First, the statement from John Engler, president and CEO of the National Association of Manufacturers:

I cannot stress enough the importance of the auto industry to our nation’s economy.  As I’ve stated in the past, the automotive sector is the country’s largest manufacturing industry, and it accounts for approximately 20 percent of our manufacturing GDP. What’s more, the overall industry accounts for more than a million jobs, including many among industry suppliers.  The automotive sector is a highly integrated industry and a failure of one automaker could have a crippling impact on the entire supply chain. As President Bush said, it would worsen a weak job market and exacerbate the economic crisis.

We applaud President Bush’s carefully-reasoned decision today to use funding from the Troubled Asset Recovery Program (TARP) to stabilize the auto industry.  This action will give the automakers time to develop plans for restructuring their businesses to ensure they are more competitive in the future.  Further, today’s action will shield the American people from another harsh economic blow at a time when the economy is especially vulnerable.  The President’s decision is a critical component in the overall effort to restore confidence to consumers and investors, and stabilize the economy.

• Detroit News, “GM, Chrysler get up to $17.4 billion in federal aid“
• Detroit News, “UAW hails auto bailout but will work to remove ‘unfair conditions’“
• Detroit News, “Wagoner: GM can meet loan conditions“
• Detroit News, “Letter: Nardelli to Chrysler employees“
• Detroit Free Press, “The breakdown: Who will get what when? “
• Detroit Free Press, “Other details: How long are the loans for? “
• Detroit Free Press, “Fact sheet: See the White House’s terms“
• Detroit Free Press, “Shelby criticizes Bush, rescue plan“
• New York Times, “Bush Approves $17.4 Billion Auto Bailout“
• Bloomberg, “GM and Chrysler Will Get $13.4 Billion in US Loans“
• Los Angeles Times, “Auto industry gets a short-term fix“
• Christian Science Monitor, “‘Viability’ is key to the White House bailout of the auto industry“
• Heritage Foundation, “Bush’s Awful Auto Bailout“

From Bloomberg, “Bush Signals Swift Decision on Funds for GM, Chrysler“:

Dec. 15 (Bloomberg) — President George W. Bush said deliberations by his administration on whether to tap a bank bailout fund to keep General Motors Corp. and Chrysler LLC out of bankruptcy “won’t be a long process” because of the “fragility” of the U.S. automakers.

The president, traveling on Air Force One from Iraq to Afghanistan last night, said he “signaled” his administration is considering using money from the $700 billion fund. Bush said he’s “not quite ready” to announce any rescue plan.

Also from Bloomberg, “GM, Chrysler Failure Would Push Economy Into Abyss“:

Dec. 15 (Bloomberg) — The U.S. risks sliding into a deeper economic slump if General Motors Corp. or Chrysler LLC shuts down because President George W. Bush doesn’t provide short-term financial assistance.

“We’re already in a deep recession in my state, as we are in most of the 50 states,” Senator Sherrod Brown, a Democrat from Ohio said on CBS’s “Face the Nation” yesterday. “And this would just plunge us deeper into economic problems, into a hole that it would take a long, long time to extricate ourselves from.”

A bankruptcy filing by either company would mean production cuts and plant closings, and tens of thousands of workers would be fired, industry analysts say. That would cause many suppliers to collapse, triggering more job losses, straining the cities and states where the car and parts companies operate, as well as federal safety-net programs.

From Dana Perino, White House Press Secretary:

It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future.

Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary – including use of the TARP program — to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.

While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.

UDPATE (12:05 p.m.): From Treasury:

Treasury spokeswoman Brookly McLaughlin said, “Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry.”

The motion to invoke cloture on the $14 billion financial aid package for the domestic auto industry failed in the Senate late Thursday on a 52-35 vote. (Roll Call No. 215.)

Detroit News coverage:

• Rescue collapses as Senate rejects aid for auto industry
• Senators to UAW: It’s payback time
• Options narrow for GM, Chrysler

We’ll highlight the Detroit News editorial, expressing sharp criticism all the way around and calling for the Treasury now to provide the aid to keep the domestic auto manufacturers operating. Now, not all disagreement is partisan squabbling; some of it may well be philosophically grounded. But otherwise, a sharply argued opinion piece:

Loan deal’s failure a loss for everyone

The collapse of the automotive bailout loan legislation is indeed, as Senate Majority Leader Harry Reid said Thursday night, a loss for the country. What should have been a simple package to lend existing funds to Detroit’s automakers turned into a political nightmare.

