Will the Big Three Get a Bailout? Plus, What the Feds Are Doing to Help Struggling Homeowners

This is a rush transcript from "The Beltway Boys", December 6, 2008, that has been edited for clarity.

FRED BARNES, FOX CO-HOST: Coming up on "The Beltway Boys," a dismal jobs report gives new urgency to the plight of struggling automakers. We'll tell you if the Big Three will get a bailout and under what conditions.

MORT KONDRACKE, FOX CO-HOST: Another drag on the economy — the foreclosure crisis. We'll tell you what the Feds are planning to do to help homeowners.

BARNES: Tensions are rising between nuclear rivals India and Pakistan in the wake of last week's terror attacks.

KONDRACKE: As one Bush gets ready to leave Washington, is another one on the way?

BARNES: That's coming up on "The Beltway Boys" right now.

I'm Fred Barnes.

KONDRACKE: And I'm Mort Kondracke. We're "The Beltway Boys."

The hot story of the week is, almost empty, and that's referring to the auto companies. Within a month, if something doesn't get done, one or more of the auto companies — the Detroit auto companies may go bankrupt jeopardizing a couple million jobs perhaps on top of the nearly two million that already been lost this year, including 533,000 in the month of November alone. But right now the whole U.S. government, the Congress, the Bush administration are totally — even Democrats within Congress, are totally gridlocked with what to do about all this. And the incoming Obama administration is AWOL. It's just not on the scene.

The best idea I've heard so far how to handle this came from Bob Corker, Republican senator from Tennessee, during the hearings in the Senate this week. Watch Corker.


SEN. BOB CORKER, (R), TENNESSEE: When the government says, we're here to help you, most people run away. And that's for a good reason. I actually see that a big stick by the government in this case could actually cause your company, for the first time in modern history, to have the tools and the leverage to actually do the things that will make you strong for the future.


KONDRACKE: Here's what Corker wants to do, especially as regards G.M., General Motors. The creditors of G.M. would take a haircut. They would get 30 percent on the dollar for what G.M. owes them. Secondly, the G.M. pension fund would be cut in half. Third, United Auto Workers members would take a pay and benefits cut to get them down to the levels of the Toyota and other plants in the United States. And fourth, there would be a March 31st deadline on all this and, if G.M. did not meet the deadline, it would go into Chapter 11 bankruptcy.

Now, General Motors' Rick Wagoner and Chryslers' Bob Nardelli agreed to March 31st deadline. Watch.


ROBERT NARDELLI, CHRYSLER CHAIRMAN: I would suggest that we put a date, March 31st, as a benchmark date that says, give us the funding, allow us to survive. And then by March 31st, have a toll gate to see where we are against those negotiations.


KONDRACKE: Now, Corker also wants G.M. and Chrysler to merge, which I'm not sure that they're exactly ready to do. Unfortunately, the Corker plan is going nowhere. The Democrats are not paying any attention to it but they should.

BARNES: Now, why is that? I agree with you. The Corker plan is one that makes sense because what he would do — wants to do is create companies that can survive on their own at some point and be eligible for worthwhile funding from the government in the short run. But the hang up is the United Auto Workers, a labor union that has Democrats by a chokehold it seems.

And I don't think Ron Gettelfinger, the head of the UAW, is going along with any cut in pay. Watch.


RON GETTELFINGER, UNITED AUTO WORKERS PRESIDENT: The UAW vigorously opposes any attempt to make workers and retirees the scapegoats and to make them shoulder the entire burden of any restructuring. Wages and benefits only make up 10 percent of the cost of the domestic auto companies.


BARNES: Nobody's trying to make the UAW members the scapegoats or to pay the whole burden here. The Corker plan's clear on that. The auto companies are mainly at fault. And besides, they agree to these terrible contracts with the UAW.

Here's Corker's idea, and it is the idea that it has to underpin anything rational that the Congress does. That is make the Big Three or big two, if it comes to that, to make them viable, profitable companies at some point. You have to get rid of that unsustainable debt for one thing. If they do that, if they don't meet these benchmarks and can't go through the next toll gate, as Nardelli said, then you're just throwing money down the rat hole. You don't want to do that. That's why these benchmarks are so important, including the one that would make the pay of the UAW members in Detroit match the pay in the auto plants, the foreign auto companies that have these successful and thriving auto companies across the south.

