According to the White House plan to aid General Motors and Chrysler with money drawn from the $700 billion fund voted by Congress, Treasury Secretary Henry Paulson will temporarily oversee loans to the two ailing auto giants.

After Jan. 20, President-elect Obama will need to choose his own more permanent overseer. This person, identified as "the president's designee" in the failed Auto Industry Financing and Restructuring Act, is now widely referred to as the "car czar."
 

The imagery and reality of a car czar is fraught with problems. First of all, under what authority will this person be able to orchestrate sacrifices required by the carmakers, United Auto Workers, bond holders, and suppliers to make the loan recipients economically viable and competitive by March 31? It is by no means clear what power, apart from personal suasion, such a person would have to resolve disputes and align interests among key stakeholders during the coming months.

Furthermore, arriving at a plan for economically viability by March 31, as stipulated by the White House, will not save loan recipients from bankruptcy unless the financial community judges the carmakers' debt to be commercially bankable. This final and most important judgment is not for the car czar, the White House or even Congress to make.

So, with little formal authority to force changes in a 50-year-old business model and an extremely limited role in certifying the economic viability of business plans submitted by loan recipients, how can the car czar truly be a czar?

What's even more problematic is that the concept of a bridge-loan program with or without a car czar has a dream-like quality in the absence of an economic stimulus program that gets fast traction and an immediate increase in the availability of consumer credit.

Unless the volume of car and truck sales recovers to the industry's current break-even point of 14.5 to 15 million units per year from its current run rate of around 11 million units, the Big Three cannot remain solvent--czar or no czar. There is no near-term financial problem facing General Motors (nyse: GM - news - people ), or any other automaker, that a surge in volume wouldn't cure.

The White House and Treasury Dept. said they are likely to help U.S. automakers avert bankruptcy after Republican senators defeated a bill late Thursday, Dec. 11, that would have provided $14 billion in taxpayer loans to the companies.

Members of Congress and auto executives were meeting all day Friday with White House officials to determine how much money will be released to General Motors (GM) and Chrysler, and on what timetable. Also, the Treasury, sources said, was also working out what oversight rules will be needed as part of the rescue package, and the other conditions the automakers and the auto-workers' union will have to meet. GM and Chrysler are known to be close to reaching their minimum levels of cash needed to sustain their operations.

For weeks, Democratic senators have called on the White House to use some of the $700 billion Wall Street bailout fund to make loans to GM and Chrysler, and to provide a line of credit to Ford (F), which is not in as dire financial shape as its two rivals. But the White House told Congress the fund was not created for industries outside of banks and financial-services companies.

After the auto-rescue bill died in the Senate following weeks of data indicating rising unemployment, however, the White House changed course. Another factor was the further decline in stock prices Friday morning, which analysts attributed to the likely bankruptcy of General Motors and Chrysler.

"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said Treasury spokeswoman Brookly McLaughlin.

The Treasury Dept. has about $15 billion of uncommitted funds left from the first $350 billion round of the Troubled Assets Relief Program, or TARP, authorized by Congress. That means it could cover the immediate needs of the auto companies without having to go to Congress. GM has said it needs $4 billion this month to keep paying its bills, and $12 billion total to get through to March.

A Breakdown over Wages?

Senate Minority Leader Mitch McConnell (R-Ky.) and Senator Bob Corker (R-Tenn.) said Thursday night on the Senate floor that negotiations broke down over the United Auto Workers' unwillingness to agree to a date for certain active workers' wages and benefits to be cut to match those of workers at non-union auto factories in the U.S., such as those of Toyota (TM) and Honda (HMC).

Senator Corker, who acted as a broker between the Republican caucus and the UAW and automakers, said Friday: "I feel a sense of surrealness today that we came so close to what would have been a landmark agreement."

Corker said he had asked the UAW to agree to language that would have made labor costs "competitive" with foreign-owned plants, and the definition would have been certified by the next Labor Secretary. Democratic senators would not have supported the language unless the UAW agreed to it.

UAW President Ron Gettelfinger on Friday took issue with the characterization that the talks broke down because of wages. "The wages discussions were about politics in the Republican caucus," said the union leader. Gettelfinger said he didn't want to get pinned down to specific language in the bill over "parity" or "competitiveness" because comparisons between Detroit and foreign automakers are complicated by the benefits held by the vast pool of union retirees.

