CQ TODAY PRINT EDITION
Nov. 19, 2008 – 9:07 p.m.
Auto Bailout Backers Prep Plan B
By Joseph J. Schatz and David Clarke, CQ Staff
Rust Belt senators worked late Wednesday on a last-gasp compromise after Republicans blocked efforts to carve an additional $25 billion for the auto industry out of the $700 billion financial bailout package.
Majority Leader Harry Reid , D-Nev., voiced little hope that the effort would succeed and did not promise that the Senate would consider the legislation being negotiated by Sens. Carl Levin , D-Mich., George V. Voinovich , R-Ohio, and Christopher S. Bond , R-Mo.
It remained unclear whether there would be 60 votes for the compromise and whether House leaders would embrace it.
With senators anxious to leave town Thursday after a possible vote on extending jobless benefits, action on auto industry assistance this week remained unlikely but not out of the question.
Republicans and the Bush administration oppose aiding the auto industry from the financial bailout fund (PL 110-343), preferring to alter an existing auto loan program at the Department of Energy to let automakers access it immediately. Minority Whip Jon Kyl , R-Ariz., blocked Reid’s attempt to move an auto loan bill (
Democratic leaders appeared ready to let the auto bailout effort wait, perhaps until the new Congress convenes in January, rather than accept the Republicans’ terms.
“As we have said all along, the Treasury already has the authority and resources to protect thousands of Americans who work in our nation’s struggling auto industry,” Reid said late Wednesday. “If the Bush administration has any interest in saving Detroit, it has the power to do so.”
Republicans and the White House want to allow the industry to tap for operating costs a $25 billion Energy Department loan program (PL 110-140) enacted last year to help automakers retool and shift to the production of more fuel-efficient vehicles. That idea, however, has drawn criticism from House leaders and environmentalists.
Under a plan being devised by Bond, Levin and Voinovich, the $25 billion in loans for the industry would come from the existing Energy Department program. But when the loans are repaid, the money would go back into the energy program, allowing it to continue operating.
If the three senators come up with a deal — which might make less than $25 billion available — it could be offered as an amendment to the House-passed legislation (
Moving on Unemployment Benefits
Reid filed a motion to limit debate on the unemployment bill late Wednesday, setting up a vote on Friday. But Reid and Minority Leader Mitch McConnell , R-Ky., said they are working on an agreement to hold that vote on Thursday.
The bill would provide seven additional weeks of benefits for those whose unemployment insurance has run out, and 13 additional weeks for unemployed people in states with a jobless rate higher than 6 percent. The House passed the measure on Oct. 3.
Auto Bailout Backers Prep Plan B
As expected, Republicans also objected on Wednesday when Reid tried to bring up a $100.3 billion economic recovery or stimulus bill (
Majority Whip Richard J. Durbin , D‑Ill., said the Voinovich-Bond plan would win some Democratic support. “We’re trying to figure out whether there are enough Republicans to make this a viable option,” he said.
Durbin said he has been told that House Democrats are opposed to the plan, and he acknowledged his own misgivings about modifying a loan program that was designed as part of a bargain to ensure that automakers retool and shift production to more fuel-efficient vehicles.
Rep. Chris Van Hollen , D-Md., the House Democrats’ new liaison to the incoming Obama administration, would not close the door on Democratic support for using the existing loan program to help Detroit automakers, providing that the loan fund is replenished.
‘Pre-Packaged Bankruptcy’ Option
Given the amount of attention Democratic leaders — and more recently, the White House — have given the plight of the auto industry, both sides may feel pressure in the coming weeks to do something to ensure that the industry does not collapse. One possibility raised repeatedly in the past two days is a “pre-packaged bankruptcy” for one or more automakers.
Under such a plan, the government would help a failing automaker arrange an orderly bankruptcy proceeding and likely provide financial assistance for the company as it restructured and emerged from bankruptcy. G. Richard Wagoner, the chief executive of General Motors Corp., called the idea a “fantasy” when he testified before the Senate Banking Committee on Nov. 18.
House Financial Services Chairman Barney Frank , D-Mass., questioned the notion of letting auto companies fall into default. “Bankruptcy has become to some extent the new spectator sport,” Frank said Wednesday morning as the Big Three chief executives and the head of the United Auto Workers gathered before his committee.
But Christopher J. Dodd , D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, said he liked the idea of a “pre-packaged bankruptcy” restructuring for struggling domestic automakers. “As I look down the road, something like that could be a valuable tool,” Dodd said.
Voinovich, whose state is home to numerous auto plants, said bankruptcy should not be viewed as an option. “Most people understand that if this was four years ago, maybe bankruptcy might be something that might be looked upon as a responsible way of handling it,” he said. “But . . . with the conditions that we got today, that really isn’t an alternative because if it does happen, it will have a devastating impact at a time when we are very fragile.”
Benton Ives and Edward Epstein contributed to this story.
Comments
Please Senators, do the right thing and get the clean unemployment extension through this week. Holding the uncontroversial unemployment benefits bill hostage to the auto bailout --or worse yet, sending the amended bill back to the House to debate after Thanksgiving --will hurt millions of people struggling to feed their kids and keep a roof over their heads. JJ
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