You're not going to get people like Corker to vote for something that doesn't include — it doesn't have to be the main thing — but doesn't include some reduction in pay and benefits on the part of the UAW. You have to have that, Mort.

KONDRACKE: What we're facing is another Herbert Hoover moment. The whole bottom could drop out of the U.S. economy if we don't get something going to sustain the auto industry. Herbert Hoover moment is the term that Paul Ryan, a Republican from Wisconsin, used during the $700 billion rescue package debate.

What's required here is leadership from somebody. And you know who? Barack Obama, who has not been on the scene. I'm not the only one saying that, you know. It's also Barney Frank, the chairman of the House Banking Committee who said, quote, "He's" — that's Obama — "is going to have to be more assertive at a time of great crisis with mortgage foreclosures and the autos. He says we only have one president at a time. That overstates the number of presidents we've got. We've got to remedy the situation." And he's talking about Obama getting into the act. But he's not so far.

BARNES: Well, there's a squabble now over where's the money going to come from in the short run here for a bridge loan that might bail out at least temporarily General Motors and Chrysler as well. Ford seems to be all right. And Democrats say oh, no, no, you can't wring it from that $25 billion that we've already authorized to spur Detroit to do research and development into green cars, these environmentally nice cars that nobody wants to buy. But the money's there. All they have to do is authorize it. But Democrats say, no. We should use the money from the financial bailout. But that's — that was for a different reason. That was to spur financial markets into lending and so on. That hadn't worked very well either.

Look, at the end of the day, which is going to be sometime this month, there will be some money from some fund that I think will go to General Motors and Chrysler just to tide them over. But if they get some big bailout after that, without these benchmarks being met, they will never achieve what I think they need to achieve. You know what that is? The kind of thriving auto industry we see across the south, from South Carolina, Georgia, Tennessee, Alabama, Mississippi. All these foreign companies have gone there and they're thriving.

Why are they thriving? They're thriving because, one, these are right-to-work states. That means these are non-union companies. It means they have great flexibility in the workplace that you don't have in Detroit. It means you have a very pro-business climate. These companies have gotten great tax incentives to come, and they last for a long time. They're thriving.

If those things had existed in Michigan and Ohio and these other states where the big three are over the last 20 years, we wouldn't be in this fix right now, Mort.

KONDRACKE: One, it's not only a labor problem. It's also a design problem. For years, General Motors, Ford and Chrysler made cars that people didn't want to buy because they weren't well designed. Although I've got to say right now, I've rented some Fords and they're pretty good.

But in addition, the transplants came in from overseas, from Japan and everywhere else, without a labor force whose pensions they had to pay. That's the big — that's the big cost that's burdening them down.

BARNES: That's not the only one though.


BARNES: It had something to do with it.


Coming up, he's made several centrist cabinet picks, but we'll tell you how President-elect Obama is under big-time pressure to go left. That's next.



BARNES: Welcome back to "The Beltway Boys." Let's check out the "Ups and Downs" for the week.

Up, homeowners. They are next in line for help from Uncle Sam. Under consideration, super-low mortgage rates for people looking to buy new or existing homes, and help for people behind in their mortgage payments.

Here's Fed Chairman Ben Bernanke.


BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: Steps that stabilize the housing market will help to stabilize the economy as well. In this regard, reducing the number of preventable foreclosures would not only help families stay in their homes, it would confer much wider benefits.


BARNES: It's about time.

KONDRACKE: Absolutely right.

BARNES: They seem to be getting back to what was the original problem, and that's all these bad loans to people who got homes and can't pay their mortgages, and probably should have known that in the first place that they couldn't pay them. But they're still on the books of the banks. And that's what the original financial bailout was supposed to deal with, the $700 billion. And Paulson and Bernanke used it to send capital to the banks. But the problem still exists and it has to be dealt with because the banks won't lend or won't lend much as long as these bad loans are on the books. And so they're finally going to do something about it.

Remember, Mort, in Japan, they had these bad loans on their books for the entire 1990s, which was basically a recession in Japan the whole time. They need to get them off the books of the banks so the banks start lending again. I hope they start immediately.

