LIANE HANSEN, host:
President-elect Obama said today that the auto industry can't be allowed to fail. But a bailout must come with a guarantee that the Big Three automakers will completely restructure themselves. Meanwhile, Congress and the White House are working this weekend on the details of an interim bailout. NPR's John Ydstie is following the story. John, what do you know about the negotiations?
JOHN YDSTIE: Well, the outline suggests that the two sides are putting together legislation that would give the car companies about half the $34 billion they were asking for during the hearings this week. That would hopefully allow them to operate through March when the new president and the new Congress would have to decide whether to spend further money. GM and Chrysler say they need an immediate infusion of cash or they'll be insolvent by the end of the year.
HANSEN: So where's the money going to come from?
YDSTIE: Well, there was a big breakthrough Friday night when congressional Democrats capitulated on just this issue. The Democrats have been pressuring the administration to use money from the $700 billion financial rescue package. The administration had refused, so Democrats have now grudgingly agreed to use money from a $25 billion program, already authorized, that the Big Three were supposed to use to develop more fuel-efficient cars.
HANSEN: What arguments did the auto company executives offer this time, this past week, that were persuasive?
YDSTIE: Well, a lot of it was actually symbolic. Instead of flying in on their corporate jets, they drove to Washington in their hybrid cars this time. And they were more contrite, actually acknowledging mistakes had been made. In the case of GM's Rick Wagoner, he said it was a mistake not to continue producing an electric car that GM developed and was making in the late 1990s and then dropped. And all the CEOs agreed to forgo compensation, not pay out executive bonuses, and they provided more details on plans that - how they'd make their companies more viable and more fuel-efficient.
I think the really horrible unemployment numbers that came out Friday, more than half a million jobs lost in November, focused the White House and Congress on keeping the companies afloat. There are millions of jobs connected with the U.S. auto industry in one way or another, and losing a big chunk of them is a really scary thought.
HANSEN: You mentioned the concessions from the auto companies. What about the Auto Workers Union, the UAW?
YDSTIE: Well, the union says it's ready to make additional concessions, including delaying billions of dollars in payments that the Big Three are supposed to make into a health care trust operated by the UAW. There's also talk of closing a job bank which has allowed laid-off union members to make almost full salary while they wait to be reassigned to other jobs.
HANSEN: OK. The White House and congressional leaders, if they can agree on this temporary bill, is it likely to pass?
YDSTIE: I think it's quite uncertain. There's still a lot of skepticism about a bailout from lawmakers. Polls suggest a majority of Americans are against it. There were warnings from economists at the hearing that the price tag to keep the companies afloat could balloon to between 75 and 125 billion dollars - a lot more than the 34 they're asking for. On the other hand, as I said before, both GM and Chrysler indicated they might not make it to the new year without an injection of funds. They'd be forced into bankruptcy. And it's hard to imagine members of Congress or the Bush administration wanting to see staggering job losses from the collapse of the auto industry on their watch.
HANSEN: NPR's economics correspondent John Ydstie. Thanks, John.
YDSTIE: You're welcome.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.