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Auto bailout may hit speed bump

Sen. Richard Shelby, R-Ala., (center) accompanied by (from left) Sen. Tom Coburn, R-Okla., Sen. Jon Ensign, R-Nev., Sen. David Vitter, R-La., and Sen. Jim DeMint, R-S.C., speaks to reporters about the auto bailout Wednesday on Capitol Hill.

Sen. Richard Shelby, R-Ala., (center) accompanied by (from left) Sen. Tom Coburn, R-Okla., Sen. Jon Ensign, R-Nev., Sen. David Vitter, R-La., and Sen. Jim DeMint, R-S.C., speaks to reporters about the auto bailout Wednesday on Capitol Hill.

WASHINGTON – A $14 billion rescue package for the nation’s imperiled auto industry sped to approval in the House Wednesday night, but the emergency bailout was still in jeopardy from Republicans who were setting out roadblocks in the Senate.

Democrats and the Bush White House hoped for a Senate vote as early as Thursday and enactment by week’s end. They argued that the loans authorized by the measure were needed to stave off disaster for the auto industry – and a crushing further blow to the reeling national economy.

Rep. Gabrielle Goffords, D-Ariz., voted against the bill.

“I did not feel this legislation was the best plan,” Giffords said after the House vote.

Giffords voted in favor of the $700 billion TARP legislation in October, but said that was to free up money supplies and spur lending, which would provide Americans with the financial abilty to buy goods and services.

The automobile industry bill did not contain provisions to ensure that it would become competitive again, she said.

That may take bankruptcy and a change in marketing, she added.

“They can restructure,” Giffords said. “They can design cars that people want to buy.”

Giffords said she had heard from no major motor vehicle dealers in Southern Arizona about the issue.

Rep. Raúl Grijalva, D-Ariz., voted for the legislation.

The legislation, approved 237-170 by the House, would provide money within days to cash-starved General Motors Corp. and Chrysler LLC. Ford Motor Co., which has said it has enough to stay afloat, would also be eligible for federal aid.

Republicans were preparing a strong fight against the aid plan in the Senate, not only taking on the Democrats but standing in open revolt against their party’s lame-duck president on the measure.

The Republicans want to force the companies into bankruptcy or mandate hefty concessions from autoworkers and creditors as a condition of any federal aid. They also oppose an environmental mandate that House Democrats insisted on including in the measure.

House Speaker Nancy Pelosi said the House-passed bill represented “tough love” for U.S. auto companies and “giving a chance – this one more chance – to this great industry.”

The White House, struggling to sell the package to congressional Republicans, said earlier that a carmaker bankruptcy could be fatal to the auto industry and have a devastating impact on workers, families and the economy.

“We believe the legislation developed in recent days is an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs,” said Dana Perino, the White House press secretary.

But the measure faces a difficult road in the Senate, where it needs 60 votes to advance. Rank-and-file Senate Republicans skewered the bill during a closed-door luncheon with White House Chief of Staff Josh Bolten, who was dispatched to Capitol Hill to make a case for the rescue package.

Besides providing cash for the auto companies, it would create a government “car czar,” to be named by President Bush to dole out the loans, with the power to take back the money and 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.

Behind the scenes, Senate Democratic and Republican leaders scrambled for a deal that would allow votes on the bill on Thursday. Some GOP senators were demanding votes on an alternative that would order the automakers to take specific actions to restructure – including steep wage cuts and debt restructuring – in return for any federal money.

Opposition from Republicans reflected the tricky task of pushing yet another federal rescue through 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 auto aid debate was replete with echoes of the tense, early-October drama surrounding the $700 billion Wall Street bailout, when a marathon set of negotiations yielded a much-celebrated deal that came apart quickly amid GOP opposition and public outrage. That bill ultimately passed after much arguing, cajoling, threatening and lobbying among lawmakers, and Bush signed it.

Before passing the auto measure Wednesday, the House voted to add language requiring that banks that are bailed out by the government report quarterly on how much they have increased or decreased lending.

In the Senate, opposition to the auto rescue 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 that are now considered unlawful tax shelters.

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 House-passed measure, 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 deal-breaker – 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.

At the White House, Deputy Chief of Staff Joel Kaplan said the Bush administration would work with President-elect Barack Obama’s team on choosing the industry czar.

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.

Tucson Citizen reporter Garry Duffy contributed to this story.

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