Congressional Democrats, Bush Administration Reach Agreement in Principle on $15B Financial Assistance Package for Big Three Automakers

Congressional Democrats and the Bush administration on Monday reached an agreement in principle on legislation that would provide $15 billion in emergency financial assistance to the Big Three automakers but continued to work to resolve the specific provisions of the bill, the Washington Post reports (Montgomery, Washington Post, 12/9). The legislation, which includes a number of conditions that the automakers would have to meet to receive financial assistance, would protect health care and other benefits for one million retirees and their dependents (Healy et al., USA Today, 12/9).

Last week, officials for the automakers presented to lawmakers individual proposals that included requests for as much as $34 billion in financial assistance, as well as revisions to their obligations to a fund that will provide health benefits to United Auto Workers retirees. Under contracts negotiated last year, the automakers agreed to contribute about $56.5 billion to a voluntary employees' beneficiary association, which UAW will manage. The VEBA, which will take effect in 2010 and remain operational for 80 years, will reduce retiree health benefit liabilities for the automakers by about $100 billion.

In addition, UAW last week agreed to allow the automakers to delay their contributions to the VEBA and make other concessions to help the companies obtain financial assistance from the federal government (Kaiser Daily Health Policy Report, 12/8).

Under the legislation, the automakers could receive financial assistance as early as next week, but they would have to submit detailed plans for restructuring by March 31, 2009, when they could receive additional assistance. The $15 billion would come from a Department of Energy program designed to promote the development of fuel-efficient vehicles (Washington Post, 12/9).

The House and Senate likely will vote on the legislation this week (Kranish/Paul, Boston Globe, 12/9).