Bailout approved by House

After battling through the weekend to reach a compromise with congressional Democrats, the White House dispatched Chief of Staff Joshua Bolten to sell the plan to restive Republican senators.

Many GOP lawmakers emerged from a combative luncheon with Bolten unconvinced the plan would compel Detroit automakers to make the painful changes necessary to restore profitability.

After mostly partisan debate, the House voted 237 to 170 to approve the measure. But with Sen. Richard Shelby, R-Ala., and other conservatives threatening to block consideration of the measure, even some Republican advocates of the bailout said it is unlikely to attract sufficient GOP support to win approval in the closely divided Senate.

“I don’t think the votes are there on our side of the aisle,” said Sen. George Voinovich, R-Ohio, a stalwart champion of the auto industry. “Some effort needs to be made to respond the concerns of my colleagues.”

At the heart of the conflict is a debate over how to best help the car companies not only survive the deepening recession but rid themselves of a legacy of debt, high production costs and plush worker benefits that have left them unable to compete.

GM, Chrysler and Ford have already moved to streamline costs; along with the United Auto Workers, they have offered to make additional concessions.

But many Republicans think the automakers’ problems could be more efficiently resolved by a bankruptcy court with legal power to dissolve contracts than by a government “car czar” whose actions could be swayed by Washington politics.

Sen. John Ensign of Nevada asserted his place among Republican leaders opposing the loan legislation. He presided over a Senate policy meeting where he said GOP senators told Vice President Dick Cheney and Bolton that they did not like the deal.

“I don’t think there was even a handful of Republicans who supported the bill in there,” Ensign said.

Ensign was among those who contended the only way that the automakers could emerge healthy in the long run would be to undergo restructuring through the bankruptcy process.

“If we don’t have the forced restructuring plans in place, many of us don’t believe American car companies will come out of this competitive, and taxpayer money will be wasted at that point,” Ensign said at a mid-day news conference.

In October, Ensign voted for the $700 billion bill to assist financial institutions. He maintained there is a difference between that and the smaller, $14 billion loan to the car companies.

The financial bailout “affected everybody in the country whether it was auto loans or student loans, or business loans,” he said. “It is the constitutional role of Congress to make sure our money supply is stable, and that is what we were trying to do.

“That is completely different from going sector, by sector, by sector, choosing winners and losers,” he said. “What happens next? Do we bail out the hotel industry? Are we going to bail out the airline industry? If we do this one, why wouldn’t we do others?”

Democrats have resisted forced restructuring, arguing that, under the Bush administration it could amount to open season on the United Auto Workers. They also sympathize with the automakers’ argument that bankruptcy proceedings would scare off potential buyers.

“People buying cars want to know that they’ll continue to have a relationship with an entity that can service the cars,” House Financial Services Committee Chairman Barney Frank, D-Mass., the chief House negotiator on the package, said in House debate.

Frank added: “The greatest illogic is to argue that somehow in the bankruptcy courts … you have a far greater degree of expertise than either” Bush or President-elect Barack Obama, with their teams of economists, could muster.

Reps. Shelley Berkley, D-Nev., and Jon Porter, R-Nev., voted for the bill. Rep. Dean Heller, R-Nev., voted against it.

“This is a loan, not a giveaway to the American auto industry, and Congress will hold Detroit’s feet to the fire to see that this money is repaid,” Berkley said. “This was not a perfect package, but at the end of the day, I could not stand by and allow GM, Ford or Chrysler to go bankrupt or to close their factory doors forever.”

Heller said the bill was no more than a Band-Aid that will delay auto industry reforms.

“Another month, another bailout,” Heller said. “Congress should focus on real economic reforms that generate jobs instead of continuing to bailout individual industries with taxpayer dollars.”

White House deputy chief of staff Joel Kaplan defended the measure, saying “we think we’ve come up with the right solution.” Kaplan, one of the chief negotiators for the White House, said President Bush would personally lobby senators in the coming days.

White House spokeswoman Dana Perino said, “Many Republicans and Democrats agree that a disorderly bankruptcy could be fatal to U.S. automakers and have devastating impacts on jobs, families and our economy.”

GM thanked the House: “We encourage the Senate to act soon so that we can continue at full speed on the restructuring and advanced technologies plans that will form a stronger, more viable GM.”

The measure would speed up to $14 billion in emergency loans to the Detroit automakers, enough to keep GM and Chrysler in business through the end of March.

Ford has also requested access to a federal line of credit but has said it does not expect to need any money immediately.

Stephens Washington Bureau Chief Steve Tetreault contributed to this report.