April 17, 2009 4:01 PM
- Text
White House, Dems Clash Over Auto Bailout
(CBS/AP)
Senate Democrats are proposing to deny bonuses to U.S. auto executives making more than $250,000 a year in exchange for giving the firms and their suppliers $25 billion in loans from the $700 billion Wall Street bailout.
The companies would first have to give the government a plan for "long-term financial viability," according to a copy of the legislation obtained by The Associated Press.
The loans - which would start at a 5 percent interest rate - would come from the second half of the financial industry rescue money.
The measure also would extend jobless aid to unemployed workers whose benefits have run out.
With Congress returning Monday to deal with an auto industry in dire financial straits, the Bush White House stressed that it supports help, but not at the expense of the $700 billion Wall Street rescue program.
With the Senate ready to start work on assistance to the industry, press secretary Dana Perino issued a statement saying the administration "does not want U.S. automakers to fail." She complained that reporting on the White House's statements on this issue has involved "attempts to shorthand the administration's position."
Perino's early morning statement also made clear, however, that the administration steadfastly opposes drawing funds from the bailout plan to help Detroit. She said the $25 billion that Democrats favor taking from the rescue plan should come, instead, from a Department of Energy program previously approved and funded to develop fuel-efficient vehicles. The White House opposes the idea of automakers getting an additional $25 billion.
Democrats want to use part of the $700 billion Wall Street bailout for emergency loans to help prop up the Big Three carmakers. General Motors Corp., Ford Motor Co. and Chrysler LLC are seeking an infusion of $25 billion, a figure that several Senate Democrats embraced Sunday.
Meanwhile, the Bush administration has told top lawmakers it does not plan to use at least half of the $700 billion bailout fund that Congress approved this fall to aid the financial industry, congressional officials said. The Treasury Department denied the claim, but stopped short of saying the funds would be tapped.
The officials, who spoke on condition of anonymity, said Treasury Secretary Henry Paulson passed the word over the weekend that he intends to leave $350 billion untouched when the administration leaves office on Jan. 20. That would mean the incoming Obama administration would decide whether and how the funds should be spent.
While each of the "Big 3" auto-makers is in dire shape, CBS News Chief White House correspondent Jim Axelrod reports General Motors is hemorrhaging cash faster than the others. The company could be out of money before the end of the year.
"What we've said is there's a high degree of urgency," says GM CEO Rick Wagoner.
The Big 3 employ roughly a quarter of a million people. General Motors alone has 133,000 workers. Suppliers for the carmakers employ 2.3 million more in all 50 states.
"This is a very fragile, but very well-connected, tightly woven web, that when you impact it at the very top, you start this cascading impact that we just don't want to see," says industry analyst David Cole, Chairman of the Center for Automotive Research.
And while foreign car makers manufacturing in the U.S. could take up the slack - like Honda, which opened a new plant in Indiana today - they share many suppliers with the Big 3 and would be hit hard by the domino effect caused by failures in Detroit, Axelrod reports.
That's the argument GM made at the White House this weekend; that if General Motors and the others go belly up, the cost to the government in terms of lost taxes, and paying into pension plans would be a lot more than $25 billion.
Perino said the White House agreed, but insisted that any bailout for the auto industry ought to be paid for out of an existing program.
"We believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers - from the $25 billion Department of Energy loan program," Perino said.
She said the $700 billion rescue program "was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector." Perino also said that any new legislative effort to help the big carmakers should require that those manufacturers are viable companies, ones willing to restructure themselves for the long term.
President-elect Barack Obama said he believes aid for the auto industry is needed but that it should be provided as part of a long-term plan - not simply as a blank check.
"For the auto industry to completely collapse would be a disaster in this kind of environment," Mr. Obama told 60 Minutes' Steve Kroft in an exclusive interview aired Sunday night.
"My hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan - what does a sustainable U.S. auto industry look like?"
4575468House Speaker Nancy Pelosi, D-Calif., has embraced an auto bailout, though she hasn't set a price tag. But passage is less certain in the Senate, where majority Democrats will need at least a dozen GOP votes to prevent opponents from blocking their measure.
On Sunday top Republican senators said using any of the Wall Street bailout money to help carmakers would be a mistake. Sen. Richard Shelby of Alabama called the U.S. auto industry a "dinosaur" whose demise would simply be stalled by a bailout.
"I don't believe the $25 billion they're talking about will make them survive," said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee. "It's just postponing the inevitable."
Shelby spoke on NBC's "Meet the Press."
Congressional Democrats have some internal power struggles to settle this week.
The House's longest-serving member, 82-year-old John Dingell of Michigan, is fighting to keep the chairmanship of the powerful Energy and Commerce Committee. And in the Senate, Democrats will have their own showdown Tuesday when they decide whether to strip independent Sen. Joe Lieberman of Connecticut of his chairmanship of the Homeland Security and Governmental Affairs Committee.
