White House Promises Last-Ditch Auto Rescue

With Congress gridlocked and the economy floundering, the Bush administration declared Friday it would step in to prevent the "precipitous collapse" of the U.S. auto industry and the disastrous loss of hundreds of thousands of jobs sure to follow.

A day after the sudden demise of rescue legislation in Congress, carmakers were talking with the administration and the Federal Reserve about how they could still get the billions of dollars they say they need to survive. The talks included conditions that automakers would have to meet, said GM spokesman Greg Martin.

The administration said no decisions had been made on the size or duration of the new bailout plan, or what type of concessions might be demanded from the struggling automakers, their workers, stockholders or others.

In a reversal, the most likely rescue option under consideration involved billions of dollars originally ticketed for the bailout of the financial industry. President George W. Bush had earlier declared that money off-limits to the beleaguered automakers.

General Motors Corp. and Chrysler LLC have warned they are running out of cash and face bankruptcy without some form of assistance. Ford Motor Co., which is in somewhat better shape financially, has been seeking access to a line of credit.

Underlining its difficulties, GM announced Friday it would cut another 250,000 vehicles from its first-quarter production schedule — a third of its normal output — by temporarily closing 21 factories across North America. The move affects most plants in the U.S., Canada and Mexico. Many will be shut the whole month of January.

Urgent requests for White House intervention to save the automakers came from President-elect Barack Obama, Republican and Democratic members of Congress and outside groups.

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," White House press secretary Dana Perino said after the failure of a $14 billion bailout bill in Congress. The legislation died when Senate Republicans demanded upfront pay and benefit concessions from the United Auto Workers that union officials rejected.

Perino added, "Given the current weakened state of the U.S. economy, we will consider other options if necessary including use of the TARP program to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."

TARP is the $700 billion Troubled Assets Recovery Program, the financial industry bailout plan enacted in October. All but $15 billion of the first $350 billion has been dedicated to troubled banks or insurance companies, and the Treasury Department is barred from dipping into the second $350 billion without a formal notification of Congress.

No decision has been reached about such a notification, administration officials said. If one is made, Congress could then vote to prevent the action, but it would be unlikely to prevail in a showdown with the president.

Obama, who will inherit the problem next month, even if bailout billions are handed over in the meantime, said, "My hope is that the administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term restructuring that is absolutely required."

In a letter to Bush, House Speaker Nancy Pelosi urged the president to demand "the same tough accountability" and taxpayer protections from the automakers as was contained in legislation that cleared the House at midweek.

Michigan Rep. Thaddeus McCotter, a conservative Republican from a state where Ford, GM and Chrysler are headquartered, said, "With the legislative opportunities now exhausted, I urge the president of the United States to immediately release Wall Street TARP funds to the domestic automakers to avoid their impending bankruptcy and its consequent devastation of working families and the depression of our American economy."

It was unclear what role was left to lawmakers after an extraordinary week in which prospects for industry relief seemed to change by the hour.

A week ago, the government reported the loss of 533,000 jobs in November, the worst monthly showing in more than 30 years.

In the days between then and now, the White House and congressional Democrats agreed on a $14 billion measure that would have extended short-term financing to the industry while establishing a powerful new "car czar" to make sure the money was used to turn the Big Three into competitive companies. That bill passed the House on Wednesday but immediately ran into opposition from Senate Republicans who said it did not go far enough.

On Thursday, they demanded the United Auto Workers union agree to accept a lower pay and benefits package that would be in line with compensation earned by workers at U.S. factories producing cars for Japanese companies such as Honda, Toyota and Nissan. In an unprecedented series of negotiations, lawmakers met with representatives of industry and labor on the first floor of the Capitol in hopes of striking a deal — the effort that ultimately collapsed when the UAW balked at the terms demanded.

At a news conference on Friday, UAW President Ron Gettelfinger accused GOP senators who blocked emergency loans of trying to "pierce the heart" of organized labor.

Sen. Bob Corker, R-Tenn., who played a leading role for Republicans, told reporters at the Capitol that the talks came close to success but failed when the UAW refused to commit to lowering its pay-and-benefits package in 2009 so it would be "competitive" with the Japanese companies — a lower threshold, he said, than his previous demand that wages and benefits be "at parity" with foreign counterparts.

He also laid blame at the feet of the administration. "I think it being known that the White House at the end of the day would probably blink probably helped keep us from a deal," he said.

Whatever the reason, the effort stalled when Republicans voted en masse against advancing the original House bill to a final vote late Thursday night.


You must be logged in to post comments.

Username:
Password (case sensitive):
Remember Me:

Read Comments

Comments are posted from viewers like you and do not always reflect the views of this station.
  • by Cactus Location: Strabane on Dec 13, 2008 at 08:44 PM
    With the money the UAW has why don't they "bailout" the big3 and save their jobs.
  • by Rick Location: Washington on Dec 13, 2008 at 06:00 PM
    Not a cent for political tribute. President Bush may using the autoworkers as pawns to reward senior auto and maybe even union executives for past political support. Lets put them under court receivership, cancel executive contracts, install government appointed and capable turn-around artists and auditors, and get the companies on a realistic course BEFORE we give them any money, and ensure that any tax money only goes to realistic and comparable wages for the rank and file workers. It will be a hard lesson but I believe an effective one.
  • by mr.bail out Location: columbia on Dec 13, 2008 at 11:54 AM
    Lets see now no one want;s the bailout. so bush give them my money. so they can give it to the union. then first time they have a lay off,union goes on strick. ya, good old u.s.a.
  • by Devil Dog Location: New Bern on Dec 13, 2008 at 06:19 AM
    Goodbye CAPITALISM. The 35,000 lobbyists in DC have won the battle over the people. Corruption,a weak judicial system, and greed has buried our CONSTITUTION along with our social and moral values. It took 45 years but it happened.
  • by Kimo Location: Belhaven on Dec 13, 2008 at 05:54 AM
    The congress doesn't want the bailout. The people really don't want it (except for the union leaders). The big 3 have long since proven that they are inept - so what does good 'ol George want to do but bail them out. I have long defended him, but, sorry to say, it looks like I was wrong. He really doesn't get it. We cannot solve a problem like this by throwing more money at it. Pres Roosevelt proved a long time ago that you cannot spend your way out of a depression (recession??). Too bad the present administrng never learned that. "W" is acting more like a Dem that the Dems.
WITN

275 E. Arlington Blvd. Greenville, NC 27858 252-439-7777
Copyright © 2002-2016 - Designed by Gray Digital Media - Powered by Clickability 36098454 - witn.com/a?a=36098454
Gray Television, Inc.