By Lori Montgomery and Kendra Marr
Washington Post Staff Writers
Saturday, December 6, 2008
Jolted by news of the worst job losses in more than 30 years, congressional Democrats were near an agreement with the White House yesterday on a plan to speed at least $15 billion to the faltering Detroit automakers in hopes of averting the collapse of an industry that supports millions of U.S. jobs.
In talks with White House Chief of Staff Joshua B. Bolten, House Speaker Nancy Pelosi (D-Calif.) dropped her long-standing opposition to tapping a loan program created by Congress to fund the development of fuel-efficient cars. Pelosi agreed instead to use the money to provide immediate cash to General Motors and Chrysler. Without government help, GM executives have said their company may not survive the month.
Pelosi is insisting, however, that money pulled from the loan program be "replenished in a matter of weeks so as not to delay that crucial initiative," she said in a statement. The White House has yet to agree to those terms, senior congressional aides said, but Democrats believe President Bush would be unlikely to veto a bill over those provisions.
The apparent breakthrough comes as the House and the Senate prepare to return to Washington next week to respond to requests from the Detroit automakers for as much as $38 billion to help them survive the economic downturn. The auto executives appeared on Capitol Hill for a second day yesterday, making a desperate plea for the funds. News that the nation had shed 533,000 jobs in November -- the most since 1974 -- added urgency to their appeal.
"Today's announcement of major job losses and findings from Congressional hearings from the last two days make it clear that Congress must work on a bipartisan basis to provide short-term and limited assistance to the automobile industry while it undertakes major restructuring," Pelosi said in a statement.
The sums being discussed by lawmakers and the White House fall well short of the automakers' request. Democratic aides said they are talking about providing $15 billion to $17 billion, which would be expected to see GM and Chrysler through the end of March, when president-elect Barack Obama would be in position to take over long-term plans for returning the industry to profitability.
Ford, which is also seeking access to a government-funded line of credit, has said it would not need an immediate infusion of cash unless economic conditions deteriorate dramatically.
Democrats had urged the Bush administration to use a portion of the $700 billion rescue program to help the car companies, but Treasury Secretary Henry M. Paulson Jr. has insisted that those funds be reserved for stabilizing the still fragile U.S. financial system. Democrats were considering legislation to force Paulson to act, but they said it became clear yesterday that Republicans had the votes to block that move in the Senate.
Earlier in the day, the administration made a fresh push for its proposal to use the loan program that Congress approved in the fall. Addressing the new jobless numbers in an appearance at the White House, President Bush said he was "concerned about the viability of the automobile companies" as well as "those who work for the automobile companies and their families." He urged Congress to act next week to tap the loan program "so long as the companies make hard choices on all aspects of their business to prove that they can not only survive but thrive."
Within hours, Pelosi was on the phone with Bolten. Administration officials sent lawmakers a detailed proposal to create a "financial viability adviser" within the Commerce Department. That person would be authorized to conduct negotiations between the car companies, their creditors and the unions to map a path toward profitability. The adviser also would have the power to extend bridge loans to any company facing the threat of bankruptcy by tapping the existing loan program.
Under the White House proposal, any company that accepted federal help would face limits on executive compensation and bonuses, a ban on golden parachutes and a ban on paying dividends to shareholders during the life of the loan.
Those details remained the subject of negotiations, with some Democrats pressing for additional taxpayer protections, including a full oversight board with several members rather than an individual "car czar," as some have dubbed it.
Negotiators from the Senate Banking Committee and the House Financial Services Committee were scheduled to meet today to hammer out their own version of the proposal. Pelosi and Senate Majority Leader Harry M. Reid (D-Nev.) said they expect their chambers to vote on it next week.
While congressional leaders and the Bush administration have agreed on the broad outlines of a plan, congressional aides said there is no guarantee that a majority of lawmakers will support it. Many Republicans -- and a sizable number of Democrats -- feel they were rushed into approving the financial system bailout, which many contend has been badly mismanaged. With polls showing a majority of the public opposed to helping the automakers, many lawmakers in both parties are reluctant to use taxpayer money to prop up what many view as a failing industry.
"There is great unhappiness among the rank and file," said one Democratic leadership aide. "We're hoping they're less unhappy now because the automakers have been more contrite" than when they first came to Capitol Hill to ask for help two weeks ago.
Yesterday, there were signs that the automakers' condition continues to worsen. GM announced it was laying off another 4,600 workers. Meanwhile, Chrysler said it had hired a law firm, Jones Day, to provide counsel on a possible bankruptcy filing.
House Financial Services Committee Chairman Barney Frank (D-Mass.) said that yesterday's jobless numbers, coupled with the precarious condition of the car companies, should serve to galvanize lawmakers to action.
"It is clear how badly the economy is now suffering," Frank said. "This is a terrible time to make things worse."