The task before Congress was to move $14 billion in emergency loans to keep the automakers operating for the next few months until their turnaround strategies could kick in, and to provide reasonable protections for taxpayers.

Instead, Congress chose partisan squabbling and political agendas over good public policy.
In the House, Democrats saw the loan package as an opportunity to saddle the automakers with strict fuel economy and emissions standards, limits on executive compensation and strict guidelines for how they run their businesses.
In the Senate, Republicans from southern states that host foreign auto manufacturers saw an opportunity to do a little union busting, insisting that the United Auto Workers negotiate concessions directly with senators.

And politicians from both sides of the aisle through this entire grueling process continued to spout the nonsense that Detroit’s automakers had “their heads in the sand,” in the words of President-elect Barack Obama.

(continue reading…)

Bloomberg, “Democrats, White House Said to Agree on Automaker Aid.”

The breakthrough came when House Speaker Nancy Pelosi said $25 billion in Energy Department funds for the development of fuel-efficient vehicles could be used to keep the automakers operating if there is a “guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative.”

• Detroit News, “Congress, White House zero in on auto aid plan.”
• Detroit Free Press, “Pelosi drops opposition to tapping plant aid“

Wall Street Journal, “Detroit Bailout Nears a Reprieve:”

White House press secretary Dana Perino termed the discussions “constructive” on Saturday but stopped short of declaring a final deal had been reached.

“We have had constructive discussions with members of Congress from both houses, and both sides of the aisle,” she said in a statement. “We hope to continue to make progress toward assistance for the automakers based on important principles,” including use of the existing auto loan program and “very strong taxpayer protections.”

UPDATE (Noon): An editorial in today’s Wall Street Journal takes a jaundiced tone, “Bridge Loan to Nowhere“:

All three CEOs also drove to Washington in hybrid vehicles as penance for their private-jet flights back in November. This bit of political obeisance was supposed to show that they’d gotten religion both on their perks and their carbon footprint. But it may not have been enough. One Congresswoman wanted to know why they couldn’t hit a 50-mpg fuel-economy target by 2015. Another asked whether, maybe, they weren’t selling enough cars because everyone in America was waiting with baited breath for the coming revolution in fuel economy.

After Barney Frank was done roughing up the CEOs, he hustled them out to hear from David Friedman of Union of Concerned Scientists and Jeffrey Sachs of the Earth Institute. Mr. Friedman warned the Members not to give one inch on fuel-economy standards and not to relax the environmental strings attached to the $25 billion Congress has already made available to the car companies.

You get the picture. If there was ever any question whether Congress actually wants to “save” Detroit, this week dispelled it. This is not a bailout that Congress is debating. It is a federal takeover. We don’t mean that in the sense that the feds will own the companies on paper, although that can’t be ruled out. What Congress wants to own is their business plan, and Detroit seems prepared to oblige.

It is a weird dynamic, to be sure. Congress imposes anti-market regulations and environmentally inspired mandates that make it difficult to turn a profit, and when Detroit cries uncle, provides just enough money to keep things going until another round of anti-market regulations and environmentally inspired mandates can be imposed. Is that what they mean by sustainable growth?

Had no time to pay attention to today’s hearing by the House Financial Services Committee on federal financial aid for the domestic auto industry. Heck, it may still be going on. (Check CSPAN. Nope.)

Henry Payne of The Detroit News, a critic of government aid, reports at National Review Online what he’s hearing:

Detroit, Mich. — They can’t get it done.

That is the backroom word on Capitol Hill as auto executives from the Detroit Three wrapped up a second, and final, day of hearings before the House in attempt to get a $35 billion loan to keep them solvent.

Instead, speculation is that the Bush administration — loath to watch a U.S. automaker drown in its last month in office — will offer $8-14 billion band-aid to GM and Chrysler (both of which will run out of cash this month) possibly from the TARP.

“Detroit’s automakers will be lucky to get less than half of the $34 billion they’re seeking for survival, as several House members said today there was simply not enough time to examine the industry’s pitch and hammer out a consensus by next week,” reads one report from the Detroit Free Press. “Only stopgap funding of up to $14 billion appeared possible next week.”

This will act as a tourniquet for the two most-crippled automakers so they can limp along until the Obama administration can convene with a new Congress and tackle long-term surgery in the new year.

