Mon., Dec. 8, 2008.
Congress sends White House
$15B auto aid proposal
Reuters – Progress made on auto bailout 
AP – In this Nov. 18, 2008 file photo, General Motors CEO Rick Wagoner, from right, Chrysler CEO Robert Nardelli, … WASHINGTON – Congressional Democrats and the White House worked to resolve their last disputes Monday over terms of a $15 billion bailout for U.S. auto makers — complete with a “car czar” to oversee the industry’s reinvention of itself — that’s expected to come to a vote as early as Wednesday.
Top Democrats gave the White House their proposal for rushing short-term loans to Detroit’s Big Three through a plan that requires that the industry remake itself in order to survive. The Bush administration gave a cool initial response, saying the measure didn’t do enough to ensure that only viable companies would get longer-term federal help. Negotiators worked into the night Monday to resolve differences.
“We’ve made a lot of progress in recent days to develop legislation to help automakers restructure and achieve long-term viability,” Dana Perino, the White House press secretary, said in a statement. “We’ll continue to work with members on both sides of the aisle to achieve legislation that protects the good faith investment by taxpayers.”
President George W. Bush himself said it was “hard to tell” if a deal was imminent because definite conditions had to be met. “These are important companies, but on the other hand, we just don’t want to put good money after bad,” he said in an interview with ABC’s “Nightline.”
Despite optimism on both sides that Congress and the White House could reach a swift agreement on the measure, it was still a tough sell on Capitol Hill.
“While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done,” said Senate Majority Leader Harry Reid, D-Nev. “This is no blank check or blind hope.”
The bill puts a government overseer named by Bush — a kind of “car czar” — in charge of setting guidelines for an industrywide overhaul, with the power to revoke the loans if the carmakers weren’t taking sufficient steps to reinvent themselves.
House Speaker Nancy Pelosi, D-Calif., said the restructuring would require tough concessions from management, labor, creditors and others.
“We call this the barbershop. Everybody’s getting a haircut here,” Pelosi said.
Still, the White House said a preliminary look at the draft didn’t appear to contain strict enough conditions to ensure that long-term financing would be available only to companies that could survive, according to officials who would comment on the continuing negotiations only on condition of anonymity.
The crux of the White House’s concern is that there may not be enough clear, immediate protection for taxpayers if a company is not meeting its own promises for long-term viability after review by the president’s overseer. The latest proposal suggests Congress may have to get involved again in a few months and pass a law to force a company to stick to its own plan — a potentially unwieldy political step.
Some congressional Republicans also are concerned that the carmakers could get loans without proving their viability. They wouldn’t have to submit long-term survival plans until late March under Democrats’ proposal.
Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman who is leading negotiations on the measure, said he was optimistic that the differences could be resolved.
“There are a couple of specific issues to be negotiated. I think they can be worked out,” Frank said Monday afternoon.
Sen. Carl Levin, D-Mich., a key ally of the auto industry, said getting the roughly 15 Republicans needed to support the plan was an uphill battle.
“This is a real hill to climb even if we can get agreement between the White House and congressional leaders,” he said.
Even sympathetic Republicans weren’t ready to sign on. Sen. George Voinovich, R-Ohio, has “numerous concerns” about the bill, including the strength of the taxpayer protections and the role of the so-called car czar, said spokesman Chris Paulitz.
There are lingering differences between the administration and Congress on details of the czar’s role and responsibilities, essentially a proxy fight between the White House and Democrats over whether Bush or President-elect Barack Obama should have the final say on who runs the auto industry restructuring.
Democrats are pressing to allow the president to choose other people beside the czar to help oversee the bailout, while the White House wants just one person tapped by Bush to have control, according to officials and lobbyists close to the negotiations.
Congress Republicans and the White House also are balking at a requirement Democrats included in their proposal that the carmakers drop their opposition to efforts by California and several other states to impose stricter emissions rules than the federal standard.
Pelosi is seeking that bar at the behest of environmentalists who are angry that money to bail out the auto industry will be drawn from an existing loan program that was meant to help the Big Three build greener vehicles that burn less gasoline.
That’s just one of several restrictions the bill places on the automakers while they’re receiving the loans.
Among the requirements included in Democrats’ draft proposal is one that the carmakers getting federal help get rid of their corporate jets — which became a potent symbol of the industry’s ineptitude when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government aid.
The proposal also gives the car czar say-so over any major business decisions by the automakers while they’re taking advantage of federal aid. The companies would have to open their books to the government, including informing the overseer of any transaction of $25 million or more and any “material change” in their financial condition.
