Tuesday, December 9, 2008

Negotiations on Auto Aid Show Bush's Influence in Final Days

From The Wall Street Journal

In the standoff between the lame-duck Republican president and an ascendant Democratic speaker of the House, an odd thing happened: The president won.

The Detroit rescue package being negotiated by congressional leaders is coming together in defiance of the prevailing political winds, representing a rare concession by House Speaker Nancy Pelosi and showing that even a weakened president can make an impact at the tail end of his administration.

For weeks, President George W. Bush stood his ground, demanding that any rescue of the Detroit auto makers be financed by $25 billion in already-approved loans intended to help the industry meet higher fuel-economy standards. Mr. Bush essentially won that argument Friday, when Rep. Pelosi, who had wanted to tap the $700 billion pool created to calm financial markets, backed down.

A House Democratic leadership aide said the decision to bend on the funding issue reflected "pragmatism" on the part of the speaker. "No one was prepared to place at risk the economic security of millions of Americans who work in and are dependent on the auto industry," the aide said.

In addition, next month President-elect Barack Obama will be in the White House and Democrats will control the House and Senate with strengthened majorities, giving the party a much greater ability to dictate the terms of future auto bills.

The White House has outmaneuvered Congress many times, on topics including the war in Iraq and surveillance powers. But this was a rare instance of the speaker backtracking on an issue of significance, something that has happened rarely since she rose to power in 2006.

The shift came after a government report showed significant weakening in the U.S. economy in November, when employers shed more than 500,000 jobs, the largest one-month drop since 1974.

Pelosi spokesman Nadeam Elshami said the speaker "is committed to the long-term viability and competitiveness of the American auto industry," noting the industry's importance to the nation's economic security and manufacturing base.

Rep. Pelosi incites much ire on the Republican right and has proved to be willing to challenge the White House, for example on a Colombia free-trade deal. But she has also shown a willingness to work with Mr. Bush at the cost of angering the left. Early this year, the speaker worked with the White House to enact $168 billion in tax rebates to help keep the economy afloat amid the first signs of weakness. And after Labor Day, Rep. Pelosi stood with Mr. Bush to pass the unpopular $700 billion market rescue, a show of bipartisanship in the midst of the 2008 elections.

Mr. Bush has never been enthusiastic about rescuing the auto industry. After coming around to the idea, he joined congressional Republicans in insisting that aid funds come from the existing $25 billion retooling program.

Rep. Pelosi strongly resisted the idea. Those loans were created to help the industry meet higher fuel-economy standards mandated by Congress in 2007, and Rep. Pelosi feared that diverting them for short-term financing needs might allow the industry to backtrack on commitments.

Rep. Pelosi insisted that the auto makers, who are seeking $34 billion to weather the economic downturn, be given access to the $700 billion market fund. The White House said that money should be husbanded to respond to the financial crisis.

The impasse appeared intractable until last week, when efforts intensified among allies of the industry in Congress to find a way forward. Thursday, Senate Majority Leader Harry Reid publicly broke with Rep. Pelosi, saying the idea of tapping the market-rescue fund couldn't pass Congress. Sen. Reid's comments signaled the need for compromise.

The next day, the sobering jobs report added a sense of urgency to the auto debate, sharpening the focus among top Democrats about the need to avoid the collapse of one or more of the auto companies.

Late Friday afternoon, Rep. Pelosi signaled her willingness to compromise. She spoke with White House chief of staff Josh Bolten and indicated she could support tapping the retooling loans, so long as those funds would be replenished rapidly.

The shift set in motion negotiations with the White House. A vote on the bill could come as soon as Tuesday.

Source: The Wall Street Journal

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