The companies would first have to give the government a plan for "long-term financial viability," according to a copy of the legislation obtained by The Associated Press.
The loans - which would start at a 5 percent interest rate - would come from the second half of the financial industry rescue money.
The measure also would extend jobless aid to unemployed workers whose benefits have run out.
With Congress returning Monday to deal with an auto industry in dire financial straits, the Bush White House stressed that it supports help, but not at the expense of the $700 billion Wall Street rescue program.
With the Senate ready to start work on assistance to the industry, press secretary Dana Perino issued a statement saying the administration "does not want U.S. automakers to fail." She complained that reporting on the White House's statements on this issue has involved "attempts to shorthand the administration's position."
Perino's early morning statement also made clear, however, that the administration steadfastly opposes drawing funds from the bailout plan to help Detroit. She said the $25 billion that Democrats favor taking from the rescue plan should come, instead, from a Department of Energy program previously approved and funded to develop fuel-efficient vehicles. The White House opposes the idea of automakers getting an additional $25 billion.
Democrats want to use part of the $700 billion Wall Street bailout for emergency loans to help prop up the Big Three carmakers. General Motors Corp., Ford Motor Co. and Chrysler LLC are seeking an infusion of $25 billion, a figure that several Senate Democrats embraced Sunday.
Meanwhile, the Bush administration has told top lawmakers it does not plan to use at least half of the $700 billion bailout fund that Congress approved this fall to aid the financial industry, congressional officials said. The Treasury Department denied the claim, but stopped short of saying the funds would be tapped.
The officials, who spoke on condition of anonymity, said Treasury Secretary Henry Paulson passed the word over the weekend that he intends to leave $350 billion untouched when the administration leaves office on Jan. 20. That would mean the incoming Obama administration would decide whether and how the funds should be spent.
While each of the "Big 3" auto-makers is in dire shape, CBS News Chief White House correspondent Jim Axelrod reports General Motors is hemorrhaging cash faster than the others. The company could be out of money before the end of the year.
"What we've said is there's a high degree of urgency," says GM CEO Rick Wagoner.
The Big 3 employ roughly a quarter of a million people. General Motors alone has 133,000 workers. Suppliers for the carmakers employ 2.3 million more in all 50 states.
"This is a very fragile, but very well-connected, tightly woven web, that when you impact it at the very top, you start this cascading impact that we just don't want to see," says industry analyst David Cole, Chairman of the Center for Automotive Research.
And while foreign car makers manufacturing in the U.S. could take up the slack - like Honda, which opened a new plant in Indiana today - they share many suppliers with the Big 3 and would be hit hard by the domino effect caused by failures in Detroit, Axelrod reports.
That's the argument GM made at the White House this weekend; that if General Motors and the others go belly up, the cost to the government in terms of lost taxes, and paying into pension plans would be a lot more than $25 billion.
Perino said the White House agreed, but insisted that any bailout for the auto industry ought to be paid for out of an existing program.
"We believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers - from the $25 billion Department of Energy loan program," Perino said.
She said the $700 billion rescue program "was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector." Perino also said that any new legislative effort to help the big carmakers should require that those manufacturers are viable companies, ones willing to restructure themselves for the long term.
President-elect Barack Obama said he believes aid for the auto industry is needed but that it should be provided as part of a long-term plan - not simply as a blank check.
"For the auto industry to completely collapse would be a disaster in this kind of environment," Mr. Obama told 60 Minutes' Steve Kroft in an exclusive interview aired Sunday night.
"My hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan - what does a sustainable U.S. auto industry look like?"
4575468House Speaker Nancy Pelosi, D-Calif., has embraced an auto bailout, though she hasn't set a price tag. But passage is less certain in the Senate, where majority Democrats will need at least a dozen GOP votes to prevent opponents from blocking their measure.
On Sunday top Republican senators said using any of the Wall Street bailout money to help carmakers would be a mistake. Sen. Richard Shelby of Alabama called the U.S. auto industry a "dinosaur" whose demise would simply be stalled by a bailout.
"I don't believe the $25 billion they're talking about will make them survive," said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee. "It's just postponing the inevitable."
Shelby spoke on NBC's "Meet the Press."
Congressional Democrats have some internal power struggles to settle this week.
The House's longest-serving member, 82-year-old John Dingell of Michigan, is fighting to keep the chairmanship of the powerful Energy and Commerce Committee. And in the Senate, Democrats will have their own showdown Tuesday when they decide whether to strip independent Sen. Joe Lieberman of Connecticut of his chairmanship of the Homeland Security and Governmental Affairs Committee.
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