the bailout, the Senate posed a much tougher hurdle. Many Republican senators were itching to take a hard line on the automakers and the unions.
These murmurs of dissent prompted Bush to dispatch both Chief of Staff Bolten and Vice President Dick Cheney to the Republican senators' weekly policy lunch, where the discussion grew heated. Abandoning his customary hard-line, free-market, let-'em-fail rhetoric, Cheney warned that unless the senators took action, they risked being remembered as "the party of Herbert Hoover forever."
As disgruntled lawmakers shifted in their seats, Bob Corker, not easily intimidated, stood up. "There is no way in heck that I would support this!" he said, declaring that the White House proposal demanded too little of the automakers. Describing what he'd learned from his fact-finding mission to Wall Street, Corker said that GM and Chrysler were effectively broke. More loans without the restructuring of liabilities and expenses would be folly, he argued. He laid out a set of tough strictures that would require the automakers to cut debt by making lenders accept stock; fund employee health care plans with stock, not cash; and make wages competitive. When he concluded, the caucus erupted in applause.
"If [Bolten and Cheney] came with ten votes, they left with two," Corker said triumphantly after the lunch. He emerged with an unusual charter: Minority Leader Mitch McConnell delegated him to use the last two days of the congressional session to negotiate a more stringent bailout bill. In the rigid Senate pecking order, such tasks were almost always reserved for senior politicians.
Word of the senators' rebellion spread fast. The White House had not expected to get many Republican votes in the House, and that proved to be the case. When Pelosi's bailout bill passed the House that evening, only 32 Republicans, mostly from auto manufacturing districts, joined 205 Democrats in voting yes. The auto bailout had been sucked into a Bermuda Triangle of transition politics. A lame-duck conservative Republican President, anxious that the auto industry not implode on his watch, was allied with congressional Democrats in the face of resistance from his own party.
Treasury Secretary Paulson wasn't holding his breath for Congress to get the job done. Dusting off the contingency plan commissioned weeks before, he called to set up a lunch to discuss autos with President Bush. Paulson wasn't enthusiastic about Corker's proposal; from an investment-banking standpoint, it wasn't bad work for an amateur, but the government's understanding of automakers' problems was still too limited to justify such specific measures. What's more, Paulson suspected that the Republican leadership's support for Corker was only lukewarm; he doubted that any bailout plan could actually muster the necessary votes.
His worry now was that Bush might not follow through on using TARP. Though the President had repeatedly told his senior team that he wanted a smooth transition and did not wish to saddle Obama with a major crisis as he walked in the door, the hard-core ideologues in the White House would certainly continue to argue against a bailout. To be sure, Paulson still believed that rescuing the automakers might strain TARP and hamper the Treasury in coping with a future crisis. But in recent days, the prospect of a disorderly bankruptcy of the automakers had moved up in his hit parade of imminent threats. Paulson was becoming convinced that an unplanned auto bankruptcy could have a disastrous impact on the declining economy and the frozen financial system.
So, as Paulson lunched with the President and Kaplan in the small dining room adjacent to the Oval Office, he argued for a bailout. "GM has done no preparations to file for bankruptcy," he explained to Bush, who was eating carrots, a chopped apple, and a hot dog on a bun. "There is no private debtor-in-possession financing available. So a GM bankruptcy would be messy and would disrupt the
These murmurs of dissent prompted Bush to dispatch both Chief of Staff Bolten and Vice President Dick Cheney to the Republican senators' weekly policy lunch, where the discussion grew heated. Abandoning his customary hard-line, free-market, let-'em-fail rhetoric, Cheney warned that unless the senators took action, they risked being remembered as "the party of Herbert Hoover forever."
As disgruntled lawmakers shifted in their seats, Bob Corker, not easily intimidated, stood up. "There is no way in heck that I would support this!" he said, declaring that the White House proposal demanded too little of the automakers. Describing what he'd learned from his fact-finding mission to Wall Street, Corker said that GM and Chrysler were effectively broke. More loans without the restructuring of liabilities and expenses would be folly, he argued. He laid out a set of tough strictures that would require the automakers to cut debt by making lenders accept stock; fund employee health care plans with stock, not cash; and make wages competitive. When he concluded, the caucus erupted in applause.
"If [Bolten and Cheney] came with ten votes, they left with two," Corker said triumphantly after the lunch. He emerged with an unusual charter: Minority Leader Mitch McConnell delegated him to use the last two days of the congressional session to negotiate a more stringent bailout bill. In the rigid Senate pecking order, such tasks were almost always reserved for senior politicians.
Word of the senators' rebellion spread fast. The White House had not expected to get many Republican votes in the House, and that proved to be the case. When Pelosi's bailout bill passed the House that evening, only 32 Republicans, mostly from auto manufacturing districts, joined 205 Democrats in voting yes. The auto bailout had been sucked into a Bermuda Triangle of transition politics. A lame-duck conservative Republican President, anxious that the auto industry not implode on his watch, was allied with congressional Democrats in the face of resistance from his own party.
Treasury Secretary Paulson wasn't holding his breath for Congress to get the job done. Dusting off the contingency plan commissioned weeks before, he called to set up a lunch to discuss autos with President Bush. Paulson wasn't enthusiastic about Corker's proposal; from an investment-banking standpoint, it wasn't bad work for an amateur, but the government's understanding of automakers' problems was still too limited to justify such specific measures. What's more, Paulson suspected that the Republican leadership's support for Corker was only lukewarm; he doubted that any bailout plan could actually muster the necessary votes.
His worry now was that Bush might not follow through on using TARP. Though the President had repeatedly told his senior team that he wanted a smooth transition and did not wish to saddle Obama with a major crisis as he walked in the door, the hard-core ideologues in the White House would certainly continue to argue against a bailout. To be sure, Paulson still believed that rescuing the automakers might strain TARP and hamper the Treasury in coping with a future crisis. But in recent days, the prospect of a disorderly bankruptcy of the automakers had moved up in his hit parade of imminent threats. Paulson was becoming convinced that an unplanned auto bankruptcy could have a disastrous impact on the declining economy and the frozen financial system.
So, as Paulson lunched with the President and Kaplan in the small dining room adjacent to the Oval Office, he argued for a bailout. "GM has done no preparations to file for bankruptcy," he explained to Bush, who was eating carrots, a chopped apple, and a hot dog on a bun. "There is no private debtor-in-possession financing available. So a GM bankruptcy would be messy and would disrupt the
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