Bush Urges Democrats to Support Bi-Partisan Aid to Auto Industry
Senate Democrats, on the other hand, hope to vote this week on legislation making money from the $700 billion Troubled Assets Rescue Program (TARP) available to the big three American car companies: Ford, General Motors and Chrysler.
The White House supports allowing money from a Department of Energy funding program for fuel efficiency to be used for emergency assistance for the auto industry.
“There’s not an appetite in the administration to open up the TARP funding for individual industries, because once you start down that road, it’s a slippery slope to other industries that might say that they need help,” White House Press Secretary Dana Perino said Monday.
“But we do have an entire pot of money, $25 billion that is specifically for the automakers. And we also know that opening up the TARP will not get through the Senate,” she added.
A Democratic auto bailout bill would require the support of every Senate Democrat and at least 12 Senate Republicans to pass.
“Therefore, to avoid partisan gridlock, what we are recommending is to work hand-in-hand on a program that would simply amend the 136 program and help companies that can show long-term viability and a willingness to restructure,” said Perino.
The Energy Department’s 136 program was meant to help U.S. car makers build more fuel-efficient vehicles, and has $25 billion in available funds. The Bush administration believes – in a time of urgency – the program should be amended to use those funds for helping to keep the car companies afloat.
The Department of Energy has a formula to determine viability for the funds that factors in debt, interest coverage, expenses, liquidity and financial projects demonstrating solvency.
Senate Majority Leader Harry Reid (D-Nev.) said the Republican plan is not acceptable. Further, while the Senate is pushing legislation, Reid thinks that Treasury Secretary Henry Paulson could take action on his own immediately to send funds to the auto firms.
“The secretary of the Treasury should use the authority and funds that Congress has already given him to help the auto industry,” Reid said in a statement.
“The administration’s plan would require additional legislative action in the House and Senate and the president’s signature – but there is no reason to start at square one when Secretary Paulson can protect millions of American jobs in one of our most important industries with the stroke of a pen,” he added.
Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement issued Monday that the Democrats’ auto bailout is not yet specific and taxpayers need to know the financial impact of the bailout.
“We owe it to the people of Nevada, Kentucky, and all across America to make known the impact this bailout would have on the deficit,” McConnell said.
“The taxpayers deserve to know if this bailout would increase the national debt and raise their taxes. … Perhaps when a bill is actually written, and its costs are known, both Republicans and Democrats can take a position on the legislation,” he added.
However, some Democrats supportive of an auto bailout want strings attached, such as an oversight board to limit executive pay and to govern the fuel efficiency of vehicles.
Meanwhile, many congressional Republicans have called for simply allowing the three companies to file bankruptcy, which would allow them to remain in business but would require their companies’ restructuring.
Perino would not comment on bankruptcy as an option, other than to say it would be an option for the auto company.
“We want the automakers to succeed and we support using an existing program to help them do so,” Perino said. “It's an important part of our manufacturing base. These are great, historical companies in the United States, and they have a way to get back on a path to be better companies, more successful companies in the future.”
While the $700 billion bailout package for financial firms was controversial with both Republicans and Democrats, Perino said it offers a return for the taxpayers.
“The TARP program was specifically designed to help taxpayers get a return on their investment,” Perino said.
She added that a subsidy to the auto companies would have no guarantee, particularly if management practices are unchanged.
“The automakers have over time made some decisions based on their needs for their employees, and some of those decisions might have to be reworked, going forward,” Perino said.