House passes $14 billion auto bailout bill

(AP) - A $14 billion rescue package for the nation'simperiled auto industry sped to approval in the House Wednesdaynight, but the emergency bailout was still in jeopardy fromRepublicans who were setting

News 12 Staff

Dec 11, 2008, 12:45 PM

Updated 5,703 days ago

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(AP) - A $14 billion rescue package for the nation'simperiled auto industry sped to approval in the House Wednesdaynight, but the emergency bailout was still in jeopardy fromRepublicans who were setting out roadblocks in the Senate. Democrats and the Bush White House hoped for a Senate vote asearly as Thursday and enactment by week's end. They argued that theloans authorized by the measure were needed to stave off disasterfor the auto industry - and a crushing further blow to the reelingnational economy. The legislation, approved 237-170 by the House, would providemoney within days to cash-starved General Motors Corp. and ChryslerLLC. Ford Motor Co., which has said it has enough to stay afloat,would also be eligible for federal aid. Republicans were preparing a strong fight against the aid planin the Senate, not only taking on the Democrats but standing inopen revolt against their party's lame-duck president on themeasure. The Republicans want to force the companies into bankruptcy ormandate hefty concessions from autoworkers and creditors as acondition of any federal aid. They also oppose an environmentalmandate that House Democrats insisted on including in the measure. House Speaker Nancy Pelosi said the House-passed billrepresented "tough love" for U.S. auto companies and "giving achance - this one more chance - to this great industry." The White House, struggling to sell the package to congressionalRepublicans, said earlier that a carmaker bankruptcy could be fatalto the auto industry and have a devastating impact on workers,families and the economy. "We believe the legislation developed in recent days is aneffective and responsible approach to deal with troubled automakersand ensure the necessary restructuring occurs," said Dana Perino,the White House press secretary. But the measure faces a difficult road in the Senate, where itneeds 60 votes to advance. Rank-and-file Senate Republicansskewered the bill during a closed-door luncheon with White HouseChief of Staff Josh Bolten, who was dispatched to Capitol Hill tomake a case for the rescue package. Even among Senate Democrats, the level of support was stilluncertain. In the House, 20 Democrats joined 150 Republicans invoting "no," while 32 Republicans sided with 205 Democrats toback the bill. Besides providing cash for the auto companies, it would create agovernment "car czar," to be named by President George W. Bush todole out the loans, with the power to take back the money and forcethe carmakers into bankruptcy next spring if they didn't cut quickdeals with labor unions, creditors and others to restructure theirbusinesses and become viable. "To give up on the auto industry now would be to condemn theAmerican economy at one of its most vulnerable periods in oureconomic history to a degree of further hurt," said Rep. BarneyFrank, D-Mass, the Financial Services Committee chairman. Behind the scenes, Senate Democratic and Republican leadersscrambled for a deal that would allow votes on the bill onThursday. Some GOP senators were demanding votes on an alternativethat would order the automakers to take specific actions torestructure - including steep wage cuts and debt restructuring - inreturn for any federal money. Opposition from Republicans reflected the tricky task of pushingyet another federal rescue through a bailout-weary Congress, withBush's influence on the wane. "People realize that this bill is an incredibly weak bill (and)is the product of an administration that wants to kick the can downthe road and let somebody else deal with it," said Sen. BobCorker, R-Tenn. The auto aid debate was replete with echoes of the tense,early-October drama surrounding the $700 billion Wall Streetbailout, when a marathon set of negotiations yielded amuch-celebrated deal that came apart quickly amid GOP oppositionand public outrage. That bill ultimately passed after much arguing,cajoling, threatening and lobbying among lawmakers, and Bush signedit. Before passing the auto measure Wednesday, the House voted toadd language requiring that banks that are bailed out by thegovernment report quarterly on how much they have increased ordecreased lending. In the Senate, opposition to the auto rescue wasn't limited toRepublicans. Democratic Sen. Max Baucus of Montana announced he was againstthe measure because of a provision to bail out transit agenciesthat were involved in transactions that are now considered unlawfultax shelters. House Republicans swiftly voiced their opposition and called fora plan that would instead provide government insurance to subsidizenew private investment in the Big Three automakers, demand majorlabor givebacks and debt restructuring at the companies andencourage them to declare bankruptcy. Under the House-passed measure, the carmakers would have tosubmit blueprints on March 31 to the industry overseer showing howthey would restructure to ensure their survival, although theycould be given until the end of May to negotiate with thegovernment on a final agreement. The carmakers initially asked Congress for $25 billion, thenreturned two weeks later to plead for as much as $34 billion. Butwith the White House refusing to dole out new spending for the BigThree, congressional Democrats agreed to use an existing programthat was to help carmakers retool their factories to make morefuel-efficient cars. That fund yielded only $15 billion in emergency loans, and whennegotiators agreed to leave some money in the environmentalprogram, the amount fell to $14 billion. Democrats agreed to scrap language - which the White House hadcalled a deal-breaker - that would have forced the carmakers todrop lawsuits challenging tough emissions limits in California andother states. But they kept a provision to force the automakers toabide by those states' limits - a kind of consolation prize forenvironmentalists, who already were livid at the raid of thefuel-efficiency program. Senate Democrats unveiled a nearly identical measure thatomitted the requirement, but that bill still faced long odds. At the White House, Deputy Chief of Staff Joel Kaplan said theBush administration would work with President-elect Barack Obama'steam on choosing industry czar. Obama defended the auto bailout as necessary given the threat apotential Big Three collapse could pose to an already batteredeconomy. "As messy as it may be, I think there's a sense of, 'Let'sstabilize the patient,"' he said in an interview published inWednesday's Chicago Tribune and Los Angeles Times. The car czar would have say-so over any major business decisionsby the automakers while they were taking advantage of federal aid,with veto power over any transaction of $100 million or more. Thecompanies - including the private equity firm Cerberus, which ownsa majority stake in Chrysler - would have to open their books tothe government overseer. And if Chrysler defaulted on its loan, Cerberus would beresponsible for reimbursing the government. The measure also would attach an array of conditions to thebailout money, including some of the same restrictions imposed onbanks as part of the $700 billion Wall Street rescue. Among themare limits on executive compensation, a prohibition on payingdividends and requirements that the government share in futureprofits and taxpayers be repaid before any other shareholders. Also included in the bill is an unrelated pay raise for federaljudges.


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