Opposition Grows on Capitol Hill to McDonnell Deal : Aerospace: Several members of Congress plan to introduce legislation seeking an ‘American solution’ to the proposed sale of a stake to a Taiwan firm.

WASHINGTON —  Political opposition to the proposed sale of a 40% stake in McDonnell Douglas’ Long Beach-based commercial aircraft business to a Taiwanese consortium has gained momentum, following the company’s delay in consummating the deal, members of Congress said Thursday in interviews.

Rep. Barbara Boxer (D-Greenbrae) and House Majority Leader Richard Gephardt (D-Mo.) have agreed to introduce legislation that would provide an “American solution” to the McDonnell deal, Boxer disclosed.

Gephardt aides confirmed that he intends to work with Boxer in introducing legislation “on a fast track” after concluding hearings scheduled in the next few weeks in Long Beach and Washington. So far, the McDonnell deal has not gained significant attention in Congress, but Gephardt could change that by throwing his political weight into the issue.

Although the specific proposals that will be offered in the legislation are unclear, the goal would be to substitute some type of U.S. private or public financing for the Taiwan deal, Boxer said.

Separately, Sen. Jeff Bingaman (D-N.M.), chairman of the Joint Economic Committee, called on McDonnell to permit a representative of the U.S. government to sit in on negotiations with the Taiwanese group, in part because financing for purchase is coming at least partly from the Taiwan government.

“The long-term future of our aircraft industry in this country is very important, and instead of waiting until it is in the same condition as our auto industry, we ought to get in front of this problem,” Bingaman said. “We have a trauma treatment approach to our industrial problems. After they pick you up off the road and take you to a hospital, then they start getting interested in the problem.”

When McDonnell signed a memorandum of understanding in November, it said a definitive agreement would be reached by today. But earlier this month, McDonnell disclosed that it would not meet that deadline. Sources close to the deal say that it could take until June to negotiate a final agreement.

Had the deal closed today as scheduled, an examination and the potential for alternatives would have been much harder to mount, Boxer said.

And Rep. Mel Levine (D-Santa Monica) introduced a resolution Wednesday, co-sponsored by six House members, calling for a presidential review of the propose $2-billion deal, examining how it would affect U.S. aerospace technology, employment, subcontractors and a range of other issues critical to the nation’s industrial base.

Bingaman, Boxer and Levine all expressed concerns that the Taiwan deal would mark a loss in American aerospace leadership. But they were noncommittal in saying whether Congress would support a taxpayer-financed alternative, which could cost $2 billion to $5 billion, based on anticipated costs the new joint venture will face in developing the planned MD-12 jetliner.

McDonnell Douglas officials declined to comment.

McDonnell signed a preliminary agreement to sell a 40% stake of its Douglas Aircraft commercial business to Taiwan Aerospace Corp., a consortium of industrial firms backed by government funding. In an interview last month, Taiwan Aerospace Chairman David Huang said that the government interest would be 29%, but acknowledged that it may be higher in the early years than later on.

St. Louis-based McDonnell Douglas has not sought a U.S. government-financed package, but Boxer said company officials in recent meetings left the door “slightly open” to alternatives that she might propose.

Boxer asserted that McDonnell has received $18 billion in military contracts in the past three years and that the Taiwan deal jeopardizes military technology paid for by taxpayers. In the past, McDonnell has strongly denied that any significant technology would be transferred, commercial or military.

Only days after the deal was unveiled, 30 senators signed a letter to President Bush calling for a review of the deal’s economic and national security impact. Bingaman said such a review should be conducted before a definitive deal is signed, but the senators have not yet heard back from Bush.