KONDRACKE: It's not only buying up these toxic loans, it's also helping the homeowners themselves to keep a floor, or at least not a crashing floor, underneath home values. And, you know, Bernanke said that 2.25 million homes may go into default this year. That's double what it was last year. And you've got all kinds of people who think you have to do something like this, including conservative economists like Martin Feldstein and Larry Lindsay, liberals like Barney Frank, Sheila Bair, the head of the FDIC, and so on.

But Hank Paulson has been away behind the curve on this. We haven't even had a plan from the Barack Obama administration in waiting.

BARNES: Some of these bad loans, the people want to stay in their homes. With a little help, they can stay and pay mortgages. The rest, foreclosure on them because they're not going to be able to deal with this ever.


Now, Congressman — Democratic Congressman Xavier Becerra. He is said to be on the very short list for U.S. trade representative. The only hitch, Becerra has a distinctly mixed record on free trade.

This is not only a Herbert Hoover moment, this is a Smoot-Harley moment, referring to the close down in world trade that deepened the world depression. Becerra was in favor, along with Bill Richardson, the new secretary of commerce, in favor of the North America Free Trade Agreement in the Clinton days. Then he turned against the North American Free Trade agreement and Becerra voted against the Central America Free Trade Agreement, which was a no-brainer, and he's against Columbia Free Trade Agreement. This is not a good sign for world markets.

BARNES: It is. The worst possible sign you can send to world markets is that you're going to — the Obama presidency that is — move in even the slightest way in a protectionist direction. At the least, if Becerra's the trade representative, this is going to set off a huge fight inside the new Barack Obama administration because you have people like Larry Summers, the former treasury secretary, former Harvard president, who I think is going to be the most important economic adviser, and he'll be the one at the White House in the Obama administration. He's a free trader. He's the one that understands that free trade is so important to world commerce. And that if you don't ensure that you have open trade markets around the world, we won't get an economic recovery anytime soon, that's for sure.

KONDRACKE: Absolutely.

Coming up, fallout from last week's massacre in Mumbai. And after knocking down previous rumors, Jeb Bush now says that he's considering a Senate run in Florida. That's coming up.


KONDRACKE: Welcome back to "The Beltway Boys." We're continuing with the "Ups and Downs" for the week.

Down, Pakistani President Asif Ali Zardari. He's under pressure from the U.S. and India to crack down on Islamic extremists inside his country in the wake of last week's terrorist attacks in Mumbai.

Here's Secretary of State Rice after meeting with Zardari this week. Watch.


CONDOLEEZZA RICE, SECRETARY OF STATE: The Pakistani government, I was told, and I fully believe, am very committed to this War on Terror. It does not in any way want to be associated with terrorist governments and is, indeed, fighting to root them out from wherever they find them. Therefore, I find these conversations quite satisfactory.


KONDRACKE: Zardari is a good guy, a Democrat, you know, the widower of Benazir Bhutto, who was assassinated by terrorists, and has dedicated himself to fighting — regards the battle against terrorism as being his war as well. And Condi Rice told him that if he did not crack down on Lashkar-e-Taiba, the group that perpetrated the Mumbai massacre, that either the U.S. would, or India would. He obviously doesn't want that.

The problem is that Lashkar is regarded by lots of people as heroes, as freedom fights in Kashmir. They run a lot of charities in Punjab. So it requires a big political step on Zardari's part to crack down on them. And what's more, they've got lots of friends still left in the ISI, the Pakistani secret service.

BARNES: You mean the terrorists still have friends.

KONDRACKE: Yeah, exactly.

BARNES: That's why it's a tough thing for Zardari. He's got to do it. But I wouldn't call him the best thing in Pakistan that India ever had, but he's someone who does want to — he and the Prime Minister Gilani want to improve relations dramatically with India. Obviously, the Mumbai attacks are a huge setback in that regard.

But I think India needs to have a little bit of patience to give him a chance to crack down and not just about on this terrorist group but got to do something about the safe havens in northwest Pakistan where lots of the terrorist groups are, including Al Qaeda, including Usama bin Laden. You can't just leave them there.

Look, the world, particularly the U.S. and India, but not just these two countries, but the world cannot allow that to persist. The more terrorists have this free area where they can go in and out of and train and then go to Mumbai or someplace else, they'll have to just stop and — we'll just have to forget about Pakistani sovereignty if Zardari can't do something about that as well.

