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WASHINGTON: First signs of a post-election rift over the financial crisis between President George W. Bush and Barack Obama emerged on Tuesday after the president-elect pressed for urgent aid to ailing auto giants.
Leaked details of Obama's one-on-one chat with Bush on Monday raised the stakes as the outgoing and incoming White House teams and Democrats in Congress jostled over the scope of short-term economic rescue efforts.
An Obama aide said on condition of anonymity that the president-elect had raised immediate help for the crippled auto industry during his first visit to the Oval Office, confirming leaks to The New York Times and Washington Post.
The Times reported the framework of a possible deal - citing unnamed sources as saying the president may back new aid to auto giants and a new economic stimulus package if Democrats pass a stalled Colombia free trade pact.
The White House on Tuesday declined to confirm that Obama had pressed Bush for immediate funds for cash-strapped automobile manufacturers, saying details of the talks between current and future presidents would remain private.
Democratic leaders of Congress called on Saturday for funds contained in a 700-billion-dollar federal rescue plan for the financial sector to be diverted to the struggling auto industry.
The drama over proposed aid to auto makers reflected the political calculations being made in Washington ahead of Obama's inauguration as the 44th US president on January 20.
The Obama team has warmly praised Bush's outgoing administration for working to ensure a "smooth" transition of power, but the debate over an auto industry rescue was the first overt sign of underlying tensions.
US labour leaders, Obama and Democrats opposed the Colombia trade deal, which Bush has been trying to pass for months, over anti-union violence by right-wing paramilitary squads allegedly linked to the Colombian armed forces.
Reversing course on the pact could carry a heavy political price for Obama, who spoke out firmly against the Colombia pact, and for congressional Democrats who won office partly on an anti-free trade platform.
The Democratic leadership of the House of Representatives poured cold water on the possible quid-pro-quo.
House Speaker Nancy Pelosi "has said that it's urgent that we have an economic recovery package and it's not dependent on a trade deal," said her spokesman Brendan Daly.
"The Colombia free trade agreement should be considered on its own merits," he said.
Pelosi and Senate Majority Leader Harry Reid on Saturday made public an appeal to Treasury Secretary Henry Paulson to help the sector as part of a 700 billion dollar finance industry bailout plan.
Paulson has broad powers under the bailout to purchase financial instruments to restore financial market stability, 250 billion dollars of which has been pledged to buy stakes in US banks.
The White House has been vague over the last few days as to what it may consider in terms of aid for the automakers.
But spokesman Tony Fratto said Tuesday that US lawmakers had already created a loan programme "specifically designed to assist auto makers."
"If Congress intends to consider legislation to accelerate funds they've already appropriated, we'll listen to their ideas - as long as funding will continue to go to viable firms and with strong taxpayer protections," he said.
The biggest US auto maker General Motors warned Friday that it would run out of cash in the first half of next year and fellow Detroit giants Ford and Chrysler are also in crisis.
Obama was on Tuesday back in Chicago after his short visit to Washington on Monday, working on the make-up of his new administration.
He was also due to lay a wreath in the city in honour of fallen US warriors on Veterans Day.
Obama's transition chief John Podesta was set to hold the transition team's first briefing with reporters in Washington. - AFP/de
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