Congressional Democrats on Monday delivered to the White House an emergency $15 billion taxpayer bailout of Detroit’s beleaguered Big Three automakers, designed to keep the companies in business until the Obama administration can tackle the industry’s long-term woes.
But there were signs that the political wrangling over Detroit’s future was not over, with the White House voicing concerns about parts of the congressional bailout blueprint, which calls for a “car czar” to oversee efforts to revive the industry.
The White House was less than thrilled with the congressional draft over its lack of focus on long-term restructuring for the companies, even though Democrats bowed to the administration’s opposition to tapping Wall Street bailout money.
According to a copy of the draft bill obtained by The Washington Times, the bill would provide up to $15 billion in loans to the Big Three, using an existing Department of Energy loan program designed to promote more fuel-efficient cars.
House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, noted that nothing in the emergency package blocked President-elect Barack Obama or the incoming Congress from approving more funds for the Big Three. The president-elect has expressed qualified support for an automaker rescue package, and many congressional Democrats expect him to dip into the remaining uncommitted $360 billion from the Wall Street bailout kitty to help the Detroit companies.
House Speaker Nancy Pelosi, California Democrat, said the hastily written bill was meant to tide over General Motors Corp., Ford Motor Co. and Chrysler LLC until the end of March, with corporate executives, unions, retirees, shareholders and creditors all on the line to take painful steps to ensure the companies’ long-term viability.
“Everybody has to take a haircut,” she said, with the government reserving the right to reclaim its money early if the carmakers fail to show progress.
“There’s not going to be an endless flow of money to this industry,” she told reporters.
With the lame-duck Congress hoping to pass a bill for President Bush’s signature by the end of the week, Mr. Frank said an intense “five-way” negotiation was under way with the White House and the Democratic and Republican caucuses in both houses of Congress.
Republicans on Capitol Hill were showing signs that they were resistant to the prospect of yet another taxpayer bailout.
Senate Minority Leader Mitch McConnell, Kentucky Republican, was noncommittal on whether he would support the bill, even though his home state has car plants for U.S. and foreign manufacturers. Sen. Bob Corker, Tennessee Republican and a key member of the Senate Banking, Housing and Urban Affairs Committee, said he was “disappointed” with reports of the draft plan devised by Mr. Frank and other leading Democrats.
Even Sen. Christopher S. Bond, Missouri Republican and part of a bipartisan group of Midwestern lawmakers who have pushed for aid to the auto industry, said on the Senate floor Monday that he had not seen “any of the details” of the plan sent to the White House on Monday afternoon.
The Big Three have been backed by lawmakers from Michigan and surrounding states, by a potent lobbying network of dealers and suppliers, and by major business groups. U.S. Chamber of Commerce President Thomas C. Donohue issued a statement Monday urging Congress to approve the bailout.
But most lawmakers are finding the auto vote a political loser, despite the industry’s vast economic impact on the U.S. economy.
A bailout is so unpopular with American voters that even a majority of union members oppose taxpayer-funded handouts for the Big Three, a poll released Monday showed.
About 57.5 percent of self-declared union members said Congress should deny the federal aid to the car companies, according to a poll by ATI-News/Zogby International. Just 29 percent of union members approved of a bailout, while 13 percent were not sure. Democrats split on the issue, with 43 percent approving of a bailout and 41 percent disapproving, the poll showed.
Overall, 61.7 percent of American voters opposed a bailout for automakers, 25.7 percent approved and 12.5 percent were undecided.
The White House, which earlier welcomed talk of progress toward a compromise “bridge loan” to the auto companies, remains hesitant, citing concern about taxpayers recouping the money.
“Long-term financing must be conditioned on the principle that taxpayers should only assist automakers executing a credible plan for long-term viability,” said White House spokeswoman Dana Perino.
The bill calls for the companies to pay 5 percent a year on the funding for five years, with the interest rate rising to 9 percent annually after that. It is the same rate charged under the Wall Street bailout program. The companies also would be required to submit an interim progress report by Jan. 1.
A “car czar” designated by the president would have extensive oversight powers for the companies, including the right to review and void any contract, deal or executive compensation plan of more than $25 million. The Associated Press reported that Kenneth Feinberg, the special master of the federal Sept. 11 fund, is a contender for the post.
According to some reports, at least one top Detroit executive, GM Chairman Rick Wagoner, would be forced to step down as a price for the public aid, but the final draft did not include that demand.
Mr. Frank said the plan would leave the federal government the “senior recipient” to be paid back by the company ahead of all other creditors.
“We’ve done all we could to make sure the taxpayer is repaid,” Mr. Frank said.
The three companies, backed by the United Auto Workers, told Congress last week that they needed a combined $34 billion immediately to deal with a global credit crunch and recession that have sent sales plummeting. GM and Chrysler executives said they needed billions of dollars in loans in the next few weeks just to avoid insolvency.
Ron Gettelfinger, president of UAW, acknowledged that the rescue plan was far short of Detroit’s request, but said in an interview on CNN, “This should get us through March when we can have a real restructuring in place.”
Skeptics say the carmakers are the victims of their own marketing, engineering and financing mistakes over the years.
• S.A. Miller and Jon Ward contributed to this report.
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