Hours after President Bush announced Friday he would offer $17.4 billion in loans to bail out automakers, the auto workers union said it will push Democrats in Congress to drop some of the conditions Mr. Bush wants to impose on the companies and their workers.
Mr. Bush Friday morning reversed course and said the Treasury Department will use the financial package intended to bail out financial firms to help out the car companies, but said the automakers will have to meet conditions that include proving viability by March 31 and restructuring their contracts with unions.
"The time to make hard decisions is now," Mr. Bush said.
But the UAW, which represents autoworkers, said Mr. Bush requires more concessions from workers than from other stakeholders in the auto companies. Union President Ron Gettelfinger said they will ask President-elect Barack Obama and Democrats in Congress to ignore the provisions.
"We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed," Mr. Gettelfinger said.
Many Republicans said the bailout was a bad move, and Sen. Jim DeMint, South Carolina Republican, said Mr. Bush's action may be unconstitutional because Congress never authorized using the $700 billion Troubled Asset Relief Program, intended for financial institutions, to bail out specific non-financial companies.
Senate Republicans last week led a filibuster that blocked a bill to extent about $14 billion to automakers. That bill, a compromise between the administration and congressional Democrats, would have tapped non-TARP funds, since Mr. Bush wanted the TARP money to be kept for financial institutions.
With the failure of the bill, though, Mr. Bush said Friday he had to reverse course and use what money he could.
"These are not ordinary circumstances," he said. "In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action."
Mr. Obama was silent on specifics, but said Mr. Bush took "a necessary step" and echoed the president's declaration that there is a limited window for the companies to act.
"The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it," he said.
The loan is split into $13.4 billion initially, and another $4 billion to come if Congress releases the final half of the TARP money.
Only Chrysler and G.M. have been offered loan terms by Treasury. The third big automaker, Ford, is in better financial shape and did not feel it needed to access the loans, the White House said.
Among the terms attached to the loans are that firms must limit executive compensation and perks such as corporate jets, allow the government to block any transactions larger than $100 million, reduce unsecured debt by two-thirds, and restructure union contracts so they are competitive with foreign auto manufacturers' contracts by Dec. 31, 2009.
Any of those conditions could be changed under Mr. Obama if his Treasury Department and the auto companies agreed.
Democrats said they will examine the deal, but said they think union workers are taking the brunt of the pain.
The White House proposal unfortunately singles out workers and clearly puts them at a disadvantage before negotiations have even begun," said House Speaker Nancy Pelosi, California Democrat.
The auto bailout has split Republicans, with those from midwest industrial states saying the action was needed because bankruptcy is not an acceptable option while many of those from southern and western states opposed it as an overreach, and said the government didn't wrest enough conditions to make the companies viable.
Rep. Thaddeus McCotter, Michigan Republican, who opposed the $700 billion financial bailout but supported the automakers bill, said the UAW's stance is the beginning of a new round of positioning.
"What you're starting to see is people starting to stake out their negotiating positions before they get in the room," he said.
He also said Mr. Bush's move will play well among a large group of Republicans in the Midwest who were afraid of the alternative to government loans.
"President Bush, being a southern Republican president doing this bridge loan, was helpful," said Rep. Thaddeus McCotter, Michigan Republican, who had opposed the $700 billion financial bailout but supported the automakers bill. "A lot of the people around here were surprised he didn't just let the industry go bankrupt."
Staff writer Jon Ward contributed to this article.
Stephen Dinan can be reached at firstname.lastname@example.org.
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