Vote on Automaker Bailout Nears
Wednesday, December 10, 2008
The White House and congressional Democrats yesterday reached an "agreement in concept" on a plan that would throw a government lifeline to the faltering Detroit auto industry but require the auto giants, their workers and creditors to quickly negotiate a path to profitability or face the prospect of bankruptcy.
The agreement, which is set for a vote in the House today, calls for the government to speed $15 billion in emergency loans to the car companies as soon as next week, and for President Bush to immediately name a car czar to oversee the bailout. The companies would be required by March 31 to cut costs, restructure debt and obtain concessions from labor sufficient to report a "positive net present value," according to a senior administration official, speaking on condition of anonymity because final language was still under discussion.
If the firms failed to make progress toward that goal, the agreement would require the car czar to revoke the loans and develop a new plan that could include the option of seeking Chapter 11 bankruptcy protection, the official said. If the companies could not agree on steps to guarantee their long-term survival, they would be denied additional federal assistance.
The official said the agreement would create "three very serious sticks to ensure that this is truly what it was intended to be: bridge financing for firms that have a plan and a path to become competitive," rather than becoming "the first in a number of interminable loans that these guys can get to avoid making the hard choices."
The agreement cedes to the Bush administration its central demand that the auto giants move quickly to make changes in their operations or risk losing the government cash they need to stay in business. It also ensures that the car companies would be held to a tough standard after President-elect Barack Obama takes office.
Last night, the agreement was still being drafted into legislation. But the official said "there's an agreement on the concept and the way forward, and we're hoping to accomplish that as quickly as possible."
In the House, Democratic leaders were racing to make arrangements to bring the measure to a vote. With ambivalence toward another bailout running high among the public and many rank-and-file Democrats, House leaders arranged an "issues forum" yesterday in which Democratic lawmakers were able to ask questions about the proposal.
"There's a lot of skepticism," Rep. C.A. Dutch Ruppersberger (D-Md.) said afterward. "But people realize, for our auto industry to go into bankruptcy, I don't know if the markets could stand it."
The agreement faces a less certain fate in the closely-divided Senate, where Republican support is crucial to passage. Yesterday, a growing list of Republicans voiced opposition to the measure, and the White House began working to shore up GOP support.
Some Republicans said they were annoyed that they had been excluded from the negotiations. Others raised more fundamental objections, saying an early draft of the plan didn't go far enough to compel the auto giants to make changes and ensure that taxpayers are repaid.
Sen. John Ensign (R-Nev.) said he plans to use Senate rules to block the measure, which could delay a vote until early next week. "Unless major changes are made that I can be convinced of, it would take a lot for me to move off where I am," said Ensign, who opposes the idea of investing vast powers in an individual car czar.
Senate Majority Leader Harry M. Reid (D-Nev.) acknowledged the brewing battle in remarks on the Senate floor, but vowed to press ahead, even if it means keeping senators in Washington through the weekend. "We're going to have a vote on this sometime. We can either have it sooner or we can have it later," Reid said. "We cannot let a few people stop us from doing the people's business."