Auto rescue bill in peril, opposed by GOP senators

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WASHINGTON — The House pressed toward passage of a $14 billion bailout for the nation's imperiled auto industry Wednesday night, but the hard-fought deal between Democrats and the Bush White House was in jeopardy amid strong opposition from GOP senators.

Republicans were in full revolt against their party's lame-duck president over the measure, balking at helping Detroit's struggling Big Three without hefty concessions from autoworkers and creditors, and furious about an environmental mandate House Democrats insisted on including in the measure.

Democratic leaders still held out hope that the emergency aid could be enacted by week's end.

The White House, though not formally endorsing an agreement with congressional Democrats, dispatched administration officials to Capitol Hill to make a case for the rescue package. During a contentious, closed-door luncheon with Senate Republicans, White House Chief of Staff Josh Bolten got an earful of criticism from the rank-and-file, some of whom have already announced plans to block the measure.

"They got a good dose," said opponent Tom Coburn, R-Okla., as he emerged from the session.

Even auto state Republicans who have pushed hard for a bailout said the measure needed work. Sen. Kit Bond, R-Mo., said he wanted to see changes. And Sen. George V. Voinovich, R-Ohio, said the bill didn't have the necessary Republican votes to pass Congress.

The plan would provide money within days to cash-starved General Motors Corp. and Chrysler LLC, while Ford Motor Co. — which has said it has enough liquidity to stay afloat — would be eligible for federal aid as well.

It would create a government "car czar," to be named by President George W. Bush to dole out the loans, with the power to force the carmakers into bankruptcy next spring if they didn't cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.

"To give up on the auto industry now would be to condemn the American economy at one of its most vulnerable periods in our economic history to a degree of further hurt," said Rep. Barney Frank, D-Mass, the Financial Services Committee chairman.

Opposition from Republicans reflected the tricky task of enacting yet another federal rescue in a bailout-weary Congress, with Bush's influence on the wane.

"People realize that this bill is an incredibly weak bill, (and) is the product of an administration that wants to kick the can down the road and let somebody else deal with it," said Sen. Bob Corker, R-Tenn.

The scene so far has been somewhat reminiscent of the tense atmosphere of early October on Capitol Hill, when lawmakers argued, cajoled, threatened and lobbied one another, ultimately passing a $700 billion bailout plan that Bush signed into law for Wall Street financial firms.

The House was to vote on adding language to the auto aid bill to require that banks that are bailed out by the government report quarterly on how much they have increased or decreased lending.

The road was harder in the Senate, where 60 votes in the 100-senator chamber would be needed. Opposition wasn't limited to Republicans.

Democratic Sen. Max Baucus of Montana announced he was against the measure because of a provision to bail out transit agencies that were involved in transactions now considered unlawful tax shelters.

At the White House, Deputy Chief of Staff Joel Kaplan told reporters at a late-morning briefing that the administration had yet to read the fine print of its "conceptual agreement" with congressional Democrats.

However, he indicated clear support, saying Bush would personally lobby Republicans.

House Republicans swiftly voiced their opposition and called for a plan that would instead provide government insurance to subsidize new private investment in the Big Three automakers, demand major labor givebacks and debt restructuring at the companies, and encourage them to declare bankruptcy.

Under the bill being considered Wednesday, the carmakers would have to submit blueprints on March 31 to the industry overseer showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.

The carmakers initially asked Congress for $25 billion, then returned two weeks later to plead for as much as $34 billion. But with the White House refusing to dole out new spending for the Big Three, congressional Democrats agreed to use an existing program that was to help carmakers retool their factories to make more fuel-efficient cars.

That fund yielded only $15 billion in emergency loans, and when negotiators agreed to leave some money in the environmental program, the amount fell to $14 billion.

Democrats agreed to scrap language — which the White House had called a "poison pill" — that would have forced the carmakers to drop lawsuits challenging tough emissions limits in California and other states. But they kept a provision to force the automakers to abide by those states' limits — a kind of consolation prize for environmentalists, who already were livid at the raid of the fuel-efficiency program.

Senate Democrats unveiled a nearly identical measure that omitted the requirement, but that bill still faced long odds.

Kaplan said the Bush administration would work with President-elect Barack Obama's team on choosing the so-called "car czar," acknowledging that Bush's tenure ends soon and the automakers' woes will continue well into 2009.

Obama defended the auto bailout as necessary given the threat a potential Big Three collapse could pose to an already battered economy.

"As messy as it may be, I think there's a sense of, 'Let's stabilize the patient,'" he said in an interview published in Wednesday's Chicago Tribune and Los Angeles Times.

The car czar would have say-so over any major business decisions by the automakers while they were taking advantage of federal aid, with veto power over any transaction of $100 million or more. The companies — including the private equity firm Cerberus, which owns a majority stake in Chrysler — would have to open their books to the government overseer.

And if Chrysler defaulted on its loan, Cerberus would be responsible for reimbursing the government.

Also included in the bill is an unrelated pay raise for federal judges.

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Associated Press Writers Ben Feller, Andrew Taylor and Jim Abrams contributed to this report.

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