Congress May Vote Today on $15 Billion Auto Aid Plan

By John Hughes and Holly Rosenkrantz

Dec. 10 (Bloomberg) -- Congress will vote as early as today on a $15 billion plan Democrats reached with the Bush administration to keep U.S. automakers afloat while forcing them to restructure.

The tentative agreement calls for appointment of a so- called car czar who could force General Motors Corp. and Chrysler LLC into Chapter 11 bankruptcy if the companies don’t come up with a restructuring plan by March 31, according to a senior Bush administration official who requested anonymity.

“Hard work has paid off,” Senator Carl Levin, a Michigan Democrat, said in a statement. “This gets us to the 20-yard line, but getting over the goal line will take a major effort, particularly in the Senate where we need 60 votes.”

GM and Chrysler have said they need at least $14 billion in combined aid to keep operating through March 31. Until late yesterday, talks stalled over disputes such as Democrats’ demand to require automakers receiving federal loans to end lawsuits challenging state auto-emission rules. The administration official said that provision is being dropped.

“We are making progress and are optimistic that we will have a reasonable compromise that will protect taxpayers and ensure the long-term viability of the American auto companies,” said Nadeam Elshami, a spokesman for House Speaker Nancy Pelosi, a California Democrat.

House leaders plan a vote as early as today once a final version of the proposal is completed. Senate Majority Leader Harry Reid, a Nevada Democrat, warned lawmakers yesterday of a session this weekend if objections are raised to voting earlier.

CEOs’ Views

GM Chief Executive Officer Rick Wagoner and Chrysler CEO Robert Nardelli both testified last week they will accept strict oversight and operating restrictions to win government loans.

“We welcome that oversight,” GM North American President Troy Clarke said yesterday in a Bloomberg Television interview.

Senate passage is uncertain because Democrats hold a 50-49 edge in that body and need at least 10 Republican votes to overcome a threatened filibuster, a delaying tactic of extending debate.

Levin said “personal involvement” will be needed from President George W. Bush and President-elect Barack Obama for the plan to win approval. An Obama spokeswoman had no comment.

Republican Opposition

A spokesman for Senator Tom Coburn said earlier yesterday that the Oklahoma Republican would support an effort to stop a bill through a filibuster. “He believes it’s naive to trust Congress to manage the auto industry when it can’t manage itself,” said spokesman John Hart.

Senator John Ensign, a Nevada Republican, also is prepared to filibuster. “It doesn’t put the Big Three on a path to compete over the long term,” said spokesman Tory Mazzola.

Senator Jim DeMint, a Republican of South Carolina, said Senate Republicans have the 41 votes needed to force Democrats to allow amendments to the proposal.

The senior administration official said the president’s designee could grant one 30-day extension beyond the March 31 deadline to devise a plan for long-term viability if he or she decides a company is negotiating in good faith.

The car czar would have the power to block the automakers’ financial transactions over a certain amount. The administration official said the level at which the government could intervene would be significantly higher than the $25 million in earlier drafts. The official didn’t specify the new figure.

Limits on Loans

The official said the bill would seek to ensure that U.S. loans aren’t the first in a series to an industry that refuses to make fundamental changes. Automakers would be barred from getting additional federal funds if they reach the deadline without an acceptable plan for viability.

The administration will consult with representatives of Obama on the appointment of the car czar, the official said.

GM gained 28 cents, or 6 percent, to $4.98 at 8:01 a.m. before regular New York Stock Exchange composite trading. GM’s 81 percent plunge this year before today made it the worst performer among the 30 companies on the Dow Jones Industrial Average.

Ford Motor Co. rose 12 cents, or 3.7 percent, to $3.35. The shares tumbled 52 percent this year through yesterday. While the second-largest U.S. automaker would be eligible to apply for the loans, it has said it doesn’t expect to.

Pelosi said former Federal Reserve Chairman Paul Volcker is qualified to be the czar. He has “the bipartisan confidence and public and private confidence,” Pelosi, a California Democrat, said on NBC when asked who Bush should name.

Obama last month named Volcker, 81, to become chairman of the president’s Economic Recovery Advisory Board, a new panel that will include experts from outside government and propose ways to revive growth.

White House spokeswoman Dana Perino declined to discuss Pelosi’s suggestion and a spokeswoman for Obama didn’t comment.

“We don’t even have legislation yet so we’re not going to comment on rumors about personnel announcements,” Perino said.

To contact the reporters on this story: Holly Rosenkrantz at hrosenkrantz@bloomberg.net; John Hughes in Washington at Jhughes5@bloomberg.net