For bailout, the devil is in the details

Congressional Democrats and the White House are edging closer to a $15 billion auto bailout that lawmakers hope to pass this week.

The package would provide short-term aid to prop up the carmakers, particularly General Motors Corp. and Chrysler LLC, through March of next year, and would call for President Bush to appoint a “car czar” who would oversee major restructuring plans for the companies and the disbursement of funds.

{mosads}The details of the bill were still being negotiated between lawmakers and the administration at press time. Aides to Senate Majority Leader Harry Reid (D-Nev.) said votes on the legislation could begin as early as Wednesday, with lawmakers optimistic that they could be finished by Friday.

“While we take no satisfaction in loaning taxpayer money to these companies, we know it must be done,” Reid said.

House Speaker Nancy Pelosi (D-Calif.) warned automakers during a news conference Monday afternoon not to expect Congress to throw money at the industry without seeing results.

“If they don’t meet the conditions of restructuring,” said Pelosi, “there is not going to be an endless flow of money.”

White House press secretary Dana Perino said in a statement Monday that the two sides have “made a lot of progress in recent days” and that the administration is reviewing the draft.

Perino repeated the White House’s assertion that “long-term financing must be conditioned on the principle that taxpayers should only assist automakers executing a credible plan for long-term viability.”

GM has said that it may run out of cash by the end of the month, and Chrysler has also portrayed a dire financial situation.

Yet the bill’s future remains in question, with Democrats needing to win support from at least 12 Republican senators — many of whom have said they would prefer to see the Big Three file for bankruptcy.

Other GOP senators, including Sens. George Voinovich (Ohio), Kit Bond (Mo.), Arlen Specter (Pa.) and Sam Brownback (Kan.), have backed a similar plan to send the automakers billions of dollars in aid.

 “As Congress works to help stabilize the broader economy,” said Minority Leader Mitch McConnell (R-Ky.), “we cannot expose the taxpayers to new burdens without the promise of avoiding in the future the same mistakes that created these problems in the first place.”

McConnell represents a state where the auto industry employs 2.2 percent of the workforce and contributes 3.9 percent of the gross domestic product — more than $5.4 billion in 2005, according to the U.S. Bureau of Economic Analysis.

Sen. Richard Shelby (R-Ala.) has yet to indicate if he and other Senate Republicans intend to mount a filibuster of the package. Republican Sens. Shelby, Jeff Sessions (Ala.) and Bob Corker (Tenn.) have suggested a form of bankruptcy proceeding would be preferable.

The money would come from $25 billion in Energy Department loans originally intended to help the car companies meet tougher fuel efficiency standards. Pelosi agreed on Friday to let that money be used for the automakers’ immediate financial needs, so long as the money would be replenished for its intended purpose.

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, predicted on Monday that Congress would pass the package and have a bill on the president’s desk by the end of the week.

{mospagebreak}By striking a short-term deal, lawmakers are punting to the Obama administration many of the larger questions about the industry and the restructuring that the companies detailed in plans requested by Congress and that lawmakers have supported.

The bridge loans now being contemplated could be recalled if the car companies are not fulfilling plans to achieve long-term viability, Reid said.

The bill would require the car companies to submit plans by March 31 for their long-term viability. The proposed language would restrict executive pay and bonuses, and also prohibit the companies from paying dividends while the loans were in place. The companies would also be forced to give up their corporate jets as a condition of receiving money.

{mosads}Pelosi said the Obama administration may need to send more taxpayer dollars to the industry before the end of March — a point made earlier in the day by Frank.

“We don’t think the $15 billion is enough to get them into March,” Frank said on CNBC. Frank left open whether Bush or President-elect Obama would need to tap the $700 billion financial rescue package to provide additional funds to the industry before the end of March.

Bond said that any person selected as a car czar should be “mutually acceptable” to the Bush and Obama administrations.

The Big Three first requested $25 billion from the government. Last week, in their second appearance before lawmakers, they asked for another $9 billion in aid, an increase that irked several Senate Republicans.

The $15 billion represents a stopgap amount of money. The package will be directed at shoring up GM and Chrysler, which had asked for a combined $25 billion in their second request to Congress last week. Ford, in the sturdiest shape of the three automakers, had requested a $9 billion credit line and said it hoped to complete its business plans without federal aid.

J. Taylor Rushing and Sam Youngman contributed to this article.