Even if the union gave in, Corker may not have been able to get the deal passed. There may have been too much opposition no matter what the union was willing to do. "Corker couldn't deliver the Senate even if the UAW agreed," said Rep. Thaddeus McCotter (R-Mich.)

Negotiation Successes

The union, in negotiations with Corker on Thursday, agreed to take half of $21 billion of future health-care and benefit payments owed to it by the automakers in stock rather than cash. And they agreed to negotiate wage "competitiveness" over the next three months. Big investors and banks that hold automakers' bonds also agreed to accept a 70% writedown on the face value of their investments, and to take half of the rest in stock.

The bill language gave authority to a government-appointed "car czar," who would have had to certify the financial "viability" of the automakers by Mar. 31, including wage competitiveness. But Republican senators wanted specific language in the bill to address labor. Gettelfinger said that tactic was designed to "pierce the heart of organized labor."

Corker, despite his freshman status in the Senate, emerged as a major player in negotiations during the past three weeks as he came to favor a government-facilitated restructuring of the automakers instead of having them reorganize under Chapter 11 bankruptcy.

Corker encouraged Treasury Secretary Henry Paulson to adopt as much of the framework of the Senate bill as possible in granting the automakers some of the Wall Street bailout funds. "What we put forth in the bill, and nearly got a deal on, were loan covenants that the Treasury Secretary could adopt by fiat," said the senator.

Details of how Treasury may help the automakers are expected to emerge over the next few days.

The White House and Treasury Dept. said they are likely to help U.S. automakers avert bankruptcy after Republican senators defeated a bill late Thursday, Dec. 11, that would have provided $14 billion in taxpayer loans to the companies.

For weeks, Democratic senators have called on the White House to use some of the $700 billion Wall Street bailout fund to make loans to General Motors (GM) and Chrysler, and to provide a line of credit to Ford (F), which is not in as dire financial shape as its two rivals. But the White House told Congress the fund was not created for industries outside of banks and financial services companies.

After the auto-rescue bill died in the Senate following weeks of data indicating rising unemployment, however, the White House changed course. Another factor was the further decline in stock prices Friday morning, which analysts attributed to the likely bankruptcy of General Motors and Chrysler.

"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said Treasury spokeswoman Brookly McLaughlin.

A Breakdown over Wages?

Senate minority leader Mitch McConnell (R-Ky.) and Senator Bob Corker (R-Tenn.) said Thursday night on the Senate floor that negotiations broke down over the United Auto Workers' unwillingness to agree to a date for certain active workers' wages and benefits to be cut to match those of workers at non-union auto factories in the U.S., such as those of Toyota (TM) and Honda (HMC).

Senator Corker, who acted as a broker between the Republican caucus and the UAW and automakers, said Friday: "I feel a sense of surrealness today that we came so close to what would have been a landmark agreement."

Corker said he had asked the UAW to agree to language that would have made labor costs "competitive" with foreign-owned plants, and the definition would have been certified by the next Secretary of Labor. Democratic senators would not have supported the language unless the UAW agreed to it.

UAW President Ron Gettelfinger on Friday took issue with the characterization that the talks broke down because of wages. "The wages discussions were about politics in the Republican caucus," said the union leader. Gettelfinger said he didn't want to get pinned down to specific language in the bill over "parity" or "competiveness" because comparisons between Detroit and foreign automakers are complicated by the benefits held by the vast pool of union retirees.

Negotiation Successes

The union, in negotiations with Corker on Thursday, agreed to take half of $21 billion of future health-care and benefit payments owed to it by the automakers in stock rather than cash. And they agreed to negotiate wage "competitiveness" over the next three months. Big investors and banks that hold automakers' bonds also agreed to accept a 70% writedown on the face value of their investments, and to take half of the rest in stock.

The bill language gave authority to a government-appointed "car czar," who would have had to certify the financial "viabaility" of the automakers by Mar. 31, including wage competitiveness. But Republican senators wanted specific language in the bill to address labor. Gettelfinger said that tactic was designed to "pierce the heart of organized labor."

Corker, despite his freshman status in the Senate, emerged as a major player in negotiations during the past three weeks as he came to favor a government-facilitated restructuring of the automakers instead of a having them reorganize under Chapter 11 bankruptcy.

