Detroit automakers are awaiting a financial lifeline from the White House to provide short-term stability to two companies on the brink of collapse which the Bush administration is currently working on.
"An abrupt bankruptcy for autos could be devastating for the economy," President George W. Bush told reporters Monday aboard Air Force One during an unannounced trip to Iraq and Afghanistan. "We’re now in the process of working with the stakeholders on a way forward. We’re not quite ready to announce that yet."
Bush wouldn’t give a precise timetable but said, "This will not be a long process because of the economic fragility of the autos."
The Bush administration is considering ways of providing emergency aid to General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks without help from the government.
White House officials said they did not anticipate announcing funding for the companies on Monday, as auto industry officials held discussions with the administration on the amount of money and any conditions that might be imposed.
"I think it’s very likely the White House will do what it said it’s going to do, not allow the auto industry to collapse," said Sen. Carl Levin, D-Mich., among several auto state lawmakers optimistic about the funding.
But Sen. Bob Corker, R-Tenn., said he spoke with the White House early Sunday and no decisions had been made. "I don’t think they yet know what they’re going to do," Corker said. Ron Gettelfinger, the president of the United Auto Workers, said the union had not held discussions with the White House.
General Motors and Chrysler are seeking the funding, while Ford Motor Co. has said it has enough cash to survive 2009.
Last week, Congress failed to approve $14 billion in loans to help the automakers. The plan would have provided short-term financing to the industry and created a "car czar" who would ensure that the money would transform the Detroit automakers into competitive companies.
The administration, following the legislative defeat, said it was considering several options, including using money from the $700 billion financial bailout fund to provide loans to the carmakers. Bush reiterated Monday that tapping the financial bailout fund remains an option.
Providing aid to the companies could represent a change for the White House, which previously insisted that the Wall Street rescue plan should be used solely to help financial institutions.
Corker and other Republicans sought a compromise that would have required the carmakers to restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the United States. The legislation died when Republicans demanded upfront pay and benefit concessions from the United Auto Workers, which union leaders rejected.
Corker urged the White House to seek similar concessions from the auto companies and their unions in return for the money. "Of course, the benefit they have — they don’t have to negotiate. They can say this money is available but it’s only available under these conditions," he said in a broadcast interview.
The administration has several options. It could tap the $700 billion financial rescue bailout fund to provide loans directly to the carmakers or use part of that fund as collateral for emergency loans the automakers could get from the Federal Reserve.
It also could do nothing, leaving open the possibility that one or more of the automakers could go bankrupt. The White House has warned a collapse of the auto industry would severely hurt the economy.
The White House is keeping President-elect Barack Obama and his advisers informed of the discussions. If administration officials choose not to provide the money now, the Obama team could wait for the new Congress, which will have stronger Democratic majorities. But the delay could risk bankruptcy filings by GM and Chrysler.
Gov. Jennifer Granholm, D-Mich., said other countries were providing aid to their automakers and the loans were essential to make the U.S. less dependent on foreign oil.
If the companies don’t get help, "we’ll be replacing our reliance on foreign oil with a reliance on foreign batteries because it’s going to be the battery that’s driving the electric vehicle in the future," Granholm said.
Corker was on CBS’ "Face the Nation" and "Fox News Sunday." Levin was on "Face the Nation." Gettelfinger was on CNN’s "Late Edition" and Granholm was on NBC’s "Meet the Press."