White House, Congressional Democrats agree in principle on auto bailout plan

2008-12-10 10:38:33  

    by Xinhua writers Liu Hong, Tan Shusen

    WASHINGTON, Dec. 9 (Xinhua) --

The White House and the Congressional Democrats have reached an agreement in principle on a draft 15-billion-dollar government loan plan to bail out the country's crippled auto industry from bankruptcy.

    With the "conceptual agreement" reached on Tuesday evening, the plan could see a vote in Congress as early as Wednesday, 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 autoworkers 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 on Tuesday 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 15 billion dollars 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 700-billion-dollar rescue package for the financial industry to the automakers. 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 25 billion dollars.

Editor: Bi Mingxin