The Note

The Note, 12/04/08: Bail Out the Bailout?

December 04, 2008 8:15 AM

By Rick Klein with Hope Ditto

Shave your beard, shut off your mic, hang up the phone (we don’t care who’s calling).

Thursday brings the rarest of items to Capitol Hill: Congressional hearings that actually matter.

When they arrive in Washington Thursday morning, hats in hand (or at least on the passenger seats of their hybrids), the Big Three automakers are jumping back into a volatile political mix, partially frozen by bailout fatigue -- and asking for more money than they were last month.

Democrats have boxed themselves into doing something -- probably something big -- for the auto industry. But what that something should be looks very different in the Senate than in the House.

The Bush administration and congressional Republicans have drawn their battle lines -- and may have a winner on their hands if they play it right.

Save some politicians from Michigan, these are votes that just about no one wants to have to take.

(President-elect Barack Obama doesn’t want to touch this, either, but he may not have a choice.)

And that’s why it’s left to the auto executives who are seeking the bailout to bail out the politicians who are fighting for them.

Skepticism abounds: “Even a top Democrat in charge of evaluating their aid requests made it clear he was eager to avoid voting on a bailout. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, wrote to Federal Reserve Chairman Ben Bernanke on Wednesday asking the central bank chief whether there was anything stopping him from using his considerable lending authority to help the automakers,” per the AP’s Ken Thomas.

“And Senate Majority Leader Harry Reid, D-Nev., said it was up to the Bush administration to unilaterally rescue the Big Three with loans drawn from the $700 billion Wall Street rescue fund, since Congress was still unwilling to do so. ‘I just don't think we have the votes to do that now,’ he told The Associated Press.”

“House Speaker Nancy Pelosi and President George W. Bush are engaged in a showdown over who will bail out the U.S. automakers and where the money will come from,” Bloomberg’s Alison Fitzgerald writes. “GM, Chrysler and Ford Motor Co. are stuck in the middle, lobbying members of Congress, preparing for hearings which start this morning and making contingency plans if the money doesn't come through.” 

Beyond the optics -- and the symbolism does matter -- there remain major policy (will it work?) and political (will it fly?) differences here.

“Despite concessions from autoworkers to delay billions in payments to their health care fund for retirees and make changes to its job bank, the auto industry bailout faces an uphill battle in Congress,” ABC’s Imaeyen Ibanga and Jonathan Karl report. 

“A Republican Senate leadership aide, who asked not to be identified in order to speak candidly, said the union moves were ‘a step in the right direction for some members,’ but it was unclear how many,” McClatchy’s David Lightman and Kevin G. Hall report. 

The president-elect tiptoes back in: “It appears, based on reports that we've seen, that this time the executives from these automakers are putting forward a more serious set of plans,” Obama said at his news conference Wednesday. 

Could it fall to Obama, again? “The political climate on Capitol Hill is still doubtful for the automakers, and only seemed to worsen on Wednesday with a new CNN poll showing a majority of Americans opposing a taxpayer rescue,” Bill Vlasic and Nick Bunkley write in The New York Times. “As a result, there is growing concern among the Democratic leadership that they will simply not be able to drum up enough votes to pass an aid package next week, and that to do so will require a major lobbying effort by President Bush and Mr. Obama.” 

When are two presidents maybe better than none? “It’s going to take Bush and Obama calling people,” said a senior House Democratic aide. 

“What you’re hearing on Capitol Hill is that unless the president-elect and the president step in, this thing won’t pass,” ABC’s George Stephanopoulos reported on “Good Morning America” Thursday. 

(And -- judging the month that was: “It’s hard to imagine this month going much better for the president-elect,” Stephanopoulos said.)

A path? “Late Wednesday, Senate Banking Chairman Christopher Dodd was tapped to develop a consensus rescue package that could be brought to the Senate floor next week,” per The Wall Street Journal. “The Connecticut Democrat, who convenes a hearing Thursday on the industry's latest appeal for assistance, is to focus on legislation that would effectively create a bridge loan for the industry, by diverting funds from an existing loan program originally intended to help the industry retool to meet higher fuel economy standards.” 

What can even help? “It almost doesn't matter whether the Big Three file for Chapter 11 protection. To a large degree, the markets are treating the auto companies as if they're already in bankruptcy,” Newsweek’s Daniel Gross writes. 

Maybe that’s the inevitable outcome: “General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout, said a person familiar with their internal discussions,” Bloomberg’s James Rowley and Linda Sandler write. 

Not the transition they imagined: “Instead of being able to call in their chits for having helped elect Obama, union leaders are facing an array of crises, including layoffs, bankruptcies, contract concessions, and rising costs for healthcare and other services,” Michael Kranish reports in The Boston Globe. 

Not the transition they imagined, either: The selection of Gov. Bill Richardson, D-N.M., at Commerce is viewed as a step in the right direction for Latino groups -- but only a step.

“We won’t be happy with just two” Latinos in the Cabinet, Rep. Joe Baca, D-Calif., tells The Note. “We stepped up to the plate. When Latinos were asked to support Obama, we showed up and we did it.”

Said Rosa Rosales, president of the League of United Latin American Citizens: “Right now we have one; we expect at least two more.” 

More on diversity, per ABC’s Jake Tapper: “As of now . . . Mr. Obama has not appointed any Asian-Americans, Native Americans, disabled Americans or openly gay or lesbian Americans to his Cabinet. And yes, there are groups paying attention.” 

The AP’s Nedra Pickler: “Some Latinos are grumbling it is not enough after all the support they gave him in the campaign, and gays and Asian-Americans are pushing for some representation in remaining Cabinet announcements. But overall Obama is allaying some early concerns that a black president wouldn't need to put so much importance on diversity of those working under him.” 

