White House, Congress Reach Deal on Auto Bailout

Posted December 5, 2008 at 9:32pm

Updated: Dec. 6, 8:27 a.m. Congressional leaders and the White House have reached an agreement in principle on a deal to bail out the struggling auto industry, with Democrats hoping to secure just enough funding to keep the automakers afloat until the new Congress is in office. But Democratic aides cautioned that any deal among the leaders will have to be vetted next week by the rank and file when Members return to Washington, D.C. Plus, some details have not yet been worked out with the White House. Still, Speaker Nancy Pelosi (D-Calif.) appeared to make a major concession on how to fund the automaker aid by agreeing in a conference call with the White House earlier Friday to drop her objection to using an existing loan fund intended to help car makers build more fuel-efficient vehicles. House aides had indicated Thursday that she was considering such a move. However, the plan currently being floated would simply use those funds for short-term loans and Congress may have to come back in January to restore the fuel-efficiency loan program with a larger bailout of the auto industry next year. Pelosi is hoping that President George W. Bush will sign a bill that requires the funds to be replenished in January, but Democrats may wait until President-elect Barack Obama takes office to deal with the issue. Either way, Congress will likely need to write another larger rescue bill early next year to prevent automakers from collapsing. Pelosi and many other Democrats had held out for the funding to come from the $700 billion financial industry bailout that they passed earlier this year, but the White House and Treasury Department flatly refused to use what many Congressional leaders had contended was existing authority under the financial industry rescue plan. “Congress is considering various short term funding options for the American automobile industry. We will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative,” Pelosi said in a statement released Friday night. “Regardless of the source, all funding needs will be tightly targeted with vigorous supervision and guaranteed taxpayer protection.” The legislation is also expected to include an oversight entity to ensure that the funds are properly disbursed and used. The House and Senate are expected to consider the auto bailout package next week during a lame-duck session of Congress.