 Meanwhile, the latest from The Detroit News’ webpage:

• GM Board member says prepackaged bankruptcy ‘a fantasy’
  A member of General Motors Corp.’s Board of Directors today reiterated that the automaker would consider all options, including Chapter 11 bankruptcy, if Congress refuses to loan the company as much as $18 billion in emergency aid. - 5:48 pm
• Chrysler hires bankruptcy advisers
  Chrysler LLC’s hiring of a firm that specializes in bankruptcy proceedings was its adherence to the request by Congress to study the drastic step as an option, the automaker said in a statement today. - 5:02 pm
• GM to lay off 2,000 more workers
  With Congress debating whether to give General Motors Corp. up to $18 billion in financing, the automaker announced 2,000 more layoffs today at three factories. - 5:02 pm
• Congressional agency: Auto aid bill can’t use $25B from energy retooling program
  WASHINGTON — The Congressional Budget Office said a compromise bill to aid automakers can’t provide $25 billion from an Energy Department retooling program, dealing another blow to efforts to win quick aid before Congress goes home for the year. - 5:02 pm

The original Nov. 21 letter from Senate Majority Harry Reid and Speaker of the House Nancy Pelosi to the auto company executives, including the political positioning against the Administration and key demand of the companies:

Unfortunately, the Bush Administration and the Federal Reserve have thus far declined to use their powers to improve our nation’s financial stability by assisting the auto industry. Notwithstanding existing authorities, this Congress is prepared to consider additional legislation that would give the assistance you seek, provided that you submit a credible restructuring plan that results in a viable industry, with quality jobs, and economic opportunity for the 21st century while protecting taxpayer investments.

House Majority Leader Steny Hoyer’s statement, December 2.

Last month, the Democratic leadership in Congress insisted that the automakers present a plan for long-term viability before receiving any assistance from taxpayers. With the economy officially in a recession, we continue to work to help this vital industry, and its 3 million jobs, ride out the storm and emerge stronger.

But before any taxpayer money is provided, the American people deserve to know how the Big Three plan to survive the current crisis, become competitive companies once again, and eventually repay taxpayer loans. The American people also need to be assured that the companies will be held accountable for any tax dollars they receive, and that CEOs will not be rewarded with exorbitant salaries.

Today, the automakers are presenting to Congress their plans for restructuring. We will examine them closely in the days to come, and on Thursday and Friday, Congressional committees will hold hearings. I hope that those hearings, along with the plans submitted today, will lead to increased public confidence in the auto industry’s viability and that Congress will be able to take action next week.

Comments by White House Press Secretary Dana Perino, December 2:

Q The automakers are getting ready to present their plans up on the Hill. Has your position — has the White House position changed at all on this? Have you seen any summaries? Do you know what they’re –

MS. PERINO: I don’t know if we have seen the summaries or not. I know Secretaries Gutierrez and Bodman sent letters to Congress last week to give the administration’s view on the taxpayer issue. We have said that we want to provide help for the auto industry. We thought that we had provided a bipartisan way forward to be able to do that. (continue reading…)

Links all fixed…

The Detroit-based domestic auto industry submits its plans…

From The Detroit News, “Survival roadmap for the Big 3“:

WASHINGTON — Detroit’s Big Three automakers made a desperate plea for a $34 billion emergency federal bailout Tuesday, as General Motors Corp. and Chrysler LLC warned they would collapse by the end of the year without immediate help.

The automakers delivered new business plans to Congress written during the last 11 days that for the first time spelled out in great detail the problems they face and the painful steps they must take to survive and restore profits amid plunging auto sales and a bleak outlook for 2009.

The recovery plans exposed how conditions have worsened dramatically in the past two weeks since GM, Chrysler and Ford Motor Co. made their initial request to Congress for $25 billion and came as the industry reported a nearly 40 percent drop in November sales, the worst sales month in 26 years.

And more from the News:

• Survival roadmap for the Big 3
• Chrysler: Warns it needs loan to stay in business
• GM: Needs $4B in December to stay afloat
• Ford: Seeks line of credit, just in case

The Detroit papers do a fantastic job covering the industry’s condition, arguments and broader impact on the economy. Here’s the Detroit Free Press:

• GM, Chrysler’s plea: Aid to survive month

General Motors Corp. and Chrysler LLC warned Tuesday they could collapse without federal aid before the end of the month, as they joined with Ford Motor Co. to urge $34 billion in loans and to press lawmakers to resolve a standoff threatening hundreds of thousands of jobs.

• Video: First pitch ‘not our finest hour’
• Michigan knows jobs can leave forever
• Chrysler: Allies eyed; electrics in works
• Ford: Cost cuts, new vehicles promised
• GM: Shrink brands, pay, jobs, dealers