There are a few ways to measure diversity: “Of the 28 senior White House staffers named so far, roughly one-third are nonwhite and nearly half -- 43% -- are women, according to a study by NYU Prof. Paul Light, an expert on presidential transitions. In addition, about two-thirds are the same age or younger than the 47-year-old Obama, himself the fifth-youngest President ever,” David Saltonstall writes in the New York Daily News. 

We’ll get you in the next round: “President-elect Barack Obama, after picking moderates for several cabinet positions, is looking at more-liberal candidates to fill some of the remaining vacancies,” Stephen Power and Laura Meckler write in The Wall Street Journal. 

“One potential choice is Rep. Xavier Becerra, a California Democrat who is in talks with the Obama transition team about heading the Office of the U.S. Trade Representative, according to two Democratic officials familiar with the selection process. Mr. Becerra is widely seen as a skeptic of free trade,” they write. “Arizona Rep. Raul Grijalva has emerged as a leading candidate for interior secretary, two people familiar with the deliberations said. Mr. Grijalva has been an outspoken critic of the Bush administration's policies on oil and gas drilling on public lands.”

Your day in transition news, per the Obama-Biden press office: “President-elect Obama and Michelle will host a thank-you event for the members of the Ilinois finance committee. There will be a print pool in attendance for his remarks. Vice President-elect Biden will be in Delaware hosting private meetings and has no public events scheduled.”

Some early tension, perhaps: “Timothy Geithner, President-elect Barack Obama's choice for U.S. Treasury Secretary, is seeking to push Federal Deposit Insurance Corp. Chairman Sheila Bair out of office,” Bloomberg’s Robert Schmidt reports. “Geithner, president of the Federal Reserve Bank of New York, has argued Bair isn't a team player and is too focused on protecting her agency rather than the financial system as a whole, according to two congressional officials and a person familiar with his thinking.” 

Promise watch: The windfall profits tax, blown away. An aide to the Obama Transition Team tells ABC News, “President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel. They are below that now and expected to stay below that.” 

David Sirota has feelings on the subject: “Between this move and the move to wait to repeal the Bush tax cuts for the wealthy, it seems like the Obama team is buying into the right-wing frame that raising any taxes -- even those on the richest citizens and wealthiest corporations -- is bad for the economy.” 

Promise watch: Iraq. “As he moves closer to the White House, President-elect Obama is making clearer than ever that tens of thousands of American troops will be left behind in Iraq, even if he can make good on his campaign promise to pull all combat forces out within 16 months,” Thom Shanker reports in The New York Times. 

“There always was a tension, if not a bit of a contradiction, in the two parts of Mr. Obama’s campaign platform to ‘end the war’ by withdrawing all combat troops by May 2010,” Shanker writes. “To be sure, Mr. Obama was careful to say that the drawdowns he was promising included only combat troops. But supporters who keyed on the language of ending the war might be forgiven if they thought that would mean bringing home all of the troops.”

Karl Rove weighs in with his latest on why Obama won: “If money talks, we'll likely soon hear the real reason why Barack Obama beat John McCain. Both men and the national parties will report to the Federal Election Commission today how much money they raised in October and November. And what the numbers will probably show is that Mr. Obama outspent Mr. McCain by the biggest margin in history, perhaps a quarter of a billion dollars.” 

Rove continues: “Rather than showing the success of a new style of post-partisan politics, Mr. Obama's victory may show the enduring truth of the old Chicago Golden Rule: He who has the gold rules.”

The real story (you can tell by who’s brokering the deal): “Barack Obama's campaign manager, David Plouffe, is writing a book about the historic election victory and has retained Washington attorney Robert Barnett, Obama's literary representative, to shop the proposal to publishers,” per the AP.

Says Barnett: “There will be many books about the Obama campaign, but only one from the campaign itself.” 

What’s Obama doing with his lists? (Other than hawking hats and fleeces for the holidays.)

“Former senator Thomas A. Daschle, Obama's point person on health care, launched an effort to create political momentum yesterday in a conference call with 1,000 invited supporters culled from 10,000 who had expressed interest in health issues, promising it would be the first of many opportunities for Americans to weigh in,” Ceci Connolly reports in The Washington Post. 

Chris Matthews watch: “All signs point to a candidate who is gearing up to run for the Senate seat held by Republican Arlen Specter. Either that or the MSNBC host is doing an awfully good job making people think he’s running, perhaps, some say, for use as a bargaining chip in his upcoming contract negotiations,” Politico’s Michael Calderone and Josh Kraushaar report. “NBC colleagues, political operatives, and friends who’ve recently spoken to Matthews told Politico he’s seriously considering running in 2010 and making the moves to prove it.”

Palin gives more gifts on Thursday: “Republican officials say that the RNC’s post-election financial report will include information on other ‘accessories’ purchased for Palin before the Nov. 4 election,” National Journal’s Edward T. Pound reports. “The amount to be reported is significantly less than $150,000,” one RNC official told National Journal. “The accessories on the report are less than $30,000.” 

Speaking of Palin -- Jimmy Kimmel has a new twist on a holiday classic. 

The Kicker:

“The Congresswoman then received another call from Obama and he told her 'It is very funny that you have twice hung up on me,' to which she responded that South Florida radio stations are notorious for these jokes. Obama told her that in Chicago they also have prank calls.” -- Press release from the office of Rep. Ileana Ros-Lehtinen, R-Fla. 

“What I meant is that Janet is a person who works 24-7, just like I do. She has no life, neither do I.” -- Gov. Ed Rendell, D-Pa., apologizing for his open-mic comment where he said Gov. Janet Napolitano, D-Ariz., is perfect for the Homeland Security job “because for that job, you have to have no life. Janet has no family. Perfect. She can devote, literally, 19-20 hours a day to it.” 

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