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Nickelless
Administrator
USA
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 Posted - 12/07/2008 : 11:39:23
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With congressional negotiators trying to hammer out the details of a package of emergency loans for the U.S. auto industry Sunday, House and Senate leaders may face a difficult week as they attempt to round up votes for yet another corporate bailout from skeptical members of both parties.
Christopher J. Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, said that General Motors Corp. chief executive Richard Wagoner would likely have to be replaced a condition for government aid.
"I think he has to move on," Dodd said on CBS' "Face the Nation."
Top auto industry ally Sen. Carl Levin, D-Mich., said on Fox News Sunday that House and Senate negotiators were "very close to a deal" on an auto industry package, noting that it could come in the next 24 hours, but said that it is "a much more complicated question as to whether the votes are there."
The auto package, which is likely to total between $15 billion and $17 billion, according to Democratic aides, is far smaller than the $700 billion financial industry bailout program enacted two months ago. But beyond Rust Belt states, where General Motors Corp., Chrysler LLC and Ford Motor Co. are vital employers, many Republicans remain reluctant to send the automakers assistance.
Appearing on the same show, Sen. Richard C. Shelby of Alabama, the top Republican on the Banking Committee whose state is home to plants run by foreign automakers, said that he would "absolutely not" support an auto bailout, saying "I think this is a bridge loan to nowhere" and "a downpayment on many bills to come."
In a statement Saturday, Sen. Bob Corker, R-Tenn., said that "based on the outline we've seen so far, we are disappointed in the plan that is being developed between House Democrats and the White House."
After weeks of stalemate over the need to bail out the struggling Big Three domestic automakers, House Speaker Nancy Pelosi, D-Calif., opened the door to a deal Friday night when she signaled that she would agree to use funds from an existing Energy Department loan program -- the method preferred by the White House.
If a final deal is struck, it remained unclear Saturday whether the House or Senate would move first. Earlier this week, Senate Majority Leader Harry Reid, D-Nev., said that he will bring a "shell bill" to the floor Monday to get the process moving. The House is expected to reconvene on Tuesday.
As negotiators try to fashion a deal that could win votes on both sides of the aisle, one issue that remains unresolved is how the money would be overseen. Asked whether Congress would put in place a so-called car czar to run the program, Levin said that he expects the bailout to include a "an administrator of the program who enforces rules." The administrator, Levin predicted, would be selected in the next 60 to 90 days and would ensure that there is "real oversight going on."
Pelosi wants the package to include a provision prohibiting the Big Three from using the federal loan money to oppose state fuel emissions rules, according to a Democratic aide, although the language has not yet been agreed to by all sides.
Stopgap Funding Lawmakers were aiming for a package that would provide domestic automakers a total of between $15 billion and $17 billion in emergency short term loans, a congressional aide said -- far smaller than the total $34 billion in short- and long-term loans and credit sought by the Big Three automakers. Democratic leaders appear to be eyeing a plan that would ensure that the Big Three can stay in business into the new year, and perhaps through March, as the incoming Obama administration and Congress begin work on a broader industry restructuring deal.
While General Motors Corp. requested a total of $18 billion in loans and credit earlier this week, the company said it needs an immediate $4 billion loan to stay solvent through Dec. 31, and $6 billion more to keep operating through March. Chrysler LLC said it needs $7 billion by the end of the year to avoid bankruptcy. Though Ford Motor Co. requested access to a total of $9 billion in long-term loans, it said it might not need to use them.
Senior Democrats have been cautious to say a deal was imminent, perhaps mindful of the events of September, when leaders announced agreement on an initial $700 billion financial industry bailout package only to see it rejected on the House floor days later when rank-and-file members opposed it. That vote sent the stock market into a nosedive.
"We will work through the weekend and then talk to our members," one House Democratic leadership aide said Saturday.
Republican leaders appeared non-commital.
"I look forward to reviewing the legislation being drafted to address the difficulties in our auto markets. As we consider this legislation, our first priority must be to protect the hard-earned money of the American taxpayer," Senate Minority Leader Mitch McConnell, R-Ky., said in a statement.
If a final deal is struck, it remained unclear whether the House or Senate would move first. Earlier this week, Senate Majority Leader Harry Reid, D-Nev., said that he will bring a "shell bill" to the floor Monday to get the process moving. The House is expected to reconvene on Tuesday.
Money Questions While the White House and Democratic leaders have agreed on the need to help automakers, they had been at odds for weeks over the proper funding source. Democrats had been urging the White House to tap the $700 billion financial services industry bailout program (PL 110-343) established in October. The White House has resisted that approach and pushed Congress to repurpose loans from an Energy Department program set up last year (PL 110-140), aimed at helping automakers shift to the production of more fuel-efficient vehicles.
While Pelosi long opposed using the Energy Department program, she gave ground Friday night after two days of high profile hearings and no sign of movement by the White House on the funding. But she demanded "a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative."
However, unless lawmakers decide to add additional money to the Energy Department loan program or somehow restructure it, such a package would likely be far smaller than the $34 billion being sought.
A bipartisan group of auto-state members led by Levin introduced legislation (S 3715) last month that sought to redirect the $25 billion Energy Department loan program to support bridge loans to the auto industry, with repayments going to the original program to appease Democrats.
But because of that repayment provision, the arcane rules governing federal loan programs would limit the amount of bridge loans provided by that legislation to only the $7.5 billion Congress has already appropriated for the Energy Department program, according to the Congressional Budget Office. That is far less than the industry needs in the short term to stave off collapse.
That amount could be increased if the bill is modified, but that raises political problems.
If the provision repaying the loans to the Energy program is dropped, CBO said the existing appropriation would be enough to support $15 billion in loans. Dropping that provision, however, would mean gutting, or at the very least stalling, the Energy program Democrats want to protect.
Regardless of what is done, CBO's analysis shows that the cost of new lending to the automakers has gone up in recent months because their financial condition has deteriorated.
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Finding votes for auto bailout could be daunting
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