- The Washington Times - Thursday, December 11, 2008

Senate Republicans raised roadblocks to $15 billion automaker bailout agreed to by Democrats and the White House, dimming chances for the measure even as the House prepared to vote on it late Wednesday.

The measure did not appear to have enough Republican support to survive in the Senate.

“We’re worried about the American taxpayer and that any money that’s loaned to these Big Three manufacturers will ultimately be repaid,” Senate Minority Whip Jon Kyl, Arizona Republican, said after a closed-door policy luncheon where Bush administration officials tried to sell Republicans on the deal.

Several Republican senators said the bailout funds likely would be lost when General Motors Corp. or Chrysler LLC go under at a later date. Some members called for the companies to seek bankruptcy protection to reorganize their businesses.

Ford Motor Co., which is the healthiest of the Big Three, is not included in the federal emergency loan. The company has asked for access to a line of credit in case its finances worsen next year.

“This is only delaying their funeral,” said Sen. Richard C. Shelby, Alabama Republican.

Under the bill, President Bush would appoint a so-called car czar to oversee the bailout loan and who will have power to impose a restructuring plan on the automakers if the companies, their creditors and auto-worker unions do not agree to a comprehensive business reorganization.

It gives the government warrants to take an equity stake in the companies to help safeguard taxpayer money and imposes restrictions on management, including limits on executive pay and prohibitions on paying shareholder dividends and expensive severence packages, or “golden parachutes,” for company bosses.

The ranking Republican on the Senate Finance Committee has come out against a provision in the draft auto industry bailout he says would bring back to life a tax shelter for public transit agencies that made risky deals with corporations.

Sen. Charles Grassley of Iowa eliminated the tax shelter — which is unrelated to Capitol Hill’s current efforts to prop up the nation’s big three automakers - when he was chairman of the committee in 2004 “as a matter of tax fairness,” he said Wednesday.

“They entered into very controversial deals with corporations, including foreign corporations, whereby selling things like the transit’s own train cars not to change the way the transit operated, but solely to access cash for them and let the corporations take a tax deduction for depreciation,” Mr. Grassley said on a conference call with Iowa reporters, a transcript of which was posted on his Web site. “It’s wrong for this auto bailout legislation to reward or bail out transit agencies for participating in these tax shelters.”

Mr. Grassley said he does not know who inserted the provision into the House draft of the auto bill, but, “Whoever’s behind it ought to raise their ugly head and justify it because I don’t think it’s right.”

Senate Finance Committee Chairman Max Baucus, Montana Democrat, agreed with Mr. Grassley, saying the provision “must be stripped from the auto bill.”

A spokesman for Majority Leader Harry Reid, Nevada Democrat, declined to comment, deferring questions to the Senate Banking Committee. A call to the Senate Banking Committee was not immediately returned.

Meanwhile, House Republicans on Wednesday issued an alternate plan that seeks to restructure auto companies’ debt and require union concessions on wages and benefits. The plan, released by Minority Leader Rep. John A. Boehner, Ohio Republican, calls for the government to provide “limited assistance” in the form of insurance.

“The proposal put forth by our colleagues in the Democratic majority is unworthy of American auto workers and unworthy of American taxpayers,” Mr. Boehner said.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide