TOPICS > Economy

Auto Rescue Plan Advances as Congress, White House Near Deal

December 8, 2008 at 6:10 PM EST
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Congressional leaders are hammering out a deal with the White House to offer General Motors and Chrysler $15 billion in low-interest loans. Two reporters discusses the details.
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JUDY WOODRUFF: Even as the Bush administration and congressional Democrats move closer to a deal on how to help the big three automakers, it is still not clear if a rescue package would have the votes in Congress to pass, especially in the Senate.

For a closer look at the prospects for emergency aid to Detroit, I’m joined by Amy Walter, editor-in-chief of the Hotline, National Journal’s political daily; and David Herszenhorn, he’s a reporter for the New York Times..

David, first of all, bring us up to date on where these negotiations stand. Who’s talking to whom?

DAVID HERSZENHORN, New York Times: Well, the White House has representatives over at the Capitol right now. They’re in Speaker Nancy Pelosi’s offices, and they’re talking about the differences that the White House has with the Democrats over the particulars in this package, which really, after a long weekend, finally got delivered, the draft legislation, to the White House this afternoon.

JUDY WOODRUFF: And what is the main debate? We know there’s legislation now that’s been drafted, $15 billion in loans. What are the main outlines of it?

DAVID HERSZENHORN: Well, apparently, the White House has not commented formally, but what we understand is that there are some concerns that they have over real particulars in this legislation.

First of all, there’s a requirement that the auto companies would have to drop a lawsuit that they have in California against emission standards.

There are also concerns about exactly how this so-called “car czar” would enforce the requirements in the bill. The main ability, it seems, would be to call back the emergency loans for immediate repayment. And there’s some disagreement over whether to set a definite date for that or exactly how to carry that out.

But Barney Frank, the congressman from Massachusetts, who’s been a key player here, says he thinks all that can be resolved tonight and that there should be a tentative deal between the Democrats and the White House.

But as you said, there’s some question about whether the votes will be there in the Senate.

JUDY WOODRUFF: And again, quickly, David, a sense of who’s on which side in all of this?

DAVID HERSZENHORN: Well, everybody is, you know, sort of on the same side, in that there’s not much appetite for doing another big corporate bailout.

At the same time, there’s a recognition that letting one or more of these auto companies fail would be disastrous, given the current economic circumstances.

So the White House has really been working with the congressional Democrats, the Senate Republicans waiting to see what those talks produce. And tomorrow morning, we should have a better indication from the Republican leader, Mitch McConnell, about where he stands.

Politics of bailout

Amy Walter
National Journal's The Hotline
There's been talk now about bailout fatigue, both from members of Congress, as well as the public.

JUDY WOODRUFF: Amy Walter, given how little appetite there is for another bailout -- they don't want to call it that -- what are the politics of this?

AMY WALTER, Editor-in-Chief, The Hotline: Well, you know, you see poll after poll where the question is asked, now, in some ways -- in some polls, it's asked actually with a specific number, in some it's just called a bailout, or an auto rescue program, but it's overwhelmingly unpopular.

There's been talk now about bailout fatigue, both from members of Congress, as well as the public.

But there was a very interesting number in the CNN poll that was done at the beginning of last week which asked, if the government spent this money, how likely is it that you think that taxpayers' money would be spent fairly or unfairly, it would treat U.S. taxpayers fairly, unfairly? And 70 percent thought it was going to be unfairly.

And, more important, this is -- very few real folks, people out in the rest of the country, believe that this is an industry that's going to affect them personally, if this industry fails, that they have somehow a stake in this or that the economic repercussions will hit them.

So politically, of course, that goes right back to senators and members of Congress who are hearing from their constituents, especially when they're home at recess. But, of course, they also understand the other realities of the current economic crisis.

JUDY WOODRUFF: But given that it's so unpopular, what argument do members of Congress make, members of the Senate make, if they decide to vote for this? What are their calculations?

AMY WALTER: Their calculation has to be that fundamentally -- and I think it's different for different folks. If you are from a state where you have a significant presence of manufacturing -- so this is why you're seeing some Republicans like George Voinovich from Ohio, Kit Bond from Missouri, you're hearing a lot from Arlen Specter, as well -- these are folks who know they're in the Rust Belt. They know that manufacturing is very important to their state. They make it on that argument, job loss, et cetera.

If you're a Republican who has in the past voted against this sort of legislation by saying we're spending way too much money bailing out companies, where does this end, you say, look, we're giving them a limited amount of money. We're not giving them as much money as they wanted. We're putting a lot of strings attached to this, and it's really for the short term.

Long term, these guys still have to prove something to us. And until then, we're going to, you know, keep a close eye on them.

Broader arguments

David Herszenhorn
The New York Times
Well, there are some broader arguments, too, which is that what the cost would be to taxpayers if General Motors, say, were to fail. The pension obligations alone, the cost of health care for retirees would be astronomical.

JUDY WOODRUFF: And, David, again, as we said earlier, the Senate is the place where it looks like the vote is the toughest. Are these the kinds of arguments that can sway the doubters in the Senate and the House, for that matter?

DAVID HERSZENHORN: Well, there are some broader arguments, too, which is that what the cost would be to taxpayers if General Motors, say, were to fail. The pension obligations alone, the cost of health care for retirees would be astronomical.

So there's an argument that, you know, the cost would be so huge to taxpayers down the line if one of these companies were to go under.

And then you have to consider the cost of trying to create jobs. Of course, President-elect Barack Obama is talking about a huge jobs program. How much this would set things back if you were to lose hundreds of thousands, if not more than a million jobs should the auto industry go down.

So at the same time, though, there are some very principled arguments against it. Sen. Dick Shelby of Alabama, the senior Republican on the Banking Committee, is just flat-out against government bailouts. He's going to vote no, and he has a number of colleagues who've expressed that sentiment, as well.

And the other complication here is that this is a lame-duck session, where you have a number of officials who have either retired or have been voted out of office. Sen. John Sununu of New Hampshire, for instance, has made it clear he would be very happy to make the last thing he does in the Senate vote down an auto rescue plan.

JUDY WOODRUFF: And, David, quickly, a sense of how involved the Bush administration is in all this and President-elect Obama?

DAVID HERSZENHORN: Well, the Bush administration has been working with the congressional Democrats. You know, there was a fight for a long time over where the money would come from. That got resolved late last week when Speaker Pelosi agreed to tap this energy fund for more fuel-efficient vehicles, at least temporarily.

The most interesting thing is that in comments tonight she said that her hope is that, when President Bush appoints a car czar, which will be one of the last things he does in office, that President-elect Barack Obama won't have to change that person, and that suggests that there may be some extraordinary cooperation about to happen, in terms of figuring out someone to lead this rescue effort.

Obama to 'inherit' plan

Amy Walter
National Journal's The Hotline
[T]he president-elect has also been very clear about how much he's going to husband his political capital and that where it's going to get spent he's being very careful about. And I think we'll start to see that, once he gets sworn in.

JUDY WOODRUFF: And, Amy, what about that? For the president-elect, he's still got -- January the 20th he takes office. Whatever happens right now, he's going to inherit this.

AMY WALTER: Exactly.

JUDY WOODRUFF: So how does that factor into his decision about how involved to get and what it means for him down the road?

AMY WALTER: Well, it's pretty clear that this was kicked down the road, that this is something that, regardless of what the final outcome is on what this bill looks like, he knows that this is still structurally a problem he's going to have to deal with.

And what's pretty clear is that this is also -- the president-elect has also been very clear about how much he's going to husband his political capital and that where it's going to get spent he's being very careful about. And I think we'll start to see that, once he gets sworn in.

But for now, you're seeing this deal being cut by the congressional leadership. It's not a place where he wants to insert himself yet.

Take the big -- you know, he's calling for, as David pointed out, big, big, big infrastructure spending. He has big, big ideas, big plans. He wants to make sure he has the capital to put those through once he gets in.

Impetus for plan

David Herszenhorn
The New York Times
[Obama's] aides have certainly been involved, have been in constant touch with the speaker's office and with congressional leaders, making sure that they can live with whatever is agreed to here.

JUDY WOODRUFF: Well, if the president-elect, David, does not put any more weight behind this, where is the impetus then to get it voted through?

DAVID HERSZENHORN: Well, you would mention that President Bush will have conversations with Mitch McConnell, the Republican leader. There's less of an urgency in the House, where the Democrats have a wider majority.

But already we have seen the president-elect insert himself. He was on TV yesterday talking about the need for a rescue plan for the auto industry. His aides have certainly been involved, have been in constant touch with the speaker's office and with congressional leaders, making sure that they can live with whatever is agreed to here.

So I think he's gotten -- he's taking more of a role than maybe we will see, but certainly the president -- President Bush, that is -- is going to have to step forward and urge some of the Republicans to vote for this plan.

JUDY WOODRUFF: And your sense, David, is that we may see a vote?

DAVID HERSZENHORN: Wednesday...

JUDY WOODRUFF: When?

DAVID HERSZENHORN: ... at the earliest. You know, middle to late this week, it seems.

JUDY WOODRUFF: All right, we're going to leave it there. David Herszenhorn, the New York Times, Amy Walter, the Hotline. Thank you both.