White House Auto Bailout Plan In Neutral

Pressure Mounts Over Administration's Promised Rescue Package For Ailing Industry

(CBS/ AP)  Just last week, on the heels of Congress' collapsed deal to help the ailing auto industry, the Bush administration boldly stepped forward, vowing swift action. Five days later, the White House has yet to announce a plan.

"We're trying to do something that's responsible," White House press secretary Dana Perino said Wednesday. A day earlier, Perino was blunter: "We are not going to be rushed into it."

As President George W. Bush's advisers ponder a rescue deal for the auto industry, the administration faces competing pressures from lawmakers in different congressional factions as it reviews its options for a bailout.

Conservative Republicans implored the White House not to use money from the $700 billion bailout for the financial sector to aid carmakers. A leading House Democrat, meanwhile, said the government should secure veto power over the companies' business decisions as part of any aid.

On Monday, President Bush suggested that a bailout package would come sooner rather than later. "An abrupt bankruptcy for autos could be devastating for the economy," Mr. Bush said. "This will not be a long process because of the economic fragility of the autos."

However, that same day, Perino tempered those comments, saying the administration wanted to hear more from all those involved, including key lawmakers and those in the industry. She said concessions need to be made in exchange for a rescue package that reportedly could reach $15 billion for General Motors Corp. and Chrysler LLC.

"I don't know of an imminent announcement coming from us," Perino said, suggesting that expectations for a quick decision were premature.

But a week after Congress failed to reach consensus on a $14 billion aid package for struggling General Motors Corp. and Chrysler LLC, several lawmakers pressed for an array of terms and conditions in any deal crafted by the White House, complicating matters.

Conservative lawmakers, many from Southern states that are home to Japanese auto plants, asked Mr. Bush not to use the $700 billion Wall Street rescue fund, known as the Troubled Asset Relief Program, to help the U.S. carmakers.

"Congress never voted for a federal bailout of the automobile industry, and the only way for TARP funds to be diverted to domestic automakers is with explicit congressional approval," wrote 26 GOP lawmakers, led by Rep. Jeb Hensarling of Texas.

Seven Senate Republicans led by Sen. Jim DeMint of South Carolina sent a similar letter saying that without restructuring, "we do not believe any amount of money will succeed in saving these companies."

Rep. Barney Frank, D-Mass., urged Treasury Secretary Henry Paulson to adopt the accountability provisions included in a House-passed auto bailout bill - the product of a deal with the White House - as a condition of any bridge loans to automakers.

The measure would have given a Bush-appointed "car czar" oversight over any major business decisions by the automakers while they were taking advantage of federal aid, including the power to veto any transaction of $100 million or more.

"Given the serious mistakes that senior auto industry executives acknowledge they have made in the past, such safeguards are absolutely necessary to ensure that taxpayers are protected and that the retooling of this critical industry proceeds as quickly as possible," Frank wrote.

The White House and Treasury Department were in talks with Sen. Bob Corker, R-Tenn., who has been seeking big union concessions in exchange for rescue money, on the terms and structure of a possible bailout, said a senior GOP congressional aide.

Corker came close last week to striking a deal with the United Auto Workers union for a $14 billion bill that would have forced the carmakers to bring their wages and benefits in line with those of Japanese auto companies in the U.S. by a specific date in 2009. The measure collapsed after the UAW refused to agree to wage cuts that quickly as Senate Republicans demanded. The new contacts with the administration were disclosed on condition of anonymity because the congressional aide was not authorized to divulge them.

GM and Chrysler have said they will run out of cash within weeks if they don't get help. Ford Motor Co. has said it has enough cash to survive 2009.

"I don't think that there's any possible way that this president would agree to allow taxpayer financing to go toward firms that are not willing to make tough decisions to become viable and competitive in the future," Perino said.

Mr. Bush said Tuesday that his administration was "considering all options" for helping the automakers. He said the already distressed economy could slide further into recession without prompt action.

"What you don't want to do is spend a lot of taxpayers' money and then have the same old stuff happen again and again and again," Mr. Bush told CNN. At the same time, he said, "we're trying to get this done in an expeditious way."

Options under consideration by the Bush administration include using part of the $700 billion fund to provide loans to the carmakers or using money from the fund as collateral for emergency loans to the automakers by the Federal Reserve.

[koyt1]

Could have had a deal, but the UAW refused to agree with wage cuts. Better to have no job than to agree to a wage cut? Makes UAW sense.

[jsd330]

Bush has been in nuetral for 8 years.Just look at his the expression on his face most of the time , he looks lost.

