Automakers Face A Skeptical Audience

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Automakers Face A Skeptical Public — Before President Bush laid out his plan on Friday, automakers had pleaded with Congress not once, but twice before it fell to the White House. Lots of politicking went into getting the deal to where it is, and many members of Congress remain skeptical.

Host Scott Simon talks with NPR News Analyst Juan Williams about the politics of the Detroit bailout and the latest additions to the Obama administration.

Freshly Funded, It's Up To Automakers Now

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Bankruptcy is no longer in the immediate future of General Motors and Chrysler. The White House offered the ailing automakers a $17 billion lifeline in emergency loans. While automakers cheered the development, they're on a short timeline to prove they can survive.

GM has been living so close to the edge, it says it when it gets its first expected flow of government cash at the end of the month, it will come just in time to pay its suppliers. CEO Rick Wagoner thanked the White House and said the goal now is to reinvent the company.

"What we've been through in a public way here over the last month and a half," Wagoner said, "has focused everybody on reality of the much more difficult circumstances we face and the fact that if we don't effectively address them then the viability of company is going to be in question."

President Bush tapped into the massive, multi-billion dollar loan package that was passed this fall for financial institutions in order to offer $13 billion to GM and $4 billion to Chrysler. Ford Motor Company says it doesn't need federal help.

The White House moved on its own after Congress blocked a deal last week. President Bush said he didn't want the country's next president to have to confront the demise of a major American industry in his first days in office. At a news conference, President-elect Barack Obama warned the auto companies to come up with a sustainable plan soon but also said he's ready to work with them — and with the union representing autoworkers.

"My top priority in this administration is going to be to create 2.5 million new jobs and I want some of those jobs to be in the auto industry," Obama said. "So my intention is to have my economic team work with not only auto management but the UAW."

He may hear from the United Auto Workers soon. The union calls some of the provisions of the White House package unfair. The Bush plan attaches a string of conditions to the three-year loans. It orders the UAW to bring wages in line with what foreign automakers pay in the U.S. It seeks elimination of a jobs bank — already suspended — that allows laid-off workers to get most of their pay for up to two years. It also calls for limits on executive pay.

If the auto industry can't come up with a viable restructuring plan by March 31, the government can recall the loans. These aren't binding terms, but the car companies have to explain if they can't meet the targets.

"This isn't like a blank check," Sen. Carl Levin of Michigan says. "It's the opposite." He says the plan is good news for the industry and the country.

"The American government is finally doing what every other government in this world is doing that has an automobile industry," he says. "And that is supporting that industry in these very, very difficult times that were not caused by the auto industry."

But others were dismayed with the loan package including Sen. John McCain, the Republican who lost the recent presidential election and David Boaz, the head of the CATO Institute, a libertarian think-tank.

Boaz says taxpayers will have to bear the brunt of the car industry's bad fortune again, if they can't come up with viable plans.

"You put $17 billion of taxpayers' money in, and then you can bet on March 31, people are not only going to say the economy is too weak to allow the automobile industries to fail ... they'll add another argument: You've already put $17 billion in, if you let them fail now you're going to lose all that money," Boaz says.

GM says it's confident it will be able to meet the government's requirements. Chrysler — seen as the weakest of the Big Three Detroit auto firms — says it will move quickly to make significant cost reductions as it struggles to survive.



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