Negotiations continued Monday evening on a $15 billion loan package for beleaguered U.S. automakers after the White House objected to some parts of the legislation proposed by congressional Democrats.
Despite the setback, House Financial Services Chairman Barney Frank said he anticipated a deal would be reached to allow the measure to move forward this week.
"If [the differences] can't be resolved in the next few hours, they can't be resolved at all," Frank told reporters after leaving ongoing staff-level negotiations between Congress and the Bush administration. "These [objections] are political."
According to a draft of the measure sent to the White House, President Bush would designate administration officials to carry out oversight of the loan program. It would provide up to $15 billion in bridge loans or commitments through March 31 for lines of credit for the Big Three, with the money coming from a $25 billion Energy Department loan program established for the industry's retooling and energy efficiency efforts.
At least $500 million of the auto funding will remain for its original use and is intended for smaller market players, such as battery manufacturers. The proposal authorizes additional appropriations to replenish the original program, known as Section 136 after a portion of the enacting law. The money is expected to be allocated in a Democratic economic stimulus package that could be in line for a vote when Congress returns the first week in January.
"I will only support using Section 136 with the assurance that we will get it back in a number of weeks," House Speaker Pelosi said Monday. "And in fact, in a number of weeks, if the Big Three are not on the path to viability, we may want our money back sooner than March 31, instead of over the longer term that would be built into the bill should they again be a thriving, competitive, innovative auto industry for the future."
Republican leaders in the Senate and House were still reviewing the draft, according to GOP leadership aides. Frank noted that the White House has specifically raised concerns that the package would enable spending beyond $15 billion.
The president's designee would allocate loans based on need, the potential impact of failure of a manufacturer on the U.S. economy and the company's ability to use the funds optimally.
The White House designee must also establish, by Jan. 1, "appropriate measures" to assess manufacturers' progress in turning the profitability plans they submitted to Congress last week into a long-term restructuring plan and evaluate that progress within 45 days.
The carmakers have until March 31 to submit their long-term plans for returning to profitability and international competitiveness, including those for repayment of government financing and detailing how they will remain in compliance with federal and state fuel-efficiency standards.
The seven-year loans would carry 5 percent interest for the five years and 9 percent for the final two years.
In a statement, Sen. Carl Levin, D-Mich., said the draft represented "great progress" and expressed "cautious optimism" that negotiations are on a path that will result in a deal that can be enacted. "A number of provisions that would have created great problems were not included, such as a czar who could dictate the operations of the companies; mandated changes in management, or a march toward bankruptcy," he said.
But Levin's spokesman said he is concerned about a provision preventing automakers from suing states that adopt California's stricter limits on tailpipe emissions. House GOP aides also raised objections to the move and sources close to the negotiations said the White House has cited it as a problem.
Sen. Bob Corker, a Tennessee Republican who had harsh criticism for auto executives who testified last week, said the draft "at first glance ... appears to be weak and lacking the benchmarks we believe are necessary to put these companies on a viable, sustainable path." Those benchmarks, he said, included union concessions on pay and benefits.
Frank also said that the White House has objections to provisions in the bill allowing the administration designee to block any overseas spending that exceeds $25 million dollars, which they see as micro management.
This article appears in the December 13, 2008 edition of NJ Daily.