Pelosi Outlines Conditions for Auto Industry Aid

WASHINGTON – House Speaker Nancy Pelosi said Saturday the House would provide aid to the ailing U.S. auto industry, requiring that the industry meet new fuel-efficiency standards, produce advanced vehicles and restructure "to ensure their long-term economic viability."

Pelosi, D-Calif., did not disclose the amount of funding House leaders intend to seek for the industry — automakers have been seeking $25 billion in loans to stabilize their sinking companies. But she said the funding should come from the $700 billion financial bailout approved by Congress in October.

"A restructured, competitive American automobile industry will continue to play a crucial role in our national economy and in the global marketplace," Pelosi said in a statement.

The move sets up a conflict with the White House, which has opposed using the bailout funds to help General Motors Corp., Ford Motor Co. and Chrysler LLC. The Detroit companies have been battered by an economic meltdown that has choked their sales and frozen credit.

U.S. automakers are lobbying lawmakers furiously for an emergency infusion of cash. GM has warned it might not survive through year's end without a government lifeline.

President-elect Barack Obama said he believes that aid is needed but that it should be provided as part of a long-term plan for a "sustainable U.S. auto industry" — not simply as a blank check.

"For the auto industry to completely collapse would be a disaster in this kind of environment," Obama said in an interview with CBS's "60 Minutes" that will air Sunday. "So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan — what does a sustainable U.S. auto industry look like?"

Pelosi said the plan would call for "immediate, targeted assistance" and must include several principles, including the restructuring of the companies "to ensure their long-term economic viability," new fuel-efficiency standards, and the development of advanced vehicles.

She said it would include "even stronger limits on executive compensation and assurances to protect the taxpayer." House aides said the legislation was still being developed and a specific funding level had not yet been reached.

Pelosi did not mention any plans for the UAW to make any concessions as part of the legislation. UAW president Ron Gettelfinger told reporters earlier Saturday the problem is not the union's contract with the auto companies.

"The focus has to be on the economy as a whole as opposed to a UAW contract," Gettelfinger said. The union has said it made several concessions in its 2007 labor agreement, setting lower pay for new hires and placing retiree health care liability into a trust run by the UAW.

Facing an uphill battle in Congress and stiff opposition from President George W. Bush, supporters of the government bailout have considered reducing its $25 billion size. A House aide said Saturday that $25 billion was still the amount being discussed.

"There's a need for immediate action," Alan Reuther, the United Auto Workers union's legislative director, said Friday. He said one option under consideration was a smaller, more targeted amount of funding "that would get the companies through to March."

Sen. Debbie Stabenow, D-Mich., said negotiations were taking place among senators on what the amount should be. "This is about getting enough votes to be able to solve the problem," she said.

Other auto suppliers and dealers with showrooms empty of customers plan to join the effort Monday when Congress returns following the Nov. 4 elections. The key Senate vote on preventing opponents from blocking the package could occur as early as Wednesday.

Democrats want to carve a portion of the $700 billion that the Bush administration is using to bail out banks, insurance companies and other financial institutions. The White House on Friday came out firmly against the approach.

White House press secretary Dana Perino said the administration would rather Congress expedite the release of a separate $25 billion loan program for the development of fuel-efficient vehicles and have the loans used for more urgent purposes as the companies struggle to stay afloat.

"Democrats are choosing a path that would only lead to partisan gridlock," Perino said.

Pelosi said Saturday that any attempt to divert money from the loan program would be a "step backward in assuring the viability and competitiveness of the U.S. auto industry."

Environmentalists and Pelosi have vehemently opposed using that money for anything other than designing and building vehicles that get higher gas mileage and produce less pollution. Democrats hold a 37-seat majority in the House and bailout supporters foresee little difficulty winning its passage there.

But the measure needs 60 votes to survive in the Senate, where Democrats will hold a razor-thin 50-49 majority when President-elect Barack Obama gives up his seat on Monday. A furious search was on for a dozen Republicans to break the anticipated filibuster from opponents.

Several Republicans have already lined up against it. "Like most Americans who are concerned about the direction of our economy and more federal spending, I must also ask — when is enough, enough?" said Sen. John Cornyn, R-Texas.

Two Republicans — Kit Bond of Missouri and George Voinovich of Ohio — said they will back the plan. Several other Republican senators have signaled they might accept a rescue if strict conditions are put on Detroit's Big Three companies, including management and salary changes, union concessions and a commitment to making more fuel-efficient vehicles.

Bond, whose home state of Missouri has several auto plants, said the concept of government mixing with the free market was "very troublesome." But he added, "We have to act in unique times of crisis when tens of thousands of Missouri workers are in danger of losing their jobs."

Democrats are modeling their bill on the bailout terms that the Bush administration has used for doling out $290 billion to banks and insurance companies. The government would get an ownership stake in the auto companies in exchange for the loans to ensure that taxpayers would get their money back if they return to profitability.