Auto bailout bill clears House but faces roadblock in Senate

McClatchy NewspapersDecember 10, 2008 

WASHINGTON — The House of Representatives late Wednesday passed by a 237 to 170 vote a $14 billion emergency plan to aid Detroit's ailing auto industry -- but Senate Republicans' doubts about the package put its ultimate fate in serious jeopardy.

The bill's funds could flow quickly to General Motors and Chrysler, which otherwise would face bankruptcy. The measure also would create a "car czar," who'd be appointed by the president to dole out the money, and require the companies to restructure themselves to achieve long-term viability.

The bill, said House Speaker Nancy Pelosi, D-Calif., in her closing argument Wednesday, is "not a life support to sustain a dying industry, but a jumpstart for an industry that is essential to our nation’s economy."

The measure passed with bipartisan support, but in the Senate, most Republicans — as well as some Democrats — voiced a long list of concerns, headed by worry that their constituents are reluctant to provide taxpayer money to help GM, Chrysler and Ford. Ford officials have said they don't need help immediately.

Sen. David Vitter, R-La., noted that the measure would require the companies to submit a restructuring plan by March 31. Why not demand that plan before the money is lent, he asked.

"I think the average American would say, 'What?' Isn't that putting the cart before the horse?" Vitter asked. "Isn't that, to use a common phrase, just ass backwards?"

Many supporters conceded that they were uneasy about the plan — a point they made to Democratic leaders in a closed-door caucus — but publicly said they had little choice.

"Much more needs to be done," Pelosi said.

"It's not that I'm enthusiastic about bailing out anybody else," said Rep. Mel Watt, D-N.C., "but the consequences of not doing something could be more severe than doing it."

The bill faces enormous problems in the Senate, where 60 votes are needed to stop procedural delays threatened by the measure's foes. On Wednesday Vice President Dick Cheney and White House Chief of Staff Joshua Bolten met privately for more than an hour with Republican senators, and according to senators present, they heard a barrage of criticism — and offered few satisfying answers.

Senators wanted assurances that the government will be tough on car companies that do not recover swiftly once the loans are made, as well as guarantees that taxpayers will not lose billions. And some suggested bankruptcy could be a preferable alternative. "The car czar doesn't have enough authority," said Sen. Robert Bennett, R-Utah. "He needs the authority to create a de facto structured bankruptcy, not consulting and calling meetings."

In addition, said Sen. John Cornyn, R-Texas, "we're worried about the American taxpayer" and whether the money will ever be repaid.

Supporters countered that the bill has strong safeguards against blank checks.

The loans are "a bridge to either fundamental restructuring or bankruptcy," said Joel Kaplan, the deputy White House chief of staff for policy.

The lawmakers' continuing concerns were a surprise because the Bush administration thought it had eased their chief objections when it won key concessions Tuesday from Democrats.

Senate Republican Leader Mitch McConnell of Kentucky wouldn't predict whether he could get enough Republicans to join the lame-duck Senate’s 49 Democrats and two independents, most of whom are expected to back the legislation.

"What I think you can pretty safely conclude,” he said, "(is) that a matter of this consequence is likely to require 60 votes.”

The White House had shared GOP senators' concerns that without precise restructuring guidelines, carmakers would return to Washington next year for more aid.

Kaplan insisted at a White House news briefing that the legislative language was toughened to say that the firms must earn profits as they continued doing business. He called that definition of attaining financial viability "firm." And, he said, if the companies don't come up with restructuring plans that make them viable, "the government gets its money back."

In that scenario, the companies presumably would declare bankruptcy, go out of business or come up with another plan. "If there is no plan that satisfies the conditions for long-term viability," Kaplan said, "there is an explicit prohibition put in the legislation against any federal financing being used to help these firms avoid bankruptcy or to achieve financial viability."

Republicans also wanted to eliminate a provision from the Democratic draft that would have required the automakers to drop lawsuits challenging emissions limits in California and elsewhere, and Democrats agreed.

Negotiators also agreed on the car czar's clout. While President George W. Bush would appoint the official, Kaplan said he'd work closely with President-elect Barack Obama on the choice.

Kaplan said the czar would have the power to force deals with unions, management and suppliers. "This is not somebody who is going to run the companies. This is someone who is going to bring them around the table, knock heads."

None of that swayed the reluctant Republicans.

"Giving Detroit and labor unions billions in taxpayer dollars without serious changes in their business practices is like giving an irresponsible teenager a credit card,” said Rep. Steve King, R-Iowa.

New polls show Americans divided over whether the government should help the car companies. A Dec. 6-8 Los Angeles Times/Bloomberg survey found 47 percent said the government should rescue the automakers, while 42 percent said it shouldn’t.

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CNN/Opinion Research Corp. poll on auto bailout

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McClatchy Newspapers 2008

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