Hoping to prevent another blow to the economy, Democratic congressional leaders unveiled a plan for propping up the teetering U.S. auto industry yesterday that closely tracks President Bush's position - some $15 billion in stop-gap emergency loans if Detroit accepts a federal monitor to oversee operations and restructuring.
The legislation could be voted on as soon as tomorrow, and supporters were cautiously optimistic that, because it mirrors the Bush approach, would attract enough GOP support to win congressional approval by the end of this week.
Under the plan, the government monitor's authority would stop short of the near-complete operational control that some critics wanted the new "car czar" to have. But the official, to be appointed by the president, would negotiate far-reaching plans for restructuring General Motors and Chrysler by March 31. If the plans, intended to ensure the companies' longer-term financial viability, were approved, the monitor could disburse billions more in aid; if not, they would be ineligible for more money and would have to pay back the government loans they received.
The monitor would also have veto power over any transactions by the company of more than $25 million or that would substantially change the companies' financial condition while the government loans are outstanding. And Washington would receive ownership stakes in the companies in exchange for the loans.
The plan, which grew out of three days of negotiations among Democratic leaders in Congress and officials of the Bush administration, is being reviewed by the White House, which withheld immediate support last night. But the specifics appear to match the terms Bush has been insisting on since the carmakers launched the appeal for help last month.
White House spokeswoman Dana Perino said earlier yesterday that Bush wanted a presidentially appointed "financial viability adviser" to negotiate with the automakers and others, such as the United Autoworkers Union, about their turnaround plans. Such an adviser should have the power to review restructuring plans and release longer-term funding if they were approved, administration officials said.
Perino also said yesterday morning that an agreement with Congress is likely.
One element the White House called for that was not in the Democrats' bill was directing the monitor to submit a plan for putting the companies into bankruptcy restructuring and requiring them to repay the short-term funding if the restructuring plans were not approved - a feature that would give the monitor additional leverage in negotiating with the companies about their future.
House Speaker Nancy Pelosi, a California Democrat, said that "come March 31, it is our hope that there will be a viable automotive industry in our country, with transparency and accountability to the taxpayer. We think that it is possible.
"But if they don't meet the conditions of restructuring and the rest," she added, "there's not going to be an endless flow of money to this industry to continue, left to their own devices, the practices they have been engaged in."
"We must act, not to reward the executives of the Big Three for their failures, but to invest in the millions of Americans who could face the consequences of those failures," said Senate Majority Leader Harry Reid, a Nevada Democrat, who added that the bill was "no blank check or blind hope."