Obama aides play down tensions with Bush

By Caren Bohan

WASHINGTON (Reuters) - Aides to President-elect Barack Obama distanced themselves on Tuesday from reports that President George W. Bush had pressed Obama to back a free trade deal with Colombia in exchange for help for the struggling automobile industry.

Obama advisers also played down suggestions the incident had led to tensions with Bush and his staff as the two sides seek to ensure a smooth presidential transition.

"I would characterize our relationship as collegial," said John Podesta, co-chair of Obama's White House transition. "Whatever happened this morning was the result of reports which I think were not accurate."

With the country facing wars in Iraq and Afghanistan and a worsening economic picture, Obama and Bush have sought to emphasize that they are working together toward a smooth transfer of power when the Democratic president-elect takes over from Bush's Republican administration on January 20.

The two met privately at the White House on Monday, almost a week after Obama's resounding electoral victory over Republican John McCain, while Bush's wife, Laura, led Obama's wife, Michelle, on a tour of the executive mansion.

The meeting featured smiles and warm handshakes and neither side initially said much about what the two men discussed.

But reports in The New York Times and Washington Post quoted unidentified aides to Obama as saying that Bush indicated he might support help for the automakers and a broader economic stimulus package if Democrats in Congress approved a stalled trade deal with Colombia.

NO QUID PRO QUO

The White House was quick to try to correct what it said were inaccurate reports.

"We just want to make sure that we let everybody know that the president did not suggest a quid pro quo, but he did talk about the merits of free trade," White House press secretary Dana Perino told reporters.

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.

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.

A collapse of any of the U.S. automakers would lead to huge job losses. Obama and his team worry there could be huge ripple effects on an already weakening economy.

Bush, a proponent of free trade, sees the agreement with Colombia as important in part because he also considers the country a crucial ally in Latin America where antipathy toward the United States has grown.

Podesta also said reports of a quid pro quo on the request for a stimulus package and auto industry help were not true.