Under the plan, the carmakers’ could get emergency loans right away. Then the overseer would write guidelines, due on the first of the year, for restructuring the Big Three.
In testimony before Congress last week, General Motors Corp. and Chrysler LLC, which have said they are weeks from collapse, made it clear they would need a total of $14 billion to $15 billion to survive through early 2009. Ford Motor Co. has said it has enough money to stay afloat unless one of the other Big Three goes under or the economy deteriorates more sharply.
While the measure would put an administration official selected by Bush in charge of setting terms for restructuring, the decision about whether the terms were being met would not be made until Obama had been sworn in. Congressional Democrats and the White House were working to find a broadly supported candidate who could span the two administrations.
Congressional officials said Kenneth Feinberg, the lawyer who oversaw the federal Sept. 11 victims’ compensation fund, was under consideration for the position. But Democrats’ draft proposal says the czar would be someone already in the executive branch.
In the latest gauge of public opinion, people were split about evenly over providing federal money to keep the car companies functioning.
Forty-five percent approved and 44 percent were opposed, according to a CBS News poll released Monday. Nearly six in 10 Democrats favored the aid, while nearly the same share of Republicans opposed it.
About seven in 10 said the government should have a say in managing the companies if taxpayers provide assistance, and nearly as many said requiring more alternative fuel vehicles should be a condition of such aid. Fifty-six percent blamed management for the companies’ problems, double the number who blamed uncontrollable economic problems.
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Tue., Dec.9, 2008
Czar would hold sway over
bailed-out car companies
By KEN THOMAS, Associated Press Writer
AP – Auto negotiations continue, no deal yet 
AP – House Speaker Nancy Pelosi of Calif., left, chats with House Financial Services Committee Chairman Rep. … WASHINGTON – Detroit’s automakers may soon be answering to a powerful “car czar,” who would dole out short-term emergency loans like a kid’s allowance, put them on a restructuring diet and hold veto power over any transaction of more than $25 million.
Just how much power this super CEO on the government’s payroll will have to wring concessions from auto company executives, the auto workers union, suppliers, bondholders and other creditors was among the last major bones of contention among Democrats, many Republicans and the White House.
“If they don’t meet the conditions of restructuring, there is not going to be an endless flow of money to this industry,” warned House Speaker Nancy Pelosi, D-Calif.
Indeed, for the large manufacturers — General Motors Corp.’s annual capital budget is about $4 billion — the amount of oversight would be dramatic. According to drafts of the bill, any asset sales, investments, contracts and commitments of more than $25 million would need to be reviewed by the czar, leading to fears of micromanagement from some auto industry insiders.
“Twenty-five million dollars is a pittance in an automobile capital budget,” said Gerald Meyers, a former chairman of American Motors Corp., which was bought out by Chrysler in 1987. Meyers, who now teaches leadership at the University of Michigan, predicted that the companies would propose “a hailstorm of $24 million proposals” to get around the requirements.
“That’s the price of going to Washington with a tin cup in your hand,” Meyers said.
The companies lobbied against the $25 million threshold and privately have called it unworkable.
But they’ve acceded to the car czar, reflecting their tenuous position. GM says it needs $4 billion by the end of the month to survive and another $4 billion in January while Chrysler has sought $7 billion by year’s end to avoid a cash shortage in 2009. Ford Motor Co. has said it would not seek the short-term assistance because it does not have an emergency cash-flow problem but wants a $9 billion standby line of credit in case a competitor fails.
Ford spokesman Mike Moran said under the draft legislation they would need to work with the czar to be eligible for the line of credit.
Referred to as the “president’s designee” in the bill, the car czar would have vast powers. President George W. Bush would appoint the czar during the final days of his administration to oversee the restructuring of the companies.
The czar could authorize loans to GM and Chrysler LLC almost immediately after the bill is signed, or as early as next week. The seven-year loans carry an interest rate of 5 percent the first five years and 9 percent the final two years. The czar has the power to set repayment terms.
The designee would have the power to “examine any books, papers, records or other data” of the companies and those of any subsidiary holding more than 50 percent of the automaker. Private equity firm Cerberus Capital Management LP owns an 80.1 percent stake of Chrysler.
By Jan. 1, the czar would determine “appropriate measures for assessing the progress” of each company in turning the plans they submitted to Congress last week “into a long-term restructuring plan.”
