The White House on Tuesday remained hopeful that reorganization plans from two Detroit automakers would help save the industry — but declined to rule out bankruptcy if they don’t.
“I wouldn’t close the door” on bankruptcy, White House spokesman Robert Gibbs said.
Chrysler and General Motors late last year received a combined $13.4 billion in federal loans to stay in business, on the condition they return by Tuesday with plans to repay the money and remain in operation.
The plan submitted by GM calls for eliminating almost 50,000 additional jobs and seeking another $30 billion in loans in coming years.
Chrysler, meanwhile, seeks $2 billion more in loans and includes 3,000 more layoffs. The company said it had come to terms with the United Auto Workers union on labor issues but did not disclose the details.
Obama earlier this week scrapped plans to appoint a so-called car czar to oversee the industry’s reorganization and will instead leave the job to a task force headed by Treasury Secretary Timothy Geithner. It was unclear how long the group would take to review the automakers’ plans.
The top priority for the administration, Gibbs said, is “a strong and vibrant auto industry that’s employing tens of thousands of hardworking Americans, and building the cars of tomorrow for Americans right now.”
Lawmakers also were taking a wait-and-see attitude toward the plans. In a letter to officials from the two companies, Democratic leaders warned reorganizations must be detailed and credible.
“We trust that your restructuring plan will demonstrate to the world that you are willing to make the tough decisions that modernize your operations, restructure your debt, enhance your competitive status in the marketplace and protect American jobs,” House Democratic leaders told the automakers by letter.
Accepting the government money puts the automakers significantly under the thumb of Washington and particularly of the Democratic leadership — which has indicated a strong interest in protecting the industry’s workers over its executives.
Democrats also want significant commitments from automakers for better fuel efficiency in the cars they produce, and have expressed sympathy toward union concerns over compensation, health care and other issues.
When the automakers return to Congress, they face certain opposition from Republicans including Sen. Richard C. Shelby of Alabama, top Republican on the Senate banking committee, and others who opposed the initial bailout for the industry.
Obama, who does not want to see the industry collapse on his watch, is expected to take a hands-on approach to the restructuring through the administration’s task force.
“Obviously there are different paths that can be chosen, and we’re anxious to see what type of restructuring details each of the automakers themselves have put together in conjunction with their bondholders [and] their employees,” Gibbs said.
