White House, Congressional Democrats agree in principle on auto bailout plan
10/12/2008 16:25
The White House and the Congressional Democrats have reached an agreement
in principle on a draft US$15-billion government loan plan to bail out the
country's crippled auto industry from bankruptcy.
With the "conceptual
agreement" reached yesterday evening, the plan could see a vote in Congress as
early today, according to local media reports. While giving out the cash, it
will also create a government "car czar," to be named by President George W.
Bush, to oversee the bailout package and a major auto industry
restructuring.
However, officials in Washington who spoke on condition of
anonymity said that the measure is not final and could still face obstacles from
the Congressional Republicans, who have not yet approved it.
Jennifer
Granholm, governor of Michigan, told CNN that she also heard about the
"conceptual agreement," a result of days of negotiations between the White House
and the Congressional Democrats.
If the bailout package could be put to vote
in Congress and get passed, it will be great news for American auto workers and
the people of Michigan, said the governor in a tone of excitement.
The
package will benefit the so-called auto Big-3, namely General Motors Corp,
Chrysler LLC and Ford Motor Co, all based in Detroit, Michigan.
GM and
Chrysler had said that they urgently need short-term loans from the package to
avoid the imminent threat of bankruptcy through March. Ford, which said it
currently has enough cash on hand, is not requesting immediate help, but would
like a line of credit in case its finances worsen.
"Of course the whole auto
industry will benefit from the bailout package," said Steve Zhou, a technical
expert with Ford Motor Co who worked in Detroit.
"The Detroit Three could
only survive as a whole," Zhou told Xinhua on the phone last night. "If GM and
Chrysler collapse, it will be very hard for Ford to carry on all
alone."
Insiders pointed out that suppliers and other elements of the auto
industry are interconnected and a bankruptcy at one could pull down other
companies.
According to estimates of the auto giants themselves, the rescue
plan could help save more than 350,000 industry jobs and employment for millions
of others.
A major controversy over the auto bailout plan, which has become
one of the hottest topics of media coverage and public debate in the United
States over the past couple of weeks, is whether the auto companies, which has
long suffered losses in the face of strong foreign competition, are worth
saving.
President Bush has insisted that the companies should prove
themselves to be commercially viable if they want the government to spend
taxpayers' money on their rescue.
"Viability means that all aspects of the
companies need to be reexamined to make sure that they can survive in the long
term," he has said.
President-elect Barack Obama, whose transition team has
been involved in the talks, backed the effort to provide short-term financing.
But he also made clear that he wants strong protections for taxpayers and that
some executives of the auto industry should lose their jobs.
A
widely-expected compromise that is most likely to be written into the final
agreement is the setting of a deadline for the auto companies to submit a
detailed and satisfying plan for the industry restructuring, which will focus on
innovation and viability.
And if the carmakers failed to do enough to
reinvent themselves, the government "car czar" would have the power to withdraw
the federal money and virtually push the companies into bankruptcy.
The size
of the planned rescue -- some US$15 billion of loans -- was agreed upon by the
Bush administration and the Congressional Democrats last Friday.
However, the
White House has refused to open the existing US$700 billion rescue package for
the financial industry to the auto makers. The parties agreed last week that the
money would come from an Energy Department fund established in September to help
Detroit make more fuel efficient cars, which has a total amount of US$25
billion.
Xinhua
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