Weary 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, including both senators from Kentucky, 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 George W. Bush in charge of overhauling the auto industry. Congress could vote on the plan as early as Wednesday, and the money could be disbursed within days.
Never miss a local story.
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, essentially pushing them into bankruptcy.
In a Senate floor speech earlier Tuesday, Senate Minority Leader Mitch McConnell, R-Ky., said the $15 billion proposal "fails to achieve our goal of securing the long-term viability of ailing auto companies,"
"I want to support a bill that revives this industry," he said, "but I will not support a bill that provides the patient with taxpayer dollars, yet doesn't (include) the commitment that the patient will change its ways so that future help isn't needed."
Meanwhile, Sen. Jim Bunning, R-Ky., said a proposed bailout resorts to "throwing money" at a problem largely created by U.S. carmakers.
Bunning said filing Chapter 11 bankruptcy would allow carmakers to make fundamental changes more quickly without political involvement from an auto czar proposed as part of the bailout. He said that under such a filing, a company would continue making cars, dealers would have cars to sell and auto workers and suppliers would keep getting paid.
The plan offered Monday by Democrats would provide emergency loans to Detroit's Big Three automakers. General Motors Corp. and Chrysler LLC are most in need of help, and could go bankrupt shortly without federal aid. Ford Motor Co. is seeking a line of credit to weather the economic downturn.
The proposal also would put strict limits on executive pay, require that taxpayers be repaid before anyone else, and bar dividends in most cases.
McConnell's support is crucial, because the lame-duck Senate has 49 Republicans. If they band together, they will have enough votes to filibuster any effort.
He laid out his position, Tuesday saying the Democratic plan "fails to require the kind of serious reform that will ensure long-term viability for struggling automobile companies. By giving the government the option of canceling government assistance in any event, (even if) reforms are not achieved, rather than requiring it, we open the door to unlimited federal assistance in the future."
He, and the White House, want assurance that management will be required to make tough choices that will put them on a path to viability. They also want sacrifices from labor.
"A good proposal would force automakers to get control of their benefit costs," McCon nell said. "A good proposal would make wages of struggling companies competitive with other automakers, not tomorrow, but today."