Obama calls for shared sacrifice in auto bailout

President-elect Barack Obama says he wants to keep tough conditions on automakers that get federal loans.

The companies must develop sustainable business models because it would be unacceptable "to keep them on their lifeline through taxpayer dollars in perpetuity," Obama told The Washington Post.

Obama said industry restructuring will require "everybody, from labor to management to creditors to shareholders, giving something up."

His comments contradict suggestions that the new administration will relax federal loan agreements reached last month with General Motors and Chrysler LLC, possibly with softer demands on the UAW. Obama takes office Tuesday, Jan. 20.

Obama met yesterdaywith The Post's editorial board. The newspaper posted an audio recording of the wide-ranging, hourlong interview on its Web site, www.washingtonpost.com.

Not an expert

Obama said he does not consider himself an expert on the crisis that faces the industry. He said his views predate the turmoil, which has sent new-vehicle sales plunging to an annualized rate of about 10 million units and some automakers to the brink of collapse.

Lawrence Summers, a top economic adviser to Obama, has formed a "working group" on the industry. Obama said he expects a report from the group soon.

Last month, President Bush approved $17.4 billion in loans for GM and Chrysler to keep them from running out of cash. The Treasury Department has pledged another $6 billion to GMAC Financial Services.

Treasury also has established guidelines for providing money to other companies deemed essential to continued industry operations.

Under the deals with the Bush administration, GM and Chrysler must present plans by Feb. 17 showing how they will become viable for the long term. The Bush administration made mandatory some conditions, such as limiting executive pay and providing stock warrants for taxpayers.

Other conditions are called targets. They include getting creditors to exchange debt for equity and asking UAW members to accept pay that is "competitive" with import-brand U.S. factories.

UAW President Ron Gettelfinger has complained that workers are being asked to give back more than other stakeholders. He has said he would take up the issue with the Obama administration. Organized labor played an important role in Obama's election.

Rising SUV sales

In The Post interview, Obama said the U.S. auto industry had deep troubles before the crisis but got by on cheap gasoline, loose credit and high SUV sales. He said he is concerned that SUV sales appear to be rising again as fuel prices have dropped.

"People's memories are a little short," Obama said. "If that's their thinking, that we'll be able to dig our way out of this problem because gas is going to stay at two bucks a gallon, then that would be a premise that I would fundamentally question."

On other issues:

-- Obama defended his request for economic stimulus legislation priced at nearly $1 trillion. He promised, once a recovery is under way, to get the federal budget under control by tackling the cost of Social Security and Medicare.

-- On proposed legislation that would make it easier for workers to unionize, Obama said employees need more leverage, but he's willing to listen to business community concerns. During his campaign, Obama favored so-called card check legislation that would allow a work force to unionize if most employees signed cards. No secret-ballot election would be necessary.

By Harry Stoffer- Automotive News