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Bush Poised to Sign Temporary-Budget Bill

THE WALL STREET JOURNAL

SEPTEMBER 29, 2008

By COREY BOLES and JOSH MITCHELL

WASHINGTON — President George W. Bush is expected to sign into law a roughly $630 billion bill to fund the federal government through March 2009. The bill would also provide billions of dollars in low-cost loans to ailing auto makers.

The Senate on Saturday approved the temporary-budget bill by a vote of 78 to 12, after the House approved it earlier in the week. The measure now proceeds to the White House for President Bush’s signature. A White House spokesman said the president would sign the bill into law, but added that the timing remained unclear.

The bill must be approved by midnight Tuesday to avert a government shutdown. Lawmakers have been unable to pass the majority of the 12 spending bills they are required to approve each year to ensure the continued operation of the federal government.

The bill would also provide $25 billion in low-interest loans to the auto industry to accelerate the development of fuel-efficient vehicles. The loans are expected to principally benefit Detroit’s Big Three auto makers, General Motors Corp., Ford Motor Co., and Chrysler LLC. The companies, which are struggling financially, could save hundreds of millions of dollars by borrowing at below-market interest rates.

Critics of the plan, mainly fiscal conservatives, have compared the loans to government bailouts of Wall Street companies. They said the package is another example of taxpayer money being put at risk to help an ailing industry.

Backers of the plan said the loans will help preserve American jobs. They noted that Congress had already authorized the Energy Department to make the loans under a sweeping energy law passed last year and aimed at reducing the country’s dependence on imported oil.

Both Republican presidential nominee John McCain and his Democratic rival Barack Obama — who are competing fiercely for votes in Michigan — have backed the auto industry’s push for the funding.

In a defeat for environmentalists, the government-spending legislation doesn’t include an extension of the moratoria that prohibit offshore drilling in many areas of the outer continental shelf, effectively opening up such areas to drilling. Commercial development of oil shale in western states also would effectively be opened up because the spending bill failed to address the expiring drilling moratorium on oil shale. Companies aren’t expected to move forward with drilling in new offshore areas or for oil shale any time soon, partly because it will take the Interior Department several years to issue new leases.

Democratic leaders had hoped to extend the drilling bans, but such a move would have risked drawing opposition from Republicans and the White House. President Bush has announced that he would allow the bans to expire at the end of September.

The prohibition on offshore drilling has been in place for more than a quarter of a century. The question of whether to lift the ban has emerged as an important issue in the presidential and congressional election contests, with polls showing growing public support for Republicans’ calls to lift the moratorium. Although Democrats ultimately acquiesced on the matter, some have said they will try to restore the offshore-drilling moratorium after the November election, when the party is expected to gain seats in both congressional chambers.

Speaking to reporters on Friday, Marvin Odum, the head of Royal Dutch Shell PLC’s U.S. operations, acknowledged that “it is a possibility that [the ban] comes right back on.”

—Stephen Power contributed to this article.Write to Corey Boles at [email protected] and Josh Mitchell at[email protected]

http://online.wsj.com/article/SB122265399484184411.html

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