Auto rescue bill in peril, opposed by GOP senators

Published 12:56 am Thursday, December 11, 2008

Emergency aid for the nation’s imperiled auto industry was thrown into jeopardy Wednesday, opposed by Republicans who were revolting against a hard-fought deal between Democrats and the Bush White House to speed $14 billion to ailing carmakers.

The House was on track to vote on the bailout Wednesday night, and Democrats held out hope that it could be enacted by week’s end. But a growing number of GOP senators declared they would not go along.

The White House, though not formally endorsing an agreement with congressional Democrats, dispatched administration officials to Capitol Hill to make a case for the rescue package. During a contentious, closed-door luncheon with Senate Republicans, White House Chief of Staff Josh Bolten got an earful of criticism from the rank-and-file, some of whom have already announced plans to block the measure.

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“They got a good dose,” said opponent Tom Coburn, R-Okla., as he emerged from the session.

Even auto state Republicans who have pushed hard for a bailout said the measure needed work. Sen. Kit Bond, R-Mo., said he wanted to see changes. And Sen. George V. Voinovich, R-Ohio, said the bill didn’t have the necessary Republican votes to pass Congress.

The Republicans’ revolt came as the House began procedural votes on the package.

It would provide money within days to cash-starved General Motors Corp. and Chrysler LLC, while Ford Motor Co. — which has said it has enough liquidity to stay afloat — would be eligible for federal aid as well.

The plan would create a government “car czar,” to be named by President George W. Bush to dole out the loans, with the power to force the carmakers into bankruptcy next spring if they didn’t cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.

Opposition from congressional Republicans reflected the tricky task of enacting yet another federal rescue in a bailout-weary Congress, with Bush’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 down the road and let somebody else deal with it,” said Sen. Bob Corker, R-Tenn.

The scene so far has been somewhat reminiscent of the tense atmosphere of early October on Capitol Hill, when lawmakers argued, cajoled, threatened and lobbied one another, ultimately passing a $700 billion bailout plan that Bush signed into law for Wall Street financial firms.

Debate on the bailout unfolded as a congressional panel reviewing the financial rescue questioned the Bush administration’s spending of those funds and challenged its reluctance to use the money to reduce foreclosures. The House was set to add language to the auto aid bill to require that banks that are bailed out by the government report quarterly on how much they have increased or decreased lending.

With Republicans balking and some absent from the emergency, postelection debate, mustering the 60 votes needed to advance the auto rescue measure in the Senate was proving tricky.

Sen. Mitch McConnell, the GOP leader, said Wednesday afternoon that his side had only recently gotten a copy of the measure. He said, “Everybody is still kind of poring through it, trying to figure out exactly what it does. But everybody understands the significance of the issue and the enormity of the problem.”

Opposition wasn’t limited to Republicans.

Democratic Sen. Max Baucus of Montana announced he was against the measure because of a provision to bail out transit agencies. 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 tax shelters — have gone sour.

At the White House, Deputy Chief of Staff Joel Kaplan told reporters at a late-morning briefing that the administration had yet to read the fine print of its “conceptual agreement” with congressional Democrats.

However, he indicated clear support, saying Bush would personally lobby Republicans.

House Republicans swiftly voiced their opposition and called for a plan that would instead provide government insurance to subsidize new private investment in the Big Three automakers, demand major labor givebacks and debt restructuring at the companies, and encourage them to declare bankruptcy.

Rep. John A. Boehner, R-Ohio, the minority leader, said the legislation “asks taxpayers to further subsidize a business model that is failing to meet the needs of American workers and consumers.”

Under the bill being considered Wednesday, the carmakers would have to submit blueprints on March 31 to the industry overseer showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.

The carmakers initially asked Congress for $25 billion, then returned two weeks later to plead for as much as $34 billion. But with the White House refusing to dole out new spending for the Big Three, congressional Democrats agreed to use an existing program that was to help carmakers retool their factories to make more fuel-efficient cars.

That fund yielded only $15 billion in emergency loans, and when negotiators agreed to leave some money in the environmental program, the amount fell to $14 billion.

A breakthrough came when Democrats agreed to scrap language — which the White House had called a “poison pill” — that would have forced the carmakers to drop lawsuits challenging tough emissions limits in California and other states.

There was still heartburn among Republicans, however, over language that would force the automakers to abide by those states’ limits. Democrats insisted on it as a kind of consolation prize for environmentalists, who already were livid at the raid of the fuel-efficiency program.

Kaplan said the Bush administration would work with President-elect Barack Obama’s team on choosing the so-called “car czar,” acknowledging that Bush’s tenure ends soon and the automakers’ woes will continue well into 2009.

Obama defended the auto bailout as necessary given the threat a potential Big Three collapse could pose to an already battered economy.

“As messy as it may be, I think there’s a sense of, ’Let’s stabilize the patient,”’ he said in an interview published in Wednesday’s Chicago Tribune and Los Angeles Times.

The car czar would have say-so over any major business decisions by the automakers while they were taking advantage of federal aid, with veto power over any transaction of $100 million or more. The companies — including the private equity firm Cerberus, which owns a majority stake in Chrysler — would have to open their books to the government overseer.

If Chrysler defaulted on its loan, Cerberus would be responsible for reimbursing the government.

Also included in the bill is an unrelated pay raise for federal judges.