Bush's Bailout: It's Beginning To Look A Lot Like Xmas
Pres. Bush gave GM and Chrysler the news they've been waiting for today when he announced a $17.4B auto industry emergency loan package at a presser this morning.
"The American people want the auto industry to succeed, and so do I," Bush said.
The loan package mirrors the one the White House and Dem Congressional leaders worked out nearly three weeks ago. GM and Chrysler, the companies expected to participate in the loan program, will get the immediate infusion of billions of dollars they say need to stave off bankruptcy before the end of the year. In return, the companies will have to agree to strict terms that require fundamental restructuring and renegotiation of labor and supplier contracts as well as dealer agreements. The goal of the loan terms is help make American automakers competitive again, Bush said.
"If they don't follow this plan, the only option is bankruptcy," Bush said.
There are some key differences between the White House-run bailout Bush announced and the bill that died in the Senate 12/12. And some could be controversial. A key component of the compromise bill in Congress was where the bailout funds come from -- the WH wanted the money to come from an existing pool of money set aside to help Detroit make more fuel efficient cars, and the Dems wanted the money to come from the $700B Troubled Asset Relief Program fund, known as TARP. The Dems are now getting what they wanted; Bush said today that the money should come from TARP.
But Dems probably aren't going to be celebrating too much. Bush included the provisions suggested by Senate GOPers that killed the bailout agreement in Congress. Chief among them is a requirement that American automakers lower worker salaries to the same level paid by foreign carmakers with factories in the U.S. by the end of '09. GOP lawmakers have been pressuring Bush to include the provision since he announced he would develop a WH-run bailout.
During the Senate negotiations, the UAW said requiring workers to take a salary cut outside of their normal contract negotiations with automakers (scheduled for 2010) was a dealbreaker. It remains to be seen how the unions will react to Bush's plan.
Rep. John Dingell (D-MI) agreed, releasing a disapproving statement shortly after Bush's presser: "[I]t is irresponsible during a time of economic crisis for the White House to insist that workers take further wage cuts on top of the historic concessions they have already made."
For carmakers, though, there's some relief today. Despite all the media reports of the past few days, bankruptcy is off the table in Bush's bailout, and as of now, the loan terms seem to be the same ones automakers already agreed to when they went before congress. The Big 3 may live to see New Year's after all.
(EVAN McMORRIS-SANTORO)