He would then begin functioning as a broker to facilitate concessions by unions, creditors, other debt holders, dealers, shareholders and suppliers as part of a long-term restructuring. He would have the power to convene meetings among various stakeholders. He would have to report to Congress twice a month, beginning Jan. 1.
If the overseer concludes that the companies have not moved aggressively enough to restructure themselves by Feb. 15, he would have the authority to recall the loans on behalf of the government, a move that could force GM or Chrysler into bankruptcy at that time.
By the end of March, the companies would have to submit more detailed restructuring plans for achieving and sustaining their “long-term viability and international competitiveness.”
Those plans would have to specify how they are going to repay the government loans, how their vehicles will comply with fuel-efficiency regulations, plans for new vehicles, efforts to streamline costs and capacity and proposals to restructure the companies’ debt, including converting debt to equity.
If the Big Three failed to come up with viable restructuring plans by the end of March, the czar would have to submit his or her own blueprint to Congress for a government-mandated overhaul.
Pelosi said she had no candidates for the job, but called Paul Volcker, a former Federal Reserve chairman and now an economic adviser to President-elect Barack Obama, a good choice.
Many consumer and environmental groups say the oversight is essential because automakers have a history of trying to postpone tougher safety and fuel-efficiency standards.
“It is not prudent to give them the money based on what they have said thus far,” said Peter Morici, a University of Maryland economist. He predicted that GM and Chrysler would be “back year after year looking for money.”
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Tue., Dec. 9, 2008
Republicans raise deep concerns
on auto aid plan
CNBC – Deal Near on $15B Auto Bailout 
AP – House Speaker Nancy Pelosi, D-Calif., and House Financial Services Committee Chairman Barney Frank, D-Mass., … WASHINGTON – Weary Democratic congressional leaders and White House officials pushed to clear the final obstacles to a $15 billion bailout of U.S. automakers Tuesday night, but the rescue plan faced new snags as Republicans raised deep concerns.
Top Democrats said they were still hopeful of a deal by Wednesday — with a final vote to follow by the end of the week — though sticking points remained regarding the package, which would place a “car czar” named by President George W. Bush in charge of an auto industry restructuring in return for emergency government loans.
“We’ve had very productive discussions about legislation consistent with the president’s principles,” said Joel Kaplan, Bush’s deputy chief of staff, emerging from an evening meeting with congressional aides where they were hammering out legislative language.
The White House also was demanding — so far unsuccessfully — that Democrats scrap language that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.
That measure “kills the deal,” said Dan Meyer, Bush’s top lobbyist. He said agreement was within reach but not finalized.
“We’re close,” Meyer said. “It’s not locked down.”
Another remaining hang-up was over ensuring that Cerberus, the private equity firm that owns Chrysler LLC, would reimburse the government if the auto company defaulted on its loan, said a congressional negotiator who spoke only on condition of anonymity because he was not authorized to disclose details of the emerging deal.
Leading Democrats voiced optimism that a deal would be reached.
“There do not appear to me to be differences in principle of a sufficient nature to blow this thing up,” Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, told reporters.
Differences were narrowing. Democrats said they were willing to toughen the measure to require that the czar revoke loans from car companies that couldn’t show they were viable by the end of March — rather than simply allowing the overseer to take back the money, the negotiator said. They were also near agreement to weaken a proposal to give the czar veto power over automakers’ business transactions — something the White House and automakers had said was unworkable. They were discussing giving the overseer say-so over transactions of $100 million or more, instead of putting the limit at $25 million.
Even if they reach a deal, though, conservative Republicans who want to force one or more of the Big Three into bankruptcy warned they might try to block the measure, virtually guaranteeing that it will need a 60-vote majority to pass and possibly delaying approval for days.
“I think that not only myself, but several of us will be looking at possibly blocking this package,” Sen. John Ensign, R-Nev., told CNBC.
The core of the bill — and its aim — was not in dispute among the White House and Democratic leaders. It would provide emergency loans to two of Detroit’s Big Three — Ford Motor Co. has said it doesn’t need an immediate cash transfusion — and create the presidentially named car czar. The federal overseer would supervise a broad industry restructuring and would be empowered to pull the money back if the carmakers weren’t doing enough to ensure their own survival.
All the while, the nation has fallen into recession, Congress and the presidency are both in transition, Wall Street is ricocheting daily and the Federal Reserve and Bush Treasury Department are fighting to steady the reeling financial industry.
A final deal hinged on only a couple of outstanding issues, said Senate Majority Leader Harry Reid, D-Nev.
