White House, Dems Clash Over Auto Bailout

Administration Resists Using Money From $700B Rescue Package To Help Big 3 Carmakers

(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?"

House 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.

[tonykim42]

Steve Kroft, CBS News did not ask Obama how $150,000,000.00 donation from UAW to Obama%u2019s election
helped the big 3 auto industries to avoid their bankruptcy: The executives of 3 big auto industries have been
mismanaging their extreme resources last 30 years just like Obama had been taking
advantage of the honorable Federal Student Loan System till he decided to run for the presidency!

Neither Steve Kroft, CBS News did ask Obama how Obama%u2019s life time taking
advantage of the honorable Federal Student Loan System helped the executives of Fannie
Mae & Freddie Mac, Lehman Brothers, Bear Sterns and AIG to avoid their taking advantage
of the Washington for the duration of their organizations!

Nor Steve Kroft, CBS News did remind Obama how %u201CThe drop hollows the stone,
not by its force, but by its frequency%u201D.

[zervyn-2009]

Maybe GM shouldnt of axed the awesome electric car they had 10 years ago. Anyone who hasnt seen Who killed the electric car? should. They are in the position now because of poor choices in the past. Its their own fault. I read that the second generation EV-1 got 75-150 miles per charge, so why does the chevy Volt only get 40 miles per charge almost 10 years later? You can add on a gas engine to make it go farther, Hmmmm could the oil companies have anything to do with that? Let them go bankrupt!!!!!!

[noloyalisti]

JUST IMPEACH AND GET IT OVER WITH. I have been working on this for 5 years, I don''t see who (except more of the corporate fascists) would be against it. I wanted to impeach Bush-Cheney before they killed again (and then they did). Before they gave their fascist friends more welfare (and then they did). There is still time to make it right.

[lanalang2]

I''m worried about the ecomony and what would happen if the auto makers don''t get help. But on the other hand where were they when I needed to get a car, they turned me down for bad business decisions, maybe they could apply for a loan with me,the taxpayer who will pay for their bad decisions. Needless to say they would not get the loan.

[coldngb]

Will the bailout be used for executives bonuses like the financial bailout? Can''t wait to get my Smart car that I ordered....

[slim1h2o]

I don''''t know why people keep om trying to blame the workers, when the problem is as clear as the nose on your face. The workers built what they were told to build.

Management told the workers what to build, which for years was junk, or close to it.
They were unreliable, broke down often, and if you were lucky got 80.000 to 90.000 miles out of them. Meanwhile, their Japanese counterparts were reaching 150.000 miles, and ran better doing so. Why should Americans go back to their Fords, Chevys'' and K-cars.


Even when their quality improved, they had lost so much market to the Japanese, that they couldn''''t recover fully. And too answer the Japanese and others, they started building these giant SUV''''s. Sure some people wanted them, but they started to become a status symbol, and people wanted them for only that reason.

What they should have done is to put their R&D money into cars that would have answered directly to the Japanese, as opposed to trying to avoid them, in a different market class.

Slowly people would have started drifting back to Detroit built cars. But their reputation stopped a lot of people from going back to Detroit cars.

Even their styling has a lot to be desired...

[getoffmine1]

let them go down. This is one of the only times i can say I agree with the repubs. If you want to bail anyone else out it had better be the middle class. Take 700 billion and divide it up by the number of homeowners in the U.S. and send us all checks.

[chitown4716]

DETROIT need to make fuel efficient vehicles and STOP making these SUV''''s that are gas hogs. Americans need to learn to conserve and also need to learn to say NO TO THEM SELVES and live with less. It sucks that the Tax Payer is being asked to Bail out DETROIT !


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Posted by Colt8881

Funny, not many folks were saying that Detriot should stop making SUVs just a few short years ago when SUVs and trucks were KING. Americans were in love with big SUVs especially when the trend was the ''bigger the better''. Americans were buying big, with EXICALADES, HUMMERS, NAGIVATORS and EXPLORERS. And everyone loved it, the automakers were making money, the oil companies were making money and the consumers were happy. Automakers only made SUVs because Americans were buying them. Just go look at any grocery store parking lot in the country, and you will find dozens upon dozens of SUVs, in most cases out numbering traditional cars.

Its was only when the gas prices started hitting record levels and the economy went in the krapper, that was when we as Americans started questioning why automakers were making the products that we once demanded....

[tbuckl]

All hands on deck! All hands on deck! She is going down at the bow, abandon ship! abandon ship! Man the life boats. All hands on deck, this is not a drill, this is not a drill, man the life boats. Mayday mayday this is USS American we are taking on water and going down, Mayday mayday this the USS Americna we are taking on water and sinking, life boats are being deployed, we are abandoning ship at this time.

[chitown4716]

Yes, by extortion, racketeering and whatnot. The "Unions" that you claim built this nation was run by organized crimelords and took the american worker for all they were worth.


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Posted by hologram5

You act as though the Unions make demands and the company executives have no choice but to agree to their demands. The company executives and their lawyers have a duty to sign on to labor contracts that are fair to all parties and allows the company to profit, thrive and be competetive in today global market.

When labor contracts are signed, the company executives signatures are on the contract as well. No one is forcing company executives to sign on to labor agreements that would doom the future of the company.

Unions and their members want the companies they work for to succeed just as much or more as the company executives.

[colt8881]

ONCE AGAIN the AUTO INDUSTRY needs a bail out. Its 100% their fault these IDIOTS rode the SUV wave until the bubble burst and now Detriot had made it Everybodys Problem. If we dont bail out the Auto Industry then there will be a huge ripple effect and suppliers will lay off people and it will make the problem worse.

