Democrats Unveil $15 Billion Emergency Loan for Big Three Automakers
Tuesday, December 9, 2008
Congressional Democrats and the White House yesterday settled on a plan to rush $15 billion in emergency loans to the cash-strapped Detroit automakers and were working into the night to resolve final disputes over the conditions the government should attach to the money.
Under the plan, unveiled by Democratic leaders, the Treasury Department would cut checks for the car companies as soon as next week. The proposal also calls for President Bush to name a "car czar" to manage a vast restructuring of the firms and restore them to profitability.
Democrats bent to the will of the president on several key demands, most notably in agreeing that the emergency funding would be drawn from an existing loan program aimed at promoting fuel-efficient technologies.
Still, the White House objected yesterday to several elements of the Democratic proposal, congressional aides said, including requirements that the car companies notify Washington of any transaction of more than $25 million and that they pull out of lawsuits against states seeking to enforce tougher tailpipe-emissions standards.
Under the proposal, the car companies would be required to submit detailed plans for restructuring by March 31, when they would be eligible for additional government assistance. The Bush administration was pressing to strengthen those provisions to make clear that only companies that were either financially viable or taking steps to achieve viability could receive more federal cash.
In a statement, White House press secretary Dana Perino said the two sides had "made a lot of progress in recent days" and that discussions were continuing over how to "help automakers restructure and achieve long-term viability."
"Long-term financing must be conditioned on the principle that taxpayers should only assist automakers executing a credible plan for long-term viability," Perino said.
Appearing briefly before reporters, House Speaker Nancy Pelosi (D-Calif.) said Democrats, too, are determined to force changes in the domestic auto industry, which had been losing customers to more nimble foreign competitors even before a deepening recession slashed demand for new cars to the lowest level in 25 years.
"Come March 31, it is our hope that there will be a viable automotive industry in our country with transparency and accountability to the taxpayer. We think that is possible," Pelosi said, adding that auto company executives, their employees, their shareholders and their network of local dealers all will be expected to make concessions.
"We call this a barbershop," Pelosi said. "Everyone is getting haircuts."
Talks continued late yesterday in Pelosi's Capitol Hill offices. Despite the administration's last-minute objections, both sides remained optimistic that a deal could be finalized and quickly presented to lawmakers for a vote.
"It is overwhelmingly likely that a bill will be on the president's desk by the end of the week," said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, whose staff was taking the lead in drafting the measure.