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Auto bailout talks drag on, though deal seems near

WASHINGTON - Weary Democratic congressional leaders and White House officials pushed to clear the final obstacles to a $15 billion bailout of U.S. automakers Tuesday night, but the rescue plan faced new snags as Republicans raised deep concerns.

Top Democrats said they were still hopeful of a deal by today - with a final vote to follow by the end of the week - though sticking points remained regarding the package, which would place a 'car czar'

named by President George W. Bush in charge of an auto industry restructuring in return for emergency government loans.

'We've had very productive discussions about legislation consistent with the president's principles,' said Joel Kaplan, Bush's domestic policy adviser, emerging from an evening meeting with congressional aides where they were hammering out legislative language.

The White House also was demanding - so far unsuccessfully - that Democrats scrap language that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.

That measure 'kills the deal,' said Dan Meyer, Bush's top lobbyist. He said an agreement was within reach but not finalized.

'We're close,' Meyer said. 'It's not locked down.'

Another remaining hang-up was over ensuring that Cerberus, the private equity firm that owns Chrysler LLC, would reimburse the government if the auto company defaulted on its loan, said a congressional negotiator who spoke only on condition of anonymity because he was not authorized to disclose details of the emerging deal.

Leading Democrats voiced optimism that a deal would be reached.

'There do not appear to me to be differences in principle of a sufficient nature to blow this thing up,' Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, told reporters. Earlier, he privately briefed House Democrats on the deal negotiations and said he expected agreement by day's end.

Differences were narrowing. Democrats said they were willing to weaken a proposal to give the czar veto power over automakers' business transactions - something the White House and automakers had said was unworkable. They were discussing giving the overseer say-so over transactions of $100 million or more, instead of putting the limit at $25 million, the negotiator said.

Even if they reach a deal, though, conservative Republicans who want to force one or more of the Big Three into bankruptcy warned they might try to block the measure, virtually guaranteeing that it will need a 60-vote majority to pass and possibly delaying approval for days.

'I think that not only myself, but several of us will be looking at possibly blocking this package,' Sen. John Ensign, R-Nev., told CNBC.

The core of the bill - and its aim - was not in dispute among the White House and Democratic leaders. It would provide emergency loans to two of Detroit's Big Three - Ford Motor Co. has said it doesn't need an immediate cash transfusion - and create the presidentially named car czar. The federal overseer would supervise a broad industry restructuring and would be empowered to pull the money back if the carmakers weren't doing enough to ensure their own survival.