[bobnjersey]

[Throwing good money after bad has become the status quo for our mentally challenged corporate leaders. American ingenuity needs to make a come-back. And we need to make it happen now.]
[Posted by Grandesign at 01:45 AM : Dec 18, 2008]

and there''s no better opportunity than now to do that. instead of viewing the assistance the auto industry as a ''bail out'' ... it should be framed as an ''opportunity'' to direct their energies toward the future ... and a more appropriate business model for that future.

if the govt is assisting them financially ... it''s in a better position to define the key criteria for how the business should be run ... and the products they chose to produce.

if there were real leadership (in the us govt) there would be an integrated plan to support these industries ... promote efficient use of resources ... incentivize individuals away from wasteful practices and toward conservative ones via the tax code ... and define a long term plan for us competiveness around the world.

... and claiming ''let the free market take care of it'' is not anywhere near the level of leadership required.

[bobnjersey]

[Personally I would like to know who the idiots are (other than Fox News) who are giving this crackpot a 24 - 26% approval rating.]
[Posted by Stacy863 at 06:30 PM : Dec 17, 2008]

they''re called ''authoritarian followers'' ... described in detail here:

http://home.cc.umanitoba.ca/~altemey/

[assemblyofso]

Not one penny of taxpayer money should be used unless the top 5 executives at each firm are replaced, the next 500 managers take a 50% pay cut for two years, no bonuses are paid until profits are made and the UAW is dissolved.

Replace the top execs with proven business leaders not a stupid government nerd czar.

[zippiez]

Bush has not changed. He will do what does best: NOTHING.

In any case, whatever happens, the executives have nothing to worry about. As business works, executives ALWAYS can find a job, regardless of previous incompetance or outright criminality. Meanwhile, workers receive the shaft regardless of previous history.

This has been true since before the Egyptians became a civilization. It will continue to be true until time ceases.

[harp1963]

Every business George Bush has presided over has ended up in fiancial distress. What a joke this man is! All he can do now is blame labor, which is a pawn to the leadership of the organization. The design engineers are the true blame. For those of you who have never LABORED for a living, you have much to learn and do not understand why Jesus Christ came into this world as a Carpenter. Your pride in achieving more than your competition restricts you inot having insight into the humility of the repetitiveness of the sameness of everyday manufacturing. I feel sorry for you. What you understand in education can not replace the day to day grind of everyday manufacturing. The United Auto Workers and all others who labor for a living deserve every penny they earn.

Scripture tells us that "the labourer deserves his wages" (Luke 10:7).

It is amazing how the Lord reveals Himself to such an unworthy soul. I will never unstand it.

[incog-nito]

Soooo, if this point were really necessary pursuant to our American interests, we need to start gearing up for World War III, because victory over others is the way we can enforce our way of life in a world economy such as we have now.

Posted by Grandesign at 01:54 AM : Dec 18, 2008

Well, I believe the real wars that are being waged now are on the economic front. And, as the points in your post indicate, we are wittingly or unwittingly helping the enemy. However I don''t think some protectionism is defeatist. Other countries embrace "free trade" right now because it''s beneficial for them, at our expense. They "protect" themselves in other ways, such as currency manipulation and export subsidies. As I mentioned, we simply cannot compete on labor costs alone, but that''s exactly what we''re doing, and losing badly at it. Why enter into trade agreements that are clearly detrimental to our interest? Makes no sense. Until you realize the people who benefited from them are certain private interests with big political contribution coffers.

[grandesign]

There are political and national interest factors to consider.
Posted by incog-nito at 01:37 AM : Dec 18, 2008

I find myself agreeing with most of your posts, however I want to pose a tangent concept on this point. We have done so much in the name of National Security, that is has become self defeatist. And beyond that, we really don''t finance our own national security, other countries are buying our government securities, and in some they are participating in our security--so having protectionist trade-policies will also be self-defeatist.

Soooo, if this point were really necessary pursuant to our American interests, we need to start gearing up for World War III, because victory over others is the way we can enforce our way of life in a world economy such as we have now.

[grandesign]

Sen. Jim DeMint of South Carolina sent a similar letter saying that without restructuring, "we do not believe any amount of money will succeed in saving these companies."

The voice of reason. And how does the government enforce restructuring. This is market forces that make restructuring a necessity; but these industries have been insulated from market forces due to tax credits and slack government regulation on mileage performance. They don''t have to compete, they are beyond reproach. W. Edward Deming would be incredulous at our American lack of commerce and process improvement to meet better benchmarks in quality (if he were alive today).

Throwing good money after bad has become the status quo for our mentally challenged corporate leaders. American ingenuity needs to make a come-back. And we need to make it happen now.