DETROIT need to make fuel efficient vehicles and STOP making these SUV''s that are gas hogs. Americans need to learn to conserve and also need to learn to say NO TO THEM SELVES and live with less. It sucks that the Tax Payer is being asked to Bail out DETROIT !

[cntrymuzksux]

Let the socialist democraps use the little slush fund of $25 BILLION just handed to them in September that the democraps want to keep in their hands so they can control it and suck off the financial market money instead.

Posted by Rowdydfw at 08:30 AM : Nov 18, 2008

Slush fund indeed. I''ve stated this before, I think we need to keep the auto industry solvent - at least until we are able to get a handle on this current economic situation. I have to say though that pulling monies from the financial bailout is not the right direction to go.

Using the DOE fund the Republicans are referring to is the smart play on this one.

[hologram5]

Union Workers BUILT this nation and created the working class.
------------------------------------
Yes, by extortion, racketeering and whatnot. The "Unions" that you claim built this nation was run by organized crimelords and took the american worker for all they were worth.

[chitown4716]

That little slush fund she created so she can keep funneling government money through pet anti-American corrupt entities like ACORN and LA RAZA so they can be assured of those votes.


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Posted by Rowdydfw

CRAZY TALK....All you have is CRAZY TALK....no wonder the REPUBLICANS ARE THE BIGGEST LOSERS this election season. Because, the loudest voices for the party are those that indulge in CRAZY TALK.....

[rando55]

Simply amazing how everyone saying "bail them out" are the people affiliated with these jobs that are in jeopardy. They claim they are worked so hard for their pay, well I''ve got news, there are a lot of otheres out there working hard too, and for much less pay. Suppliers have had to lower costs of their products being assembled in these cars, by cutting jobs, decreasing benefits, compete with overseas markets for many years so these comapanies can make a bigger margin of profit. Its time for the Big 3 to take some responsibility also.

Americans are getting tired of paying for other peoples profits and mistakes by making the majority pay for the few concerned.

[hitoyou1]

No. No Bailout. Let them file for bankruptcy and then the courts can automatically renegotiate those obscene Union Contracts back to sanity.

The BODY is dead. You can''''t stop it now. As I said NOBODY buys cars as it is. Keeping the same FAILED system afloat won''''t fix it.

I could not agree more. NO BAILOUT for the NUTS. Automaker, they make JUNK.

[promaclaura]

People, you are missing the point! Bail them out with CONDITIONS NOW under the Bush Administration. When Barack gets in he will be paying his loyal voting block back without the major overhaul that is needed to make Detroit competitive. Do you really think the Democrats will slap this voting block in the face and lose them, no they want them and will only slap them on the wrist.

Also if the auto industry goes down, so will Michigan, no lie. REALITY is taxpayers are going to pay no matter what and I don''t want Jenny Granholm in charge of any money.

[irmcvet97]

Yeah, right. I have a friend that "retired" from Delco at the age of 48 sitting fat and happy because he had "seniority". I had another friend at GM that got 85% of full pay to be laid off for two months every year.

Give it a rest sweet pea.

Posted by FloydZeppd at 08:12 AM : Nov 18, 2008

So YOU are a LIAR!! You have NEVER been on an assembly line and you have NO idea what they do or how they do it. You are simply jealous of HOW they spent their earnings. You are jealous of how they negotiated THEIR share of the Profits back when those profits were VERY LARGE. Those Pension Plans are INVESTMENTS you know... THEY put money in those plans from THEIR wages. But regardless YOU are just jealous and haven''t done ONE minute of the work they do! THANKS for showing who you really are!! It''s great to know what our kids have to look forward too!

[irmcvet97]

Get real...Unions just helped crater the manufacturing industry in this country because they priced themselves out of jobs...

You have guys up there plugging in a part on an auto making more than most college graduates who''''ve spent thousands already getting their education.

It''''s lead Americans to stop achieving and educating themselves...

And now cars cost almost as much as a modest small home, for pete''''s sakes. Ane most of them aren''''t worth krap.

Now we''''ve sucked off the auto industry too long, have no skills...and find ourselves competing with the world for jobs. Innovation takes education. Without innovation and being on top with skills to stay on top, we''''re dead in the water.

Posted by Rowdydfw at 08:09 AM : Nov 18, 2008

You sound really jealous there sparky. It''s also a LIE! Union Workers BUILT this nation and created the working class. NONE of the safety and Working Condition Standards we enjoy would be there if not for Union''s. You act like Unions aren''t American''s and that American''s do not make up Unions. They do! But hey, you freaks have decided to trash them, to destroy that which has created ALL that you have, so have at it. I have other things I must do!!

[irmcvet97]

Doing what? Turning a wrench on an assembly line!

Way Over Paid. And no, he didn''''t deserve it. He wanted it handed to him.

Posted by FloydZeppd at 08:02 AM : Nov 18, 2008


I''m willing to bet the next house payment that YOU have NEVER been on an assembly line and have NO idea what they do. How about it Sparky! You are SO "SUPERIOR" to these American''s, so ready to trash their lives to satisfy your envy of them, how about it. How many HOURS have YOU spent on one of these lines? How do YOU know what their skills are? YOU are a pathetic LIAR who cares NOT for this nation... you care ONLY that someone YOU think your are superior to is making more than YOU think they should. Come on now admit it!!