Bush, Democrats OK $15 billion for Big 3

The White House and senior congressional Democrats reached an agreement on the outlines of a $15 billion taxpayer bailout plan for troubled Detroit automakers General Motors Corp. and Chrysler LLC, though the bill to implement the rescue package still faces an uncertain reception on Capitol Hill.

Administration sources said the bill, which would create a “car czar” appointed by President Bush to oversee a major restructuring of the beleaguered Big Three, could be ready for a vote in Congress as early as Wednesday. The deal sets a deadline of March 31 for the companies to offer a long-term plan for reform, with the czar having the authority to force the companies to declare bankruptcy if they fail to act.

The deal was announced at the end of a day when leading Senate Republicans expressed growing unhappiness with the developing accord and congressional Democrats scrambled to keep the bailout package on track.

Senate Minority Leader Mitch McConnell, Kentucky Republican, said the draft bill circulated over the weekend by Capitol Hill Democrats “does not go nearly far enough” to force the car companies and their union to make fundamental changes needed to restore the industry’s long-term health.

Another top Republican senator, briefing reporters on background, said opposition has been raised within the Republican caucus to the short-term bailout and that the White House had applied “zero” pressure on Republican lawmakers to support the bill.

“I’m prepared to hold it. Some major changes need to happen before it goes through,” said the senator, arguing that the legislation does not have enough protections for taxpayers.

Senate Majority Leader Harry Reid, Nevada Democrat at first predicted a quick deal with the White House but said lawmakers may have to work into the weekend to overcome opposition from the Republican minority.

“We cannot let a few people stop us from doing the people’s business,” Mr. Reid said.

General Motors, Ford Motor Co. and Chrysler had been seeking a combined $34 billion in taxpayer loans and credit lines to deal with what they say are the catastrophic impacts on sales of the global credit crunch. GM and Chrysler warned last week that they could go bankrupt in the next few weeks if billions of dollars in federal aid are not forthcoming.

The rescue package provides about $15 billion in federal loans and credit lines to GM and Chrysler, designed to keep the beleaguered firms in business until the incoming Obama administration can tackle Detroit’s long-term problems.

Ford, considered the healthiest of the Big Three automakers, had been seeking $9 billion in a standby credit line but had not sought immediate financing.

The Bush administration will consult with the transition team of President-elect Barack Obama in selecting the new federal auto overseer. Other pieces of the Democratic proposal would give the government the right to acquire shares in the bailed-out firms and the power to recall the loans early if the three companies, their unions, dealers, suppliers and investors fail to make major concessions.

But Mr. McConnell and other Republicans said the measure does not address the companies’ high costs of labor, benefits and pensions, and includes several provisions apparently designed to protect the United Auto Workers.

It is “unfair to taxpayers” to approve even the interim bailout plan without clear commitments from the companies and from the UAW to change their ways, he said.

Story Continues →