“We would hope that we could complete work on this Detroit situation tonight or tomorrow,” he said on the Senate floor.
The last issues were significant. The White House and congressional Republicans were demanding tougher consequences for carmakers that couldn’t prove to the government they were viable, including a requirement — rather than an option — for them to be cut off from federal aid.
Democrats have already given in to the White House on a key element of the measure — drawing the money from an existing loan program meant to help carmakers finance the production of greener cars. With environmentalists livid at that move, Democrats were digging in over the bar against carmakers’ participation in state emissions rules lawsuits.
Sen. Mitch McConnell, R-Ky., said he was concerned that Democrats were proposing a package that “fails to require the kind of serious reform that will ensure long-term viability for struggling automobile companies.”
With their approach, “we open the door to unlimited federal subsidies in the future,” McConnell said.
The White House has said it shares those concerns.
“There will not be long-term financing if they can’t prove long-term viability,” White House press secretary Dana Perino said.
However, she also said, “I think overall we’re headed in the right direction.”
Getting 60 votes for an agreement, with many senators expected to be absent for the emergency, postelection debate, could be tricky.
Said Sen. Carl Levin, D-Mich., an ally of the auto industry: “This is a real hill to climb even if we can get agreement between the White House and congressional leaders.”
The current Congress is ready to depart for the year after this week.
The proposal under discussion would attach an array of conditions to the bailout money, including some of the same restrictions imposed on banks as part of the Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
Also included in the plan is a requirement that the carmakers taking federal aid get rid of their corporate jets — which became a potent symbol when the Big Three CEOs used them for their initial trips to Washington to plead before Congress for government assistance.
Democrats also inserted a provision in the bill to bail out some of the nation’s largest transit systems. The bus and rail systems could be on the hook for billions of dollars in payments because exotic deals they entered into with investors — which have since been declared unlawful — have gone sour with the collapse of American International Group Inc. and other financial institutions.
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Associated Press writers Jim Kuhnhenn and Ken Thomas contributed to this report.
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Wed., Dec. 10, 2008
Inaction on Big 3 would
cost taxpayers billions
By ALAN FRAM, Associated Press Writer
AFP/Getty Images – (From left to right) United Auto Workers President Ron Gettelfinger, President and CEO of Ford Alan Mulally … WASHINGTON – The U.S. auto industry’s problems will cost taxpayers plenty whether or not the government helps Detroit.
Just walking away and letting the struggling Big Three automakers go under would drain government coffers by about as much as the $15 billion bridge loan that lawmakers are preparing, and perhaps much more, according to outside analysts. The costs would come from lower tax collections by the federal, state and local governments and the payment of extra unemployment, pension and other benefits to unemployed or retired auto workers.
There’s sharp disagreement among outside experts about exactly what an auto industry failure would look like and how much it would cost taxpayers. But what’s clear is that while no one knows how much government aid the Big Three will ultimately need, inaction would also be expensive, assuming automobile production drops and more workers lose their jobs.
“It’s possible to push arguments like this too far, but there is still a net cost” to government without taking action, said Lou Crandall, chief economist for the bond market research firm Wrightson ICAP in Jersey City, N.J. “The question is whether the social objective you’re pursuing is worth that net cost.”
The Center for Automotive Research, a non-profit organization in Ann Arbor, Mich., estimates that if Ford Motor Co., General Motors Corp. and Chrysler LLC completely stopped making cars next year but returned to 50 percent production levels in 2010 and 2011, it would still wipe out nearly 2.5 million jobs next year.
The center, which gets a small portion of its budget from auto companies, says 239,000 of those jobs would come from the Big Three, 795,000 from their suppliers, and 1.4 million from other jobs created by the spending of auto workers and suppliers’ employees. The number of lost jobs would decline to 1 million by 2011 as the Detroit companies resume work, foreign automakers in the U.S. expand their production, and some laid-off workers find other jobs.
Overall, that lost employment would cost government at all levels $50 billion next year and $108 billion over the next three years, the center estimates, with Washington bearing most of that cost. Almost a quarter of the money would be for unemployment, welfare, health care and other costs government would have to carry, while the rest would come from lost collections of income taxes and payroll taxes that support Social Security.
In a more severe scenario in which the Big Three halted all U.S. operations completely, the three-year cost to taxpayers would be $156 billion in lost tax revenue and higher spending, the center says.
