By Adriel Bettelheim CQ Staff
President Obama believes U.S. automakers have not yet achieved a viable restructuring plan and is calling for sacrifices from all parties involved" including management labor shareholders and suppliers.
One casualty according to Democratic sources is General Motors Corp. Chairman and Chief Executive Officer Rick Wagoner who will step down at the urging of the administration. The company plans to issue a statement on Wagoners future after Obama addresses the automarkers plight Monday morning.
A day before his administration is due to respond to a request to continue a bailout of GM and Chrysler LLC Obama appeared on CBS Face The Nation" on Sunday and warned that major concessions are necessary to ensure the companies remain viable once the economy recovers.
Everybodys gonna have to come to the table and say its important for us to take serious restructuring steps now in order to preserve a brighter future down the road" Obama said.
A presidentially appointed task force is expected to recommend continued aid but with more oversight and a new deadline to extract concessions from the companies creditors and unions sources familiar with the issue said.
In the wide-ranging interview Obama also said he would continue to press Congress to make permanent the middle-class tax cuts contained in the economic stimulus package (PL 111-5) and expressed concern about the effect violence from Mexicos battle against drug cartels could have on border communities.
On foreign affairs Obama ruled out sending U.S. troops into al Qaeda safe havens in Pakistan but added he expects the government there to be accountable as the United States increases military and civilian aid to Pakistan and in Afghanistan.
Obamas comments on the auto industry were broadcast a day before he is expected to announce his plans to reconfigure their businesses. GM and Chrysler have asked for an additional $21.6 billion in aid on top of the more than $17 billion the government has provided the companies to stay afloat since December. Most of that first installment of aid has been exhausted.
The administration is in a tight spot eager to show it is sensitive to the concerns of unionized workers and the manufacturing sector after allowing Wall Street executives to collect millions of dollars of bonuses from bailout funds. Yet administration officials privately acknowledge the strong public sentiment against what some perceive as rewarding auto executives for bad business decisions.
A CBS News poll of 1142 adults conducted March 12-16 found mounting frustration with such bailouts with only 18 percent of respondents saying the government should provide the companies more assistance; 76 percent said the government should not.
A Democratic source said administration officials were expected to brief members of Congress on details of their response Sunday evening. By asking Wagoner to step down the administration targeted an executive who headed the huge company for eight years but became the focus of intense congressional criticism when auto executives first approached the government for assistance last fall. GM in particular was cited for its resistance to making smaller more fuel-efficient vehicles.
Administration officials did not respond to questions about Wagoner or details of the plan on Sunday evening.
Obama in the CBS interview said the automakers have not yet made the case for the additional funds though he acknowledged the belt-tightening GM and Chrysler have undertaken since they first asked for relief.
Ford Motor Co. which secured lines of credit before the financial crisis has not requested bailout money.
Theyre not quite there yet" Obama said of GM and Chrysler. What were trying to let them know is that we want to have a successful auto industry ... but its got to be one thats realistically designed to weather this storm and to emerge at the other end much more lean mean and competitive than it currently is."
GM and Chrysler employ some 140000 workers in the United States. The companies have until Tuesday to submit restructuring plans to the government but are not expected to meet that deadline. The plan Obama is expected to announce on Monday will take up whether bankruptcy is a viable option should the companies fail to restructure arrangements with unions shareholders and creditors.
Under terms of the governments first round of assistance to GM and Chrysler the companies are pressing the United Auto Workers to accept stock in exchange for half of the payments the companies are supposed to make into a union-run trust fund to cover the cost of retirees health care.
Obama is expected to sound themes of shared sacrifice a message he said he delivered to CEOs of the nations largest banks last week.
Its very difficult for me as president to call on the American people to make sacrifices to help shore up the financial system if theres no sense of mutual obligation and mutual help" Obama said.
But he added he needs to convince the American public that an economic recovery is predicated on the success of banks and other players in the financial sector.
