Bipartisan deal reached on aid for automakers

Bipartisan deal reached on aid for automakers

Compromise among group of senators comes after furious Big Three lobbying
By Robert Schroeder, MarketWatch
Last Update: 1:33 PM ET 11/20/08

WASHINGTON (MarketWatch) -- A small bipartisan group of lawmakers have reached a deal to buoy the struggling U.S. automobile industry, finding common ground after two furious days of lobbying on Capitol Hill by the battered Big Three automakers.

Details weren't immediately available, but the office of Sen. Carl Levin, D-Mich., said agreement had been reached. Senators were set to speak to reporters at 2:30 p.m. Eastern Thursday.

It was not clear whether the compromise plan could draw enough support to get through the entire Senate, however, and reports were also circulating that Speaker of the House Nancy Pelosi would not go along with the compromise, and was pushing Congress to return again in December to continue working on a package.

Democrats have sought $25 billion in new loans for Ford, General Motors and Chrysler, but the White House and Republicans want the Big Three to tap into a previously approved $25 billion Energy Department loan program aimed at helping the companies retool.

Sens. Levin, Kit Bond and George Voinovich were working on the compromise to give the industry $25 billion in loans. The senators' plan would take the $25 billion from the Energy Department program. When the loans are paid back, the money would go back into the energy program.

Thursday, White House spokeswoman Dana Perino pushed Senate Majority Leader Harry Reid to allow a vote using the previously authorized Energy Department loan funds.

"We would hope that they would allow that to come up for a vote, but unfortunately, it looks like Senator Reid just wants to pick up his ball and go home for the next two weeks," she told reporters.

"And if that is the case, then one can only deduct that the Democrats don't believe that the auto industry really needs help, and really needs help now. We disagree. We think they need help," she said.

Shares of General Motors Corp. (GM) and Ford Motor Co. (F) rocketed higher on the news of the compromise.

The compromise comes after the chief executives of the companies and the head of the United Auto Workers testified before the Senate Banking Committee and House Financial Services Committee this week, arguing it would be cheaper in the long run for Washington to aid them than to let them fail.

Earlier Thursday, Ron Gettelfinger, president of the United Auto Workers union, said at a news conference that one or two U.S. auto makers could collapse by the end of the year without government assistance.

Gettelfinger said that the U.S. auto industry needs "immediate assistance" from the Bush Administration and Congress, and that Congress must not adjourn without some sort of agreement.

Meanwhile, helping the automakers is proving unpopular with voters. Nearly half of U.S. voters -- 48% -- say it is better for the economy to let companies like GM fail rather than providing government subsidies to keep them in business, according to a Rasmussen Reports poll released Thursday.
Robert Schroeder is a reporter for MarketWatch in Washington.

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