“We are not going to be rushed into it,” presidential press secretary Dana Perino declared.
Only a day earlier, President George W. Bush suggested that a rescue package would come sooner rather than later. “An abrupt bankruptcy for autos could be devastating for the economy,” Bush said on Monday. “This will not be a long process because of the economic fragility of the autos.”
Perino said the administration was still working on details of the package and wanted to hear more from all those involved, including key lawmakers and leaders in the industry. She said concessions had to be made in exchange for a rescue package that could reach $15 billion for General Motors Corp. and Chrysler LLC.
“If we’re going to use taxpayer financing to assist the automakers, all stakeholders are going to have to come to the table,” Perino said. “I don’t think that there’s any possible way that this president would agree to allow taxpayer financing to go toward firms that are not willing to make tough decisions to become viable and competitive in the future. I just do not think that will happen.”
Bush said Tuesday that his administration was “considering all options” for bailing out the automakers, arguing that the already distressed economy could slide further into recession without prompt action.
“What you don’t want to do is spend a lot of taxpayers’ money, and then have the same old stuff happen again and again and again,” Bush told CNN in an interview. At the same time, he said, “we’re trying to get this done in an expeditious way.”
GM and Chrysler have said they will run out of cash within weeks if they don’t get help. Ford Motor Co. has said it has enough cash to survive 2009.
The administration has indicated it would extend a helping hand to the domestic automakers after a $14 billion aid package to the auto industry failed in Congress late last week in part because of a contention that the industry was largely to blame for its own problems. The White House wanted Congress to act.
The timing and details of Plan B – the Bush administration stepping in to help the automakers directly – remain in flux.
The administration is weighing several options. They include using money from a $700 billion bailout of the U.S. financial sector to provide loans to the carmakers, or using money from the fund as collateral for emergency loans the automakers could get from the Federal Reserve.
Otherwise, the White House has signaled that it wants to avoid a “disorderly bankruptcy” of any major automaker – presumably a Chapter 7 filing that would effectively shut down the company and require a destructive liquidation of its assets.
But the administration has not taken off the table an aid package that could still force one or more companies to enter into a Chapter 11 bankruptcy, which would allow a car maker to keep operating but put it under the purview of a court.
Among the White House’s chief concerns is that any aid package it authorizes would not have the same force of law that a plan approved by Congress would have. The White House is researching ways to prevent the collapse of automakers yet still provide leverage to hold them accountable for the money they get, wary of saddling taxpayers with a plan that could be tough for the government to enforce.
Perino said at her daily news briefing that “I don’t know of an imminent announcement coming from us.”
“We will do it if we decide to do it, and we’ll do it in the time that we think that is right,” Perino added.
Asked why she used the word “if,” when Bush himself had appeared to signal that some form of U.S. aid would be forthcoming, Perino said: “Because I don’t have an announcement for you.”
She said she didn’t want to appear to signal that help was on its way “if at the end of the day, we don’t do something.”
Bush refused to answer shouted questions about the timing of any auto deal during an unrelated event in the Oval Office earlier Tuesday morning.
Sen. Carl Levin, D-Mich., has said he expects GM to get $8 billion and Chrysler $7 billion from the Bush administration. He said the Treasury secretary likely would be tapped as a “car czar” to oversee restructuring of the companies.
Vice President Dick Cheney, in an interview with conservative talk show host Rush Limbaugh, cautioned that “if the automobile industry goes belly up now, there’s a deep concern that that would be a major shock to the system.”
House Speaker Nancy Pelosi, D-Calif., said the bailout funds were “the only recourse that they have” because of the failure to pass legislation in Congress. She said “something will have to happen imminently” but requirements for restructuring should be attached to the funds.
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.
Copyright 2008 The Associated Press.