Dems, White House agree to $15B auto bailout

House vote may come today; Senate Republicans could still stall bill

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The White House and congressional Democrats reached an agreement in principle late Tuesday on a $15 billion bailout to keep General Motors Corp. and Chrysler LLC afloat through early next year, but supporters still must get enough Senate Republicans on board to pass a bill.The White House won a key concession that would essentially force the automakers to file for bankruptcy if they have not worked out long-term restructuring plans by March 31. The presidential appointee who would oversee the money, or "car czar," would be required to call back the loans at the end of that period if he or she determines a company is not executing a plan for viability, a senior Bush administration official said.

The czar could grant automakers a one-time, one-month extension, to April 30, if they were making significant progress.

The House could vote on the auto bailout plan as early as today; it is not clear when the Senate might vote.

The changes to the plan hammered out Tuesday leave little wiggle room for the automakers, which will have to radically cut costs, restructure debt and negotiate new concessions with the United Auto Workers in a few short months to hold on to the loan money. Shareholders and others are also likely to have to make concessions.

Under the original Democratic proposal, the car czar could have opted to call the loans back if an automaker's restructuring plans were inadequate, but would not have been required to. Calling the loans back would essentially push an automaker into bankruptcy and the czar could extend debtor-in-possession financing for the company to operate in bankruptcy.

The compromise reached Tuesday night also gives the czar veto power over transactions of about $100 million, up from $25 million, a level the White House said was too onerous. Negotiators also are near agreement to hold Cerberus Capital Management LP, Chrysler LLC's majority owner, liable for losses the government could incur in connection with emergency loans made to the automaker. Cerberus officials could not be reached for comment.

General Motors Corp. spokesman Greg Martin said late Tuesday that quick action is essential.

"All parties need to continue to move a bill forward to a vote and the president's signature. With jobs and the economy on the line, we can't afford delay," he said.

Sen. Carl Levin, D-Detroit, hailed the deal. "This gets us to the 20-yard line, but getting over the goal line will take a major effort, particularly in the Senate where we need 60 votes," he said. "We will need the personal involvement of President Bush and President-elect Obama to reach our goal of securing bridge loans to ensure America's auto industry is not only viable but vibrant in the years ahead."

Neither side was calling the deal complete. "We are making progress that we will have a reasonable compromise that will protect taxpayers and ensure the long-term viability of the American auto companies," said Drew Hamill, a spokesman for House Speaker Nancy Pelosi, D-Calif. White House spokeswoman Dana Perino also said progress was being made.

While some issues remain undecided, however, they are expected to be resolved soon. One such issue is whether to force automakers that get loan money to drop lawsuits against California and 13 other states trying to set their own tailpipe emission limits, a provision that has been important to Democrats. The issue is largely symbolic because other parties, including dealers and foreign automakers, would be able to continue their suits. Automakers lost efforts to stop the emissions standards in Rhode Island, California and Vermont -- but a challenge by dealers is pending in Rhode Island. The suits are on appeal. President-elect Barack Obama's administration is expected to let states set the standards.

The White House told Congress that a provision on California would never pass the Senate. Democrats may relent if in exchange they can get Republican support to pass the bailout bill, a congressional aide said.

Some Republicans remain strongly against the idea of bailing out Detroit automakers.

Sen. John Ensign, R-Nev., told CNBC on Tuesday he was considering trying to thwart a vote. "I think that not only myself, but several of us will be looking at possibly blocking this package," Ensign said. White House chief of staff Josh Bolten plans to attend a Senate Republican lunch today to try and win over skeptical lawmakers. Democrats need 15 to 20 Republican votes to reach 60 in the Senate -- the hurdle to end debate and proceed to a vote.

Congressional leaders said all day Tuesday a deal was close.

Sen. Majority Leader Harry Reid said early in the day that "we are very, very close. We need to join hands and recognize that this is going to be a compromise."

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said that Obama would be able to replace any car czar when he takes office Jan. 20. Democrats could also add more money to the loan program and soften some of the provisions demanded by Republicans next year when they have larger majorities in Congress.

Under the original Democratic bill, the czar would be able to veto transactions of $25 million or more. Democrats wanted the veto power in the bill to try to prevent automakers from using government funds to ship production off-shore. A senior Bush Administration official said that number will be raised to about $100 million -- since the smaller figure would be too onerous for automakers.

Other objections had centered on the government's priority in getting repaid if an automaker went bankrupt. The government will get stock or warrants equal to 20 percent of the money borrowed and could end up owning a significant chunk of the automakers. The UAW and debt holders also could get equity in exchange for taking concessions.

The UAW could be forced to accept lower payments from the automakers into a trust fund that takes over responsibility for retiree health care beginning in 2010.

Reid said a few opponents could delay a vote until as late as the weekend, but he remains confident bailout legislation will pass. "The American people want us to make a decision," he said Tuesday.

Pelosi, D-Calif., also said progress was being made toward a deal. "The auto CEOs know that we are willing to give them a chance to restructure and turn themselves viable, accountable to the taxpayer," Pelosi said. "If that is not the path, we are not going to be engaged in corporate welfare, and they will not succeed."

But Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday the bill isn't tough enough on restructuring. Detroit's Big Three automakers asked Congress for $34 billion in loans to help them survive plunging U.S. auto sales.

General Motors Corp. asked for $18 billion, saying it needs $4 billion by Dec. 31 and at least another $4 billion in January. Chrysler asked for $7 billion and said it needs $4 billion to survive until March 31. Ford Motor Co. has asked for a $9 billion stand-by line of credit in case the market worsens, but has said it won't apply for immediate loans.

In exchange for aid, automakers would have to accept conditions. They would be barred from paying bonuses to top executives and dividends to shareholders, and could not own or lease corporate aircraft.

You can reach David Shepardson at (202) 662- 8735.