Auto Industry: Bailout Funds Would Come But With Strings Attached
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Nov 15, 2008
This is an update to:
No Bailout For US Auto Industry Will Surely Damage NASCAR
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Stymied by one last stalemate with the Bush administration, the Democratic Congress has released a scaled back auto industry bailout that would force Detroit to embrace more fuel efficient cars and new auto technologies.
Speaker Nancy Pelosi, in a Saturday afternoon announcement, says the House plan would require existing funds from the $700 billion Troubled Asset Relief Program (TARP) to be used to help the auto industry, meaning no new money would be authorized by Congress under this plan.
Pelosi said the auto industry funds would come with many strings attached, including restructuring company finances, meeting new standards for gas mileage and requiring advanced technologies “to compete in the domestic and global market.” The speaker’s office offered no specifics about what the new fuel efficiency standards would be and what types of technologies would be required for the auto industry.
“Recognizing the severe challenges facing the domestic automobile industry, whose failure could jeopardize millions of jobs here at home and have a devastating impact on our economy, the House Democratic bill will provide immediate, targeted assistance to allow the car makers, together with affected unions, time to develop a plan to assure the long-term viability of the industry,” Pelosi said Saturday in a statement.
UPDATE: November 15, 2008 11:56 pm
House Speaker Nancy Pelosi said Saturday that Democrats would move to add new conditions to an aid package of up to $25 billion for struggling domestic automakers, requiring them to further restructure in order to receive government assistance.
“Recognizing the severe challenges facing the domestic automobile industry, whose failure could jeopardize millions of jobs here at home and have a devastating impact on our economy, the House Democratic bill will provide immediate, targeted assistance to allow the carmakers, together with affected unions, time to develop a plan to assure the long-term viability of the industry,” she said.
“A restructured, competitive American automobile industry will continue to play a crucial role in our national economy and in the global marketplace,” Pelosi said in a statement.
The move sets up a conflict with the White House, which has opposed using the bailout funds to help General Motors Corp., Ford Motor Co. and Chrysler LLC. The Detroit companies have been battered by an economic meltdown that has choked their sales and frozen credit.
U.S. automakers are lobbying lawmakers furiously for an emergency infusion of cash. GM has warned it might not survive through year’s end without a government lifeline.
President-elect Barack Obama said he believes that aid is needed but that it should be provided as part of a long-term plan for a “sustainable U.S. auto industry” — not simply as a blank check.
Pelosi said the plan would call for “immediate, targeted assistance” and must include several principles, including the restructuring of the companies “to ensure their long-term economic viability,” new fuel-efficiency standards, and the development of advanced vehicles.
She said it would include “even stronger limits on executive compensation and assurances to protect the taxpayer.” House aides said the legislation was still being developed and a specific funding level had not yet been reached.
Pelosi did not mention any plans for the UAW to make any concessions as part of the legislation. UAW president Ron Gettelfinger told reporters earlier Saturday the problem is not the union’s contract with the auto companies.
“The focus has to be on the economy as a whole as opposed to a UAW contract,” Gettelfinger said. The union has said it made several concessions in its 2007 labor agreement, setting lower pay for new hires and placing retiree health care liability into a trust run by the UAW.
But Larry Sabato, political science professor at the University of Virgina, was equally pessimistic about the chances of any concrete action.
“There’s a chance they can do it, but right now it doesn’t appear likely,” he said.
“Lame-duck sessions almost always fail,” he added, referring to the outgoing Congress meeting before lawmakers officially relaunch the session in January.
Pelosi had backed her counterpart in the US Senate, Majority Leader Harry Reid, in calling for a economic rescue bailout for the beleaguered auto industry.
But the White House in Saturday also firmly rejected pumping any if the 700-billion dollars bailout into the auto industry, which was given 25 billion dollars in loan guarantees in September.
“We want to see legislation passed at this week’s lame duck session that uses existing funds intended for the automakers that will help them become viable for the long run,” said White House spokeswoman Dana Perino.
She said the money allocated under the Wall Street bailout plan to help stem the economic crisis needed to be conserved for “its intended purpose, stabilizing and strengthening our financial system.”
