Road Map: Members Warm to Package With Strings
The White House and Democratic leaders appeared close to a deal late Monday on a $15 billion lifeline for domestic automakers, but the plan still has to be vetted with rank-and-file lawmakers before votes later this week.
[IMGCAP(1)]The two sides have agreed on the loan concept with only relatively minor disagreements remaining, House Financial Services Chairman Barney Frank (D-Mass.) said. Frank and Speaker Nancy Pelosi (D-Calif.) sounded confident at a Monday afternoon press conference that a bill would be passed later this week.
The biggest roadblock to the deal ended last week when Pelosi acceded to White House demands that the money come from a $25 billion fuel-efficiency program. Pelosi, Frank and other Democrats said the money would be restored to the fuel-efficiency program quickly in the next Congress, probably as part
of a massive recovery package now in the works.
Democrats and the White House are negotiating details of a tough oversight plan for the loans, which would give the government the ability to call the loans if the companies failed to show steps toward restructuring and viability.
Frank also said taxpayers would be protected because the loans would have to be repaid before other auto company debt in the event that any of the companies declare bankruptcy. General Motors has said it might need billions by the end of the month, and much more next year, to stay afloat, after the credit crunch and recession caused the market for new vehicles to crash. Chrysler is also expected to use the funding, while Ford has a larger cash cushion and might not need to take the loans.
All of the industrys stakeholders bondholders, executives, labor will have to pitch in, Pelosi said. We call this a barbershop, she said. Everybodys going to have to take a haircut.
She added that she was encouraged by the discussions.
We will not give up on our auto industry, she said.
According to Frank, the White House was objecting to a provision giving the government overseers appointed by the president veto power over investments larger than $25 million by companies receiving the loans. It also objected to a provision restricting the companies from suing states over emissions standards. The White House also wanted firmer language requiring a long-term viability plan.
Frank said the $25 million approval was needed to mollify lawmakers worried the bailout money could be used to send jobs overseas, saying the issue was similar in importance to the requirement for executive compensation restrictions in the $700 billion financial rescue package. The lawsuit language has been important to environmental groups and Pelosi, but Frank noted that even if the language remains in the bill, it would not mean an end to the lawsuits because other parties are also suing. Republicans, including House Minority Leader John Boehner (Ohio), have strongly objected to effectively forcing the companies to spend more money to meet separate federal and state emissions standards.
By giving automakers less than half of the $34 billion they requested and with many more strings attached, GOP and Democratic aides said it could be an easier vote for bailout-leery lawmakers than it first appeared.
Democrats also effectively keep the auto companies on a short leash and will effectively give President-elect Barack Obama the ability to devise a longer-term plan.
One issue that has been a hot button, politically whether to force chief executive officers to resign before their companies get aid was punted by Frank. He said that would be left to the federal loan overseers to decide.
Questions linger about the extent of Senate Republican support for the bill, given the cautious statements put out by GOP leaders and rank-and-file Members. One senior Senate Democratic aide said Senate Minority Leader Mitch McConnell (R-Ky.) was invited to participate in talks over the weekend or to send a proxy, but declined.
One senior Senate GOP aide said Republican leaders felt comfortable that the White House was in there. McConnell has offered vague remarks about the proposals being floated.
Republicans insist that any proposal aimed at helping the auto industry include a firm commitment on its part of significant and fundamental reform, McConnell said on the floor Monday. Troubled automakers cannot expect taxpayers help without a serious commitment to change their ways permanently.
Sen. Judd Gregg (R-N.H.) said he remained concerned about committing federal dollars for the Big Three without any clear strategy that the money will be put to good use and repaid. After decades of mistakes, these companies as well as the UAW, bondholders and others first need to agree to a meaningful plan for how they will become economically competitive, including specific concessions from all the stakeholders involved.
It was unclear whether the restructuring plans carmakers have provided to Congress were sufficient, or whether language in the draft bill to appoint an oversight board to demand reforms and even recall loans would be enough to secure GOP support.
We do not have Republican buy-in yet, said one Senate Democratic leadership aide. Talks between McConnell and Senate Majority Leader Harry Reid (D-Nev.) were just beginning as of press time Monday.
Still, it became increasingly likely that the Senate would be ready to vote as early as Wednesday afternoon, if the Bush White House signed off on the measure on Monday evening.
Aides said its not clear whether the Senate would go first, but such a move would presumably help pass the bill in the House. House Democratic leaders will want to be sure they have the votes before bringing the bill to the floor after the $700 billion financial bailout failed the first time out, sending markets plummeting.