Senate Republicans, left on the sideline as the Bush White House negotiated the terms of a bailout of the Big Three with House Democrats, are threatening to block passage of the bill, which could be considered as early as tommorow. From MSNBC:
Senate Republicans say they have grave concerns about the agreement between congressional Democrats and the Bush White House to speed billions of dollars to struggling U.S. automakers.
Sen. George V. Voinovich, a Republican from Ohio and a leading supporter of the emergency measure, says it doesn’t have the necessary Republican votes to pass Congress.
The legislation will create an auto czar who will have some authority to force bankruptcy if sufficient progress is not made by the auto companies to achieve cost reductions and become viable entities.
Under the bill the Big Three would have to negotiate with labor unions, creditors and others and submit blueprints on March 31 to the industry czar showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.
Further conditions are added, and some substantive power given to the auto czar.
The car czar would have say-so over any major business decisions by the automakers while they were taking advantage of federal aid, with veto power over any transaction of $100 million or more. The companies — including the private equity firm Cerberus, which owns a majority stake in Chrysler — would have to open their books to the government overseer.
And if Chrysler defaulted on its loan, Cerberus would be responsible for reimbursing the government.
The measure would attach an array of conditions to the bailout money, including some of the same restrictions imposed on banks as part of the $700 billion Wall Street rescue. Among them are limits on executive compensation, a prohibition on paying dividends and requirements that the government share in future profits and taxpayers be repaid before any other shareholders.
One Republican called that approach “ass-backwards”.
Vitter said the package has an “ass-backwards” approach to curing what ails the U.S. auto industry— giving carmakers money immediately, and only later demanding that they restructure.
A key sticking point in the negotiations between the White House and House Democrats was a provision in the bill that would have forced automakers to drop lawsuits challenging individual state laws that mandated emission standards over and above existing federal clean air requirements. The Democrats, to the chagrin of the environmental folks, caved in on that issue and removed that provision.
President elect Obama came out in support of the bailout, calling for “stabilization of the patient.”
“As messy as it may be, I think there’s a sense of, ’Let’s stabilize the patient,’ “ he said in an interview published in Wednesday’s editions of the Chicago Tribune and Los Angeles Times.
He called the auto industry’s plight — lackluster sales, choked credit and widespread economic turmoil — “the perfect storm.”
I have attached a pdf containing the full text of the agreement for those folks crazy enough to want to read it. I predict passage, with Senate Republicans making enough noise to mollify the base, and then rolling over to make passage possible.
Bill Manzi.com 
Your Honor,
This “document” hope to preserve the retiree’s benefits. That has been a overwhelming burden.
It also seems to preserve the unions as they are right now.
My hope; this thing dies.
Bankruptcy best chance of brining things under control.
GM is a publicly held held corporation. Who protects the investors. Not even mentioned.
Jules
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Mr. Speaker,
I think that was their original intent, but the point they made on their first Congressional tour was that the financing normally available if they went to bankruptcy is not now available due to the financial crisis, so they are turning to the lender of last resort.
I agree with you on this point: companies who are mismanaged should be allowed to fail. Creative destruction is a foundation of capitalism.
But I wonder out loud if we’ve allowed companies to grow so big, and so inter-related, that they would take too many other companies and perhaps the entire economy with them. The auto industry provides 1 in 10 jobs in the US. Honda has publicly stated that they are worried that if GM goes down, the supplier chain that supplies them both will seriously affect north american Honda operations.
IMHO, the only investors that corporations are concerned with are the officers and institutions. The rest of us swim with the tide, usually without a life preserver.
My hope is that as this crisis passes, that we take a serious look into reversing the deregulatory tide of the past 30 years and start using common sense in understanding the basic human greed tendency.
-FM
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Fred,
Greed is a basic drive of a free market(economics 101). Trade law sets the standards of competitiveness. Anti-trust legislation comes to mind as an example.
The problem is democracy yields greedy politicians whose corruption prevents enforcement. How do you control that?
Jules
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Mr. Speaker,
I’m not sure I accept your premise that democracy yields greedy politicians. I think any organizational structure built by humans may exhibit this behaviour, whether it be governments, corporations, or churches, for that matter.
Trade law / Anti-trust law exists to temper basic greed in a marketplace. History tells us what happens when those tools don’t exist or are not enforced. The events of this past year are only another gentle reminder of things our predecessors have seen before.
My own solution to your stated political problem would be strict ethics reform, transparency in government communication, and term limits. It does imply that citizens get involved and understand what their government is either doing for them or to them, as the case may be. It requires an intelligent public and a functioning fourth estate, something I fear we are currently breeding out of the system.
Guys like the governor of Illinois should be made an example of, perhaps public square floggings should be brought back. I could think of a few senior members of the current Bush administration I wouldn’t mind joining him. Crimes Against Democracy. What a concept.
But that’s a topic for some future thread.
-FM
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Fred,
The political class have been assigned the task of doing the people’s business. Honesty, transparency and all those other qualities inherent in a politician’s make up no longer drive their work. Instead, what should be a service to their country has turned into a life long job.
Now what drives them is votes. It becomes a balance between limiting transparency (so you won’t see what they are actually doing) and pandering to influence for votes.
Fred, there so much money in the system it has corrupted the entire society resulting in the problems we now face.
Do you know who were the two largest Obama donations? Trial Lawyers followed by Wall Street (35 million).
By the way, it has just been announced that Pfizer has developed a vaccine to cure guys like you of BHS or Bush Hate Syndrome. Get a shot and get over it. Enjoy our new leader President Obama.
Jules
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Mr. Speaker,
And from a Republican, no less? Too much money in the system? Pray tell, from where?
If there really were a vaccine to cure us from Republican rule … I’m not sure Pfizer could provide enough doses, but I’m sure they’d have a winner on their hands.
BTW – I don’t hate your good friend. I feel sorry for him. I think he was clearly intellectually overmatched by the job, and he wasn’t helped by the narrow thinking of the cabal he surrounded himself with. I just want him and his minions to go away, quietly, so that the work of rebuilding what’s left can be left to people who seem more interested in the job.
I don’t know if Obama is up to the task, he’s got what I like to call a “target rich opportunity”. I hope, for all of our sake, including yours, that he is.
-FM
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