Deal seems near, but talks on auto bailout drag on
|House Speaker Nancy Pelosi, with House Financial Services Committee Chairman Barney Frank, D-Mass., at right, talks about a possible bailout of American automakers during a news conference on Capitol Hill in Washington, Monday, Dec. 8, 2008.|
WASHINGTON (AP) -- Weary Democratic congressional leaders pushed to clear the final obstacles to a $15 billion bailout of U.S. automakers Tuesday night, but the rescue plan faced new snags as Republicans raised deep concerns.
Top Democrats said they were still hopeful of a deal by the end of the night - with a vote to follow by the end of the week - though significant sticking points remained. Still unresolved were the precise requirements to be placed on carmakers by a new "car czar" who would be named by President George W. Bush and could ultimately force the carmakers to reinvent themselves.
Republicans also were demanding - so far unsuccessfully - that Democrats scrap language that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.
Still, leading Democrats voiced optimism that a deal would emerge.
"There do not appear to me to be differences in principle of a sufficient nature to blow this thing up," Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, told reporters. Earlier, he privately briefed House Democrats on the emerging deal and expected agreement by day's end.
Democrats and White House officials hammered out legislative language behind the scenes.
Even if they strike a deal, though, conservative Republicans who want to force one or more of the Big Three into bankruptcy warned they might try to block the measure, virtually guaranteeing that it will need a 60-vote majority to pass and possibly delaying approval for days.
"I think that not only myself, but several of us will be looking at possibly blocking this package," Sen. John Ensign, R-Nev., told CNBC.
The core of the bill - and its aim - was not in dispute among the White House and Democratic leaders. It would provide emergency loans to two of Detroit's Big Three - Ford Motor Co. has said it doesn't need an immediate cash transfusion - and create the presidentially named "car czar." The federal overseer would supervise a broad industry restructuring and would be empowered to pull the money back if the carmakers weren't doing enough to ensure their own survival.
All the while, the nation has fallen into recession, Congress and the presidency are both in transition, Wall Street is ricocheting daily and the Federal Reserve and Bush Treasury Department are fighting to steady the reeling financial industry.
A final deal hinged on only a couple of outstanding issues, said Senate Majority Leader Harry Reid, D-Nev.
"We would hope that we could complete work on this Detroit situation tonight or tomorrow," he said on the Senate floor.
The last issues were significant. The White House and congressional Republicans were demanding tougher consequences for carmakers that couldn't prove to the government they were viable, including a requirement - rather than an option - for them to be cut off from federal aid.
Democrats have already given in to the White House on a key element of the measure - drawing the money from an existing loan program meant to help carmakers finance the production of greener cars. With environmentalists livid at that move, Democrats were digging in over the bar against carmakers' participation in state emissions rules lawsuits.
Sen. Mitch McConnell, R-Ky., said he was concerned that Democrats were proposing a package that "fails to require the kind of serious reform that will ensure long-term viability for struggling automobile companies."
With their approach, "we open the door to unlimited federal subsidies in the future," McConnell said.
The White House has said it shares those concerns.
"There will not be long-term financing if they can't prove long-term viability," White House Press Secretary Dana Perino said.
However, she also said, "I think overall we're headed in the right direction."
Getting 60 votes for an agreement, with many senators expected to be absent for the emergency, post-election debate, could be tricky.
Said Sen. Carl Levin, D-Mich., an ally of the auto industry: "This is a real hill to climb even if we can get agreement between the White House and congressional leaders."
The current Congress is ready to depart for the year after this week.
Cash from the Big Three bailout would immediately be plowed into General Motors Corp. and Chrysler LLC. Ford has said it does not have an emergency cash-flow problem and that it would not ask for short-term assistance. The overseer would come up with terms for restructuring the beleaguered firms by Jan. 1.
The proposal would attach an array of conditions to the bailout money, including some of the same restrictions imposed on banks as part of the Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends, and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
The proposal gives the car czar say-so over any major business decisions by the automakers while they're taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more.
Also included in the plan is a requirement that the carmakers taking federal aid get rid of their corporate jets - which became a potent symbol when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.
Under the Democrats' proposal, if the Big Three didn't come up with suitable restructuring plans by the end of March, the czar would have to submit his own blueprint to Congress for a government-mandated overhaul.
Democrats also inserted a provision in the bill to bail out some of the nation's largest transit systems. The bus and rail systems could be on the hook for billions of dollars in payments because exotic deals they entered into with investors - which have since been declared unlawful - have gone sour with the collapse of American International Group Inc. and other financial institutions.