House to Consider Auto Aid
Chamber to Reconvene To Vote on Bailout Funds

By Lori Montgomery and Michael Abramowitz
Washington Post Staff Writers
Wednesday, November 12, 2008

The House will convene next week to vote on a plan to provide emergency cash to the nation's battered automobile industry, Speaker Nancy Pelosi said yesterday, but a federal bailout for Detroit faces an uphill battle in the Senate and an uncertain fate at the White House.

In a written statement, Pelosi (D-Calif.) said that the failure of one of the car companies "would have a devastating impact on our economy" and that Congress must "provide emergency and limited financial assistance" by adding the industry to the Treasury Department's $700 billion economic rescue program, which was designed to stabilize the U.S. banking system.

Pelosi did not spell out details of the proposal but designated House Financial Services Committee Chairman Barney Frank (D-Mass.), a key architect of the Treasury program, to work with lawmakers in both chambers to craft the measure. Congressional Democrats -- and Michigan Republicans -- are pressing to carve $25 billion out of the Treasury program as a bridge loan to help the car companies survive an economic crisis that analysts say has pushed the industry to the brink of collapse.

The cash would come with the same restrictions placed on other participants in the Treasury program, Pelosi said, including limits on executive compensation, a ban on golden parachutes, and other "taxpayer protections to ensure that any companies that benefit from this assistance -- and not the taxpayers -- bear the full burden of repaying any costs that are incurred."

The move would greatly expand the reach of the government into the private sector and could touch off a mad scramble in other industries to claim a piece of the Treasury's bailout money. The Bush administration has rebuffed calls from Pelosi, Senate Majority Leader Harry M. Reid (D-Nev.) and President-elect Barack Obama, among others, to use the broad discretion Congress granted Treasury Secretary Henry M. Paulson Jr. to aid the car companies without further legislation.

But the White House has not ruled out the possibility of signing a measure that would amend the Treasury program to include the auto industry specifically.

"We'll have to see what Speaker Pelosi is proposing," White House spokesman Tony Fratto said yesterday. "Right now, the . . . program is being used consistent with the law and congressional intent. If Congress wants to change the law, we'll see how they intend to do it."

A stumbling block may be the Senate, where Republicans control 49 seats until the new Congress is seated in January. Many Republican senators were attacked on the campaign trail by Democratic opponents for supporting the original Treasury bailout legislation last month and probably won't be in the mood to expand the program to the car companies, Senate aides said.

A USA Today/Gallup poll taken over the weekend found that helping the auto industry and other big firms ranks low on the public's list of economic priorities, with just one in five of those surveyed saying such assistance is "critical" or "very important."

Reid seemed to acknowledge as much yesterday. "Senate Democrats are committed to doing all we can to help the auto industry," he said in a written statement. "But until next year, we still have the slimmest of majorities in the Senate; this will only get done if President Bush and Senate Republicans work with us in a bipartisan fashion."

The $25 billion would come on top of $25 billion in low-interest loans Congress approved in September for the car companies to retool factories to produce more fuel-efficient vehicles. And the United Auto Workers plans to press next year for an additional $15 billion in public funds to cover the first payment the three companies are due to make into a new independent entity that will fund retiree pensions and health benefits.

Help for Detroit is just one piece of a broader economic agenda that could be addressed in the final session of Congress before Bush leaves the White House. Pelosi has called for approval of as much as $100 billion in new federal spending to stimulate economic activity and combat the most painful effects of a looming recession, a proposal opposed by the Bush administration. The White House wants passage of a long-stalled free-trade agreement with Colombia that would open the Central American nation to U.S. exports while rewarding President Álvaro Uribe, a stalwart U.S. ally. But that pact has been opposed by labor leaders and key Democrats.

All three topics were discussed Monday when Obama spoke with Bush during his first visit to the Oval Office. But the Obama transition leader John D. Podesta and the White House yesterday rejected reports that the two men had discussed the possibility of a deal in which Bush would sign off on an economic stimulus package and help for the car companies if Democrats would approve free trade with Colombia.

"The president did not suggest a quid pro quo" during his meeting with Obama, White House press secretary Dana Perino told reporters traveling with Bush for a Veterans' Day visit to the Intrepid Sea, Air and Space Museum in New York. She acknowledged, however, that Bush spoke with Obama "about the merits of free trade."

During his first official briefing at Obama's transition headquarters in Washington, Podesta echoed Perino's words. "While the topic of Colombia came up, there was no quid pro quo in the conversation," Podesta said.

"Those things just shouldn't be linked," Podesta insisted, adding that he had a conversation with Bush's chief of staff on Monday during which there was "no linkage" between Colombia and an economic stimulus package. "We need to deal with the current crisis of our economy, and the Colombia Free Trade Agreement should be dealt with on its own merits."

Podesta said Obama's discussion with Bush was "definitely not a negotiation," but senior Obama aides said the Republican White House is continuing to push Congress to act on the Colombian trade issue as part of behind-the-scenes economic discussions. House Democrats, meanwhile, insisted that the trade agreement would not be approved. "It's not going to be brought up. We've made that clear all along," said Rep. Sander M. Levin (D-Mich.), a champion of the auto industry who chairs a House subcommittee on trade.

The White House and Democrats are maneuvering in advance of next week's meeting on Capitol Hill, known as a "lame-duck" session because it includes lawmakers who are retiring or were defeated in Tuesday's election. The session offers Bush a final chance to enact a critical piece of his trade agenda and presents Democrats an opportunity to get a jump on addressing the economic crisis before Obama takes office in January -- if the two sides are willing to compromise.

For his part, Bush signaled his interest in the session after helicoptering yesterday to the flight deck of the USS Intrepid, the aircraft carrier that is now a museum on the west side of Manhattan.

As he recognized Rep. Charles B. Rangel (D-N.Y.), chairman of the House Ways and Means Committee, and other lawmakers in the crowd, Bush joked: "Looking forward to that lame-duck session, aren't we?"

Staff writers Michael Shear and Kendra Marr contributed to this report.

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