“Without question” it would cost the government less to give the Big Three a loan than to watch them curtail production, said Sean McAlinden, the research center’s vice president for research. “That’s better than taking this huge tax and transfer payment hit.”
The conservative Heritage Foundation, however, says such projections are far too dismal.
William Beach, a senior fellow in economics at the thinktank, says it is likelier that the Detroit automakers would declare bankruptcy but continue reduced operations as they try to re-emerge as leaner but stronger companies. During this lull, foreign auto companies in the U.S. would see their sales increase and would hire additional workers, cushioning much of the blow to government budgets.
The result: 453,000 lost jobs in the first year from the Big Three, their suppliers and spin-off jobs, Heritage estimates. Beach said this would mean a 2009 cost to federal taxpayers of just over $13 billion: $12.7 billion in tax collections and nearly $600 million for unemployment insurance, food stamps and other expenditures.
“The impact is significant but not large,” Beach said. “The government has well-developed programs to handle things like this.”
A pair of Michigan consulting firms say an automaker bankruptcy would be four times more expensive to taxpayers than a government bailout that allows the companies to restructure.
If two of the Big Three declare bankruptcy and are forced to liquidate, federal and state taxpayers would lose $66 billion in the first two years alone, according to a study by Anderson Economic Group of East Lansing, Mich., and BBK, a business advisory firm in Southfield, Mich. That scenario — which envisions the loss of 1.8 million jobs — includes costs of $20 billion in lost federal income taxes, $21 billion in payroll taxes, $6 billion in state income and property taxes, and $5 billion in unemployment benefits.
A $30 billion loan in which half is repaid and the government gets a stake in the companies would cost $16 billion, with far less in lost revenue and higher spending to support unemployed workers, the firms predicted.
Warily eyeing the auto industry’s problems is the Pension Benefit Guaranty Corp., the federal corporation that insures the defined-benefit pensions of 44 million American workers, including autoworkers.
Even without a failure in Detroit, the PBGC has about $11 billion more in liabilities than it holds in assets. In an interview, Director Charles E.F. Millard said the red ink could grow, depending on what happens to the automakers’ pension funds.
“It’s possible that in a bankruptcy scenario, the deficit of the PBGC could more than double,” he said. “It’s also possible the PBGC would not be affected.”
The PBGC receives no taxpayer funds and is financed by fees on the companies it insures and other sources. A dramatic worsening of the corporation’s finances, along with growing numbers of people drawing pensions from it, might force lawmakers to consider taxpayer assistance.
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Thursday, Dec. 11, 2008
Key senators reach tentative
auto bailout deal
CBS 2 New York – GOP Senators Revolt Against $14B Auto Bailout 
AP – The House Republican leader, Rep. John A. Boehner, R-Ohio, leaves the floor after the auto industry bailout …WASHINGTON – A bipartisan group of senators reached tentative agreement Thursday night on an emergency $14 billion bailout for U.S. automakers, the Senate’s top Democrat said. Majority Leader Harry Reid said the lead Republican architect of the deal was briefing colleagues on the compromise, and Democrats were prepared to move forward on it quickly.
“We’re ready to go,” said Reid, D-Nev.
His announcement came after hours of marathon talks at the Capitol between labor, lawmakers and the auto industry to salvage the Big Three rescue. The talks centered on possible wage and benefit concessions from the United Auto Workers union as well as large-scale debt restructuring by General Motors Corp., Ford Motor Co. and Chrysler LLC.
The details of the agreement weren’t immediately known, and it was not clear whether Republicans senators — who revolted against an auto bailout the Bush White House negotiated with congressional Democrats — would go along.
Leaders stressed that the deal wasn’t final.
“All issues are still on the table,” said Sen. Dick Durbin of Illinois, the No. 2 Democrat, as he emerged from the talks.
But it was clear lawmakers had made substantial progress toward getting the auto industry aid back on track, and members of both parties were in search of an accord.
“We’ve got some issues still to resolve but we all want to resolve them,” said Sen. Bob Corker, R-Tenn., who led the closed-door talks for his party.
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Friday, Dec. 12, 2008
White House promises
last-ditch auto rescue
by DAVID ESPO, AP Special Correspondent
– Sen. Corker TARP Money for Autos 
AP – Chevrolet Malibu and Pontiac G6’s are shown at the General Motors Orion Assembly plant in Orion Township, … WASHINGTON – 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.
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Associated Press writers Laurie Kellman and Ken Thomas in Washington and Tom Krisher and Kimberly S. Johnson in Detroit contributed to this story.
