A government "car czar" with the power to force U.S. automakers into bankruptcy would dole out $14 billion in emergency loans to the failing industry under an emerging deal between the White House and congressional Democrats.
(AP Photo)
The Corker-proposed compromise would have required the auto companies to reduce company debt by two-thirds and to negotiate a new labor deal that would make labor costs for the American automobile companies -- wages, benefits and pension plan expenditures -- the same as labor costs for foreign companies that operate plants in the United States. Estimates are that U.S. workers cost about $70 per vehicle to the $45 that foreign workers cost.
This is already a goal of the Detroit companies, but they are trying to phase in cuts by 2011. Under Corker's proposal, Chrysler and GM would get $14 billion in loans up front, but would have to give the money back if the changes were not implemented by March 31.
In addition to meeting with Democratic leaders and Republicans, Corker also met today with United Auto Worker representatives and talked to executives at GM, Chrysler and Ford.
Earlier, McConnell announced on the Senate floor that he would oppose the earlier bipartisan auto rescue package backed by Democrats and the White House, and instead backed a proposal for a pre-packaged bankruptcy being pushed by Corker.
"A lot of struggling Americans are wondering where their bailout is," said McConnell, arguing that, at some point, the bailouts have to stop, and that the Wall Street bailout he supported was for the entire economy and not just one industry.
McConnell's announcement came at the same time that President-elect Barack Obama was speaking in Chicago, saying, "we cannot simply stand by and watch this industry collapse."
Obama said that "doing so would lead to a devastating ripple effect throughout our economy." He said the government should provide a short-term loan and said he hopes an agreement can be reached this week on Capitol Hill.
"I understand people's anger and frustration at the situation our auto companies find themselves in today," Obama said. "I raised concerns about the health of our auto industry a year and a half ago, when I spoke to industry leaders in Detroit. I urged them to act quickly to adopt new technologies and a new business approach that would help them stay competitive in these changing times."
The White House, too, promised to work with Republicans and Democrats to pass legislation to aid automakers, despite mounting criticism from GOP senators who said they would not support the plan as it stood.
"The president and others are reaching out to senators today, listening to their concerns, listening to their questions, trying to answer their questions as best we can, making the case for why this legislation is the most effective and appropriate approach to help the auto companies become viable for the long term," White House press secretary Dana Perino said.
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