Bush approves $17.4 billion in aid to automakers
The conditions-laden bailout offers $13.4 billion in emergency government loans, with an additional $4 billion to come.
Reporting from Washington — President Bush extended a desperately needed financial lifeline to General Motors and Chrysler today, reluctantly providing $13.4 billion in emergency government loans to help them stave off bankruptcy for three months.
The money comes with a series of conditions, such as achieving wage competitiveness with U.S. factories run by foreign automakers, to make the companies financially viable by March 31. But Bush administration officials admitted many of the conditions could be revised by the incoming administration of President-elect Barack Obama.
Obama was scheduled to hold a news conference later today in Chicago, but in a written statement said he supported the White House action and has consistently echoed the Bush administration in calling for major changes by the auto industry.
"With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together -- including labor, dealers, creditors and suppliers -- to make the hard choices necessary to achieve long-term viability," Obama said. "The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it."
GM Chief Executive Richard Wagoner said the company was confident it could meet the conditions for financial viability, noting it already laid out major changes in a restructuring plan delivered to Congress this month. Among them are eliminating or selling its Saab and Saturn brands, shrinking its Pontiac division to a few niche models, and laying off tens of thousands of employees.
"We know we have a lot of work in front of us to accomplish this plan," he said at a Detroit news conference. "We look forward to proving what American ingenuity can achieve."
Speaking from the White House, Bush said the short-term loans were a stop-gap measure taken mostly to prevent wider damage to the rest of the economy.
"There is too great a risk that bankruptcy now would lead to a disorderly collapse of the auto companies," Bush said. "My economic advisors believe that would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry . . . and send our suffering economy into a deeper and longer recession."
