Democratic congressional leaders and White House officials agreed in principle Tuesday on a $15 billion bailout of U.S. automakers that would give the government extraordinary power to restructure the failing industry. But the rescue faced snags as Republicans raised deep concerns.
WASHINGTON — Democratic congressional leaders and White House officials agreed in principle Tuesday on a $15 billion bailout of U.S. automakers that would give the government extraordinary power to restructure the failing industry. But the rescue faced snags as Republicans raised deep concerns.
Congressional aides and a senior administration official said the proposed deal would speed the loans to Detroit’s struggling car companies and place a “car czar” named by President Bush in charge of overhauling the auto industry. Congress could vote on the plan as early as today.
A breakthrough came when negotiators reached a compromise to require the czar to revoke the loans and deny any further federal aid to automakers that don’t strike a deal with labor unions, creditors and others to ensure their survival by next spring.
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said the remaining issues were minor.
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The deal could face substantial obstacles from congressional Republicans, who remained skeptical of the White House-negotiated plan. A group of conservatives led by Sen. John Ensign, R-Nev., has threatened to block it.
A further stumbling block was Democrats’ refusal to scrap language, vehemently opposed by the White House, that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.
That measure “kills the deal,” said Dan Meyer, Bush’s top lobbyist. Senior Democratic aides said they expected the provision to be dropped.
Environmentalists, who count House Speaker Nancy Pelosi, D-Calif., among their closest allies, already were irate that the bailout uses money set aside for a program to help the automakers finance the retooling of their factories so they could produce greener vehicles.
Another remaining hang-up was over ensuring that Cerberus, the private equity firm that owns Chrysler, would reimburse the government if the company defaults on its loan.
The measure would be open to Detroit’s Big Three but is expected to provide emergency loans only to General Motors and Chrysler. Ford has said it doesn’t need an immediate cash transfusion.