Bush extends aid to carmakers

AND MARTIN ZIMMERMAN, WASHINGTON AND LOS ANGELES — In reluctantly tossing a $17.4-billion government lifeline to General Motors Corp. and Chrysler on Friday, President Bush ensured that the automakers would not fail in the coming weeks -- sparing the economy and his own legacy another potentially devastating blow. But Bush's action leaves most of the tough decisions about the the U.S. auto industry's future to President-elect Barack Obama.

The conditions Bush attached to the emergency loans, such as requiring trade unions to accept wages and benefits comparable to those at U.S. factories run by foreign automakers, were largely nonbinding and thus subject to change by the next president.

That could mean a far different future for American automakers than many analysts have been predicting.

Obama has consistently echoed Bush's call for major restructuring by U.S. automakers to assure their long-term viability in a changing global marketplace.

With his strong environmental and pro-labor stances, however, Obama may have a much different view from his predecessor of what constitutes viability. For example, in his energy plan Obama has called for not just keeping Detroit alive but making it a world leader in fuel-efficient, environmentally friendly vehicles.

"This is clearly a temporary measure," said Mark Oline, an analyst with credit rating firm Fitch Ratings. "We expect the agreement will be significantly reworked once the new Congress and the new administration take office."

Detroit automakers have begun shifting production from gas-guzzling trucks to smaller, fuel-efficient cars and investing in technology to produce hybrid and electric vehicles. But those changes have been slow in coming, and the recession and credit crunch have hammered Detroit's already financially weakened Big Three.

GM and Chrysler have said they needed a total of $14 billion by March 31 or they could face bankruptcy. Ford said it did not need short-term funding but warned that a failure of one or both competitors could endanger it as well.

In an indication of what may lie ahead, the United Auto Workers union and some Democratic lawmakers Friday were already calling on Obama to change some conditions.

Obama called the bailout a "necessary step" and warned GM and Chrysler executives not to squander the chance to remake their companies because "the American people's patience is running out."