big Three would have to negotiate with labor unions, creditors and others and submit blueprints on March 31 to the industry czar showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.
A breakthrough came when Democrats agreed to scrap language--which the White House had called a poison pill--that would have forced the carmakers to drop lawsuits challenging tough emissions limits in California and other states, said congressional aides.
Environmentalists already were livid that the measure draws the emergency loans from an existing loan program to help carmakers retool their factories to make greener cars.
Kaplan said the Bush administration would work with President-elect Barack Obama's team on choosing the so-called "car czar," acknowledging that Bush's tenure ends in 41 days and the automakers' woes will continue well into 2009.
Getting 60 votes for an agreement, with many senators expected to be absent for the emergency, postelection debate, is expected to be tricky.
Sen. Carl Levin, D-Mich., an ally of the auto industry, said, "This gets us to the 20-yard line, but getting over the goal line will take a major effort, particularly in the Senate."
Obama defended the auto bailout as necessary given the threat a potential Big Three collapse could pose to an already battered economy.
"As messy as it may be, I think there's a sense of, 'Let's stabilize the patient,' " he said in an interview published in Wednesday's editions of the Chicago Tribune and Los Angeles Times.
He called the auto industry's plight--lackluster sales, choked credit and widespread economic turmoil--"the perfect storm."
A key compromise came when negotiators reached agreed to require the czar to revoke the loans and deny any further federal aid to automakers that don't strike restructuring deals by next spring. Democrats had proposed giving the overseer that option but not requiring it.
The car czar would have say-so over any major business decisions by the automakers while they were taking advantage of federal aid, with veto power over any transaction of $100 million or more. The companies--including the private equity firm Cerberus, which owns a majority stake in Chrysler--would have to open their books to the government overseer.
And if Chrysler defaulted on its loan, Cerberus would be responsible for reimbursing the government.
The measure would attach an array of conditions to the bailout money, including some of the same restrictions imposed on banks as part of the $700 billion Wall Street rescue. Among them are 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.
Also included in the plan is a requirement that the carmakers taking federal aid get rid of their corporate jets--which became a potent symbol when the CEOs used them for their initial trips to Washington to plead before Congress for government assistance.
The measure also includes a bailout of some of the nation's largest transit systems. The bus and rail systems could be on the hook for billions of dollars in payments because exotic deals they entered into with investors--which have since been declared unlawful tax shelters--have gone sour with the collapse of American International Group Inc. and other financial institutions.
It also contains language the automakers insisted on that preserves a tax break allowing them to reclaim taxes paid when times were good. Without the provision, the foundering companies would have to account for huge amounts of losses, potentially pushing them into bankruptcy.
Also included in the bill is an unrelated pay-raise for federal judges.
Associated Press Writer Ben Feller contributed to this report.