Obama, Bush deny bailout bargaining

Aids for both men say there was no link between bailout, stimulus packages and trade deal.

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NEW YORK (CNN) -- Both the White House and a senior aide to President-elect Obama on Tuesday emphatically denied there had been any attempt on the part of President Bush -- while meeting with Obama on Monday -- to link a federal bailout of the struggling auto industry or a second stimulus package to passage of a Colombia free trade deal.

Those two financial packages are favored by many Democrats, including Obama, while the free trade deal remains a top priority for the outgoing administration.

"The president does support free trade, but did not suggest a quid pro quo (with Obama)," White House spokeswoman Dana Perino said Tuesday. "He did discuss the merits of free trade, but there was no linkage between Colombia free trade and a second stimulus package."

There was no "wheeling or dealing" between Obama and Bush during their private Oval Office meeting Monday, the Obama aide said -- the president and the president-elect each listed his top priorities, but did not attempt to reach any agreements.

Obama is not "under any great illusion" that Bush will support a second economic stimulus plan, said the aide.

Obama did, however, strongly urge Bush to support billions of dollars in aid for the struggling auto industry during the coming lame-duck session of Congress, according to three officials briefed on the meeting.

The officials said Bush expressed skepticism about giving taxpayer money to automakers on the heels of a string of government bailouts for other industries. In addition, they said, the president urged Obama to help push through the free trade pact with Colombia -- a key legacy item for the outgoing administration that is facing stiff resistance from Democrats on Capitol Hill.

But a senior Bush administration official downplayed suggestions that Bush was offering a trade-off by saying the White House still believes the trade deal "deserves to pass on its own merits" without being linked to anything else.

The officials familiar with the meeting said Obama, pushing the auto industry aid, made the case that dramatic action needs to be taken this year -- rather than after he is sworn into office -- because the Big Three U.S. automakers are bleeding cash at an alarming rate.

One of the officials noted that about one in 10 jobs in America is tied to the auto industry, and if one of the companies goes bankrupt it could have a massive spillover effect in the credit industry and other sectors.

"The numbers are so staggering," said the official. "It's a huge piece of the financial fabric of the country."

The senior Bush administration official said the White House is "open to ideas from Congress to accelerate funds they've already appropriated" to help the auto industry.

But the administration official said support for the auto industry would come only "as long as funding will continue to go to viable firms and with strong taxpayer protections."

"Congress created a loan program for the auto industry," Perino noted. "As we read it, we don't see anything in there that would give us the authority to help individual industries, but we are willing to listen to Congress as to how they might choose or not choose to provide additional authority so that we could accelerate those loans to viable companies. We understand that they're going through a very difficult time."

An official in the auto industry told CNN that bringing the Colombian pact into the negotiations could be a poison pill that would prevent passage of an auto industry aid package. But a senior Democratic aide suggested that even if Bush attempted to link the aid package to the trade deal, Congress may be likely to stand up to him and pass the aid package separately.

The senior aide said Democrats do not believe "this president wants to add the demise of GM to his legacy list." To top of page

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