Up, Jeb Bush. The former Florida governor is mulling over a run for the U.S. Senate in 2010 despite comments he made last year saying he'd never become a dreaded Washington insider. How dreaded can that be? Lived here my whole life. Mort, you've been here for years.

KONDRACKE: For years.

BARNES: I guess we're dreaded insiders.

But, in any case, Jeb Bush, who I regarded as head and shoulders above any other governor in the country, as the best governor in the country. When he was eight years as the governor of Florida, he told me he's not a Washington guy. I interpret that as being, well, he's probably not going to come to Washington and doesn't want to run for president.

Now — he jumped in so quickly, the day after Mel Martinez said he wouldn't run for re-election in 2010. I think he's going to run. And if he runs, he wins. And if he wins, then it will keep the presidential option open at the least. If he didn't, if he were just on the side lines, I think it would evaporate.

Meantime, I think he's got to be a unified figure in the Republican Party. He's a conservative on practically everything. But there are a couple of areas that are attractive to moderates and Hispanics in particular. He's very pro-immigrant. And he's one person who might think, let's take on the task of saving the Republican Party from its anti-immigrant extremists, because they tend to be the noisiest group now. We saw what happened in the election. They alienated Hispanic voters.

KONDRACKE: Yeah, exactly. Well, I hope Jeb Bush does get involved in politics again and returns, and does take the Senate seat. He would instantly become a leader of the party and a moderating influence on the party and a count weight to all the people who follow the radio talk shows clack that whip everybody up. He'd also provide competition for Sarah Palin as the face of the party. And she needs it. She needs some challenge.

Down, the anti-war left. If they were hoping for President-elect Obama to follow through on his campaign pledge to, "end the war in Iraq quickly," they have another thing coming.

Here's Obama this week. Watch.


BARACK OBAMA, (D), PRESIDENT-ELECT OF THE UNITED STATES: That SOFA that has been now passed by the Iraqi legislature points us in the right direction. It indicates we are now on a glide path to reduce our forces in Iraq. I believe that 16 months is the right time frame. But, as I've said consistently, I will listen to the recommendations of my commanders.


KONDRACKE: That means that, you know, a deadline is flexible and the SOFA, of course, is the Status of Forces Agreement. Not only that, but Obama has also said that he might not tax rich people while we're in the middle of a recession. Also, the idea of a windfall profits tax on oil companies is out the window. But lefties, do not despair, your cabinet officers are going to be named quite soon.

BARNES: Just so you're giving him credit for doing things that are no-brainers. It would make perfect sense, you know, to raise taxes during a recession.

You know what makes sense with the anti-war left? They are morally bankrupt. They don't care what happens in Iraq so long as the American forces lead to genocide. What do they care? Fortunately, Obama's not on their side anymore.

Don't move a muscle. "The Buzz" is coming up next.


KONDRACKE: What's "The Buzz," Fred?

BARNES: Mort, you know, as much as I hear about the economy and the Mumbai attacks in the rarified air of Washington, D.C., I hear about the bowl championship series, college football. Saturday night, there's a game between Alabama and Florida, the best two teams in the country, but only one of those teams will be in the BCS championship game. They've got an 18 playoff. They both could be there and they probably should be.

KONDRACKE: Yeah. To follow up what you said about India, Pakistan, look, there's a danger for the United States in the Mumbai massacre, and it's this. If India mobilizes troops against Pakistan — it doesn't even have to go to war — Pakistan will pull its troops out of the Taliban areas and the troops that are guarding the Khyber Pass. Through that channel passes 80 percent of the supplies for NATO troops and U.S. troops in Afghanistan. That's a real danger. That roadway will be blocked. And we'll have to ask Russia to help us supply our troops in Afghanistan. And then, we're at Russia's mercy. Not good.

BARNES: That's all for "The Beltway Boys" for this week. Join us next week when the boys will be back in town.

Watch "The Beltway Boys" Saturday at 6 p.m. ET and Sunday at 1 and 6 a.m. ET

Content and Programming Copyright 2008 Fox News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2008 ASC LLC (www.ascllc.net), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and ASC LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.