Bush backs federal aid for Big 3 without fuel strings

Democratic leaders opposed the move. They are pushing for $25 billion in emergency loans for the automakers

that would be funded through the $700 billion Wall Street rescue package. The White House said again on

Friday that it opposes that strategy.

Congressional Democrats are 'choosing a path that will only lead to partisan gridlock with a focus only on

the Troubled Asset Relief Program,' Jones said. 'The TARP was never intended for that purpose.'

Bush's move sets the stage for a showdown in Congress. House Speaker Nancy Pelosi, D-Calif., and Sen.

Majority Leader Harry Reid, D-Nev., want lawmakers to vote next week to authorize the $25 billion from the

Wall Street package. The government would get equity stakes in the companies, which would agree to limits on

executive compensation and could not pay dividends with the loans.

Reid, who said Friday the Senate would take up the Democrats' bill Monday, rejected the Bush administration

overture, calling it 'unacceptable.'

Treasury Secretary Henry Paulson 'should use the authority and funds that Congress has already given him to

help the auto industry,' Reid said. 'There is no reason to start at Square One when Secretary Paulson can

protect millions of American jobs in one of our most important industries with the stroke of a pen.'

Pelosi said the Bush proposal would 'unwisely divert money urgently needed for modernization of the U.S.

auto industry so that it can be competitive.'

UAW key base of support

One reason the Democrats are opposed is because the retooling program, overseen by the Energy Department,

was pushed by the United Auto Workers in 2007, according to congressional aides and lobbyists. The program

gives Detroit's automakers a hefty financial incentive to keep auto production in the United States. The UAW

is a key base of support for the Democratic Party.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said Friday the UAW is now more

concerned with the survival of the companies.

'It's a little different than when this program was authorized,' Cole said. 'It was a neat deal to encourage

domestic production, but now it's money we can use to keep the automakers alive until some of the fog lifts

over the credit markets.'

In addition, environmentalists Friday urged Democrats not to drop the restrictions on the Energy Department

loans, saying they were essential to boosting the efficiency of the nation's vehicles.

Automakers lobby hard

The automakers are pleading for federal aid as they confront a deepening financial crisis that threatens

their survival.

General Motors Corp. and Ford Motor Co. last week reported burning through a combined $14.6 billion in cash

during the third quarter, and GM warned it could run out of money by early next year without help. Chrysler

CEO Robert Nardelli said Thursday the automaker might not survive without federal aid.

The automakers lobbied Capitol Hill on Friday to win support for the Democrats' $25 billion bailout bill in

a bid to win over at least 12 Republican senators to get the 60 votes needed to overcome procedural hurdles

in the Senate. Test votes on the bill were set for Wednesday.

Sen. Debbie Stabenow, D-Lansing, said in a conference call that she was open to changes to win GOP support

-- even accepting less than $25 billion. 'We're still discussing and negotiating with colleagues in terms of

what the final amount will be,' Stabenow said. 'This is about getting enough votes to be able to solve the

problem.'

In a letter Friday to Republican leader Sen. Mitch McConnell, Reid urged the Kentucky lawmaker to support

the auto effort, including 'legislation to protect the millions of workers at risk from the possible

collapse of our domestic auto industry,' Reid wrote.

McConnell was noncommittal, saying he hadn't seen any bill. 'The taxpayers deserve to know if this bailout

would increase the national debt and raise their taxes,' he said.

Reid is trying to win additional GOP votes by including an unemployment extension.

On Oct. 31, the House voted 368-28 to extend benefits by seven weeks in all states, plus an additional 13

weeks in hard-hit states, like Michigan, with jobless rates of at least 6 percent. As of Nov. 1, 3.9 million

Americans were collecting unemployment -- the most since 1983 -- and the U.S. has shed 1.2 million jobs this

year.

Strings may be attached

The $25 billion retooling program -- known as the Advanced Technology Vehicles Manufacturing Incentive --

was approved by Congress in December as part of the energy bill that hiked fuel efficiency requirements by

40 percent by 2020 and applied to retooling factories to build vehicles at least 25 percent more efficient

than required. Congress approved funding in September.

It's not clear whether Congress would attach conditions it was considering for money from the TARP if it

rewrote the rules for the retooling loans. Those strings include limits on executive bonuses and

compensation and a bar on using the money to pay for dividends. Under either scenario, Congress wouldn't

divvy up the $25 billion among the automakers, leaving that up to the administration.

Sen. Carl Levin, D-Detroit, said Friday that Reid's decision to bring up the bill Monday is a good sign,

saying automakers have a 'unique role in the American economy. If the administration is serious about

wanting to help the industry bridge the economic chasm we are facing, then I am confident that a way can be

found to provide this support.'

Tough questions on table

Detroit's Big Three CEOs and the president of the United Auto Workers plan to appear before the Senate

Banking Committee, headed by Sen. Christopher Dodd, D-Conn., and the House Financial Services Committee over

two days next week to make their case for federal help. Congressional aides said each is likely to face many

tough questions. GM CEO Rick Wagoner, who has been in charge since 2000, may be asked why he should be

allowed to continue in the job -- when GM has lost more than $70 billion since 2004.

Ford Motor Co. President and CEO Alan Mulally may have to defend the $49.9 million he has received in pay

from Ford since taking the reigns in 2006, while Chrysler's Nardelli may have to disclose exactly how much

money he's earned or stands to earn.

Since Cerberus Capital Management LP owns 80.1 percent of Chrysler, Nardelli's salary isn't disclosed. He

may also face questions about retention bonuses for key executives.

Republicans emphasized the automakers must show how they will return to profitability and remain viable.

'The American people would not support using tax dollars to support non-viable businesses,' the White

House's Jones said. 'There's a program that exists to help automakers, that was passed specifically for that

purpose, and we stand ready to accelerate the funds as soon as Congress acts. The opportunity to help viable

auto companies is there for the taking.'

The House returns to work Wednesday and will likely have an easier time passing an auto bailout because it

has a larger Democratic majority.