White House says Bush says didn't link trade, autos

By Jeremy Pelofsky

NEW YORK (Reuters) - The White House said on Tuesday President George W. Bush did not link support for economic stimulus measures or further aid to U.S. automakers to congressional passage of free trade pacts in a meeting with President-elect Barack Obama.

"The president did not suggest a quid-pro-quo," White House spokeswoman Dana Perino told reporters, adding, however, that Bush did speak to Obama about the merits of free trade.

An Obama adviser, speaking on condition of anonymity, also said Bush did not link the issues in their White House meeting on Monday.

The New York Times, citing people familiar with the discussion, reported Bush indicated he might support further aid to struggling automakers and a broader economic stimulus package if Democrats in Congress passed a stalled free-trade agreement with Colombia.

At the meeting, Obama urged Bush to use existing bailout measures to help the ailing industry on top of a $25 billion loan packaged approved in September, another Obama aide said.

That aide, who insisted on anonymity, said Obama suggested accelerating implementation of the current loan package and exploring avenues that exist under current law.

Obama suggested identifying someone in charge of the auto issue who would have authority to bring about reforms that would lead to a viable auto industry, the aide said.

Obama also raised the need for a second stimulus plan that would create jobs and help relieve "the squeeze on families," the aide said.

EXISTING PACKAGE

The Bush administration said any new and substantial money for manufacturers could come out of the existing loan package, which was passed to help Detroit make more fuel-efficient vehicles. But any change would require additional legislative action, White House spokesman Tony Fratto said.

"We're open to ideas from Congress to accelerate funds they've already appropriated in the auto loan program -- as long as funding will continue to go to viable firms and with strong taxpayer protections," Fratto said.

Detroit has asked for up to $25 billion in additional loans to stave off collapse. U.S. auto sales are plunging and General Motors Corp, Chrysler LLC and Ford Motor Co, are burning through billions of dollars of cash monthly.

Automakers privately say the financing for fuel-efficient vehicles would take too long to obtain and has too many strings attached to help shake the current crisis. They would like another $25 billion later to reduce retiree health-care costs.

Top congressional Democrats asked Treasury Secretary Henry Paulson on Saturday to consider using the $700 billion financial bailout initiative that has so far covered banks and other financial services companies to help automakers as well.

Congress next week could act to increase the flexibility of the bailout program if Treasury balks.