White House and Democrats push for auto bailout deal

By John Crawley and Thomas Ferraro

WASHINGTON (Reuters) - The White House on Tuesday demanded greater assurances about the viability of U.S. automakers before it would agree to a Democratic proposal for $15 billion in short-term loans for the wounded corporate giants.

The administration also opposed a Democratic bid to force automakers to drop lawsuits against California and other states seeking to cut tailpipe pollution, Democrats said.

Regardless, Democrats trying to cut an elusive deal with the administration said they remained hopeful an agreement would soon be reached and passed by Congress, perhaps by week's end.

"Progress is being made," said Nancy Pelosi, speaker of the U.S. House of Representatives and a California Democrat.

"We're still working through a number of issues, some of them just small and technical and other ones a little bit more meaty," said White House press secretary Dana Perino.

"There will not be long-term financing if they cannot prove long-term viability," she said, although the White House and some Republican allies have not specified what sort of assurances they seek.

"We need to keep moving forward," said Senate Majority Leader Harry Reid, a Nevada Democrat who has preached the need to safeguard a century-old industry that has long been a centerpiece of the now-ailing U.S. economy.

The Democratic measure is designed to allow General Motors Corp. and Chrysler LLC to avert bankruptcy through March with short-term loans. Ford Motor Co. has requested an emergency line of credit of up to $9 billion.

Senate Republican leader Mitch McConnell, a Kentucky Republican, complained that the Democrat draft "fails to assure taxpayers ... that they will not be asked to shell out billions more a few years or even a few months from now."

A day after Democrats offered their draft proposal, a handful of issues had yet to be resolved despite earlier hopes that a vote by Congress would come as early as on Tuesday.

One of these issues was Democratic demands that automakers drop lawsuits against states seeking to force them to comply with tougher emission standards.

In addition to providing $15 billion in loans, the Democratic proposal would force automakers to answer to a "car czar" and make the government their biggest shareholder.

That official would have powers to shape a restructuring of the companies, withholding further loans if progress toward a turnaround stalled.

Pelosi said a "car czar" could be named as this week if a deal is reached and approved by Congress. She suggested a possible choice of former Federal Reserve Chairman Paul Volcker.

Democrats control Congress and are expected to push a bill through the House. But they may run into trouble in the 100-member Senate where Republicans could raise a roadblock that would take 60 votes to clear.