Corker encouraged Treasury Secretary Henry Paulson to adopt as much of the framework of the Senate bill as possible in granting the automakers some of the Wall Street bailout funds. "What we put forth in the bill, and nearly got a deal on, were loan covenants that the Treasury Secretary could adopt by fiat," said the senator.

Details of how Treasury may help the automakers are expected to emerge over the next few days.

Congressional aides and a senior administration official say the White House and congressional Democrats have reached an agreement in principle to speed $15 billion in government loans to struggling U.S. automakers.

The plan could see a vote as early as Wednesday. It creates a government "car czar," to be named by President George W. Bush, to oversee the bailout billions and an auto industry restructuring. The czar would have to yank back the federal money if carmakers didn't do enough to reinvent themselves.

The measure is not final and could still face obstacles from congressional Republicans, who have not approved it.

The officials spoke on condition of anonymity because they were not authorized to announce the developments.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

The White House and congressional Democrats yesterday reached an "agreement in concept" on a measure that would throw a government lifeline to the faltering Detroit auto industry but require the auto giants, their workers and creditors to quickly negotiate a plan to achieve profitability or face the prospect of bankruptcy.

The agreement calls for the government to speed $15 billion in emergency loans to the car companies as soon as next week, and for President Bush to immediately name a car czar to oversee the bailout. Under the agreement, the car czar would be required to revoke the loans unless the companies proved by March 31 that they were implementing a plan to achieve "a positive net present value," according to a senior administration official who spoke on condition of anonymity because final language was still under discussion.

Under the measure, if the firms fail to make progress, the car czar would be required to submit to Congress a new plan to restore them to financial viability, the official said, including the option of Chapter 11 bankruptcy protection. If no plan for the long-term survival of the companies were to emerge, the firms would be ineligible for any additional federal assistance.

The official said the agreement would create "three very serious sticks to ensure that this is truly what it was intended to be: bridge financing for firms that have a plan and a path to become competitive," rather than becoming "the first in a number of interminable loans that these guys can get to avoid making the hard choices."

The agreement cedes to the Bush administration its central demand that the auto giants move immediately to make changes in their operations or lose government funding. It would also ensure that the car companies would be held to a tough standard after President-elect Barack Obama takes office.

Last night, the agreement was still being drafted into legislation, which would be subject to review by both sides. But the official said "there's an agreement on the concept and the way forward" between the Bush administration and Democratic lawmakers.

House leaders said they would hold the first vote as soon as today. Still unclear was whether the plan would be accepted by congressional Republicans, whose support is crucial to pushing it through the closely divided Senate. Yesterday, a growing list of Republicans voiced opposition to the compromise.

Some Republicans said they were annoyed that they had been excluded from the negotiations. Others raised more fundamental objections, saying the plan didn't go far enough to compel the auto giants to make painful changes in their operations and to ensure that taxpayers are repaid. As the White House began working to shore up GOP support, Sen. John Ensign (R-Nev.) said he plans to use Senate rules to block the measure, which could delay a vote in the Senate until early next week.

"Unless major changes are made that I can be convinced of, it would take a lot for me to move off where I am," said Ensign, who expressed skepticism toward the idea of investing vast powers in an auto czar.

Senate Majority Leader Harry M. Reid (D-Nev.) acknowledged the brewing battle in remarks on the Senate floor, but vowed to press ahead, even if it means keeping senators in Washington through the weekend. "We're going to have a vote on this sometime. We can either have it sooner or we can have it later," Reid said. "We cannot let a few people stop us from doing the people's business."

Until new members take office in January, Democrats have at best a 50-to-49 edge in the Senate, because of President-elect Barack Obama's resignation. It was unclear yesterday whether Obama's vice president, Sen. Joseph R. Biden Jr. (D-Del.), would cast a vote on the auto bill, meaning Democrats may need as many as 11 GOP votes to prevail over filibuster threats. A spokesman for Obama's pick for secretary of state, Sen. Hillary Rodham Clinton (D-N.Y.), said she would be available for the vote.

The legislative maneuvering came as Democratic negotiators and White House officials were signing off on the final details of an agreement to speed $15 billion in emergency loans to the car companies as soon as next week -- less than half the $38 billion General Motors, Chrysler and Ford had been seeking. The money is intended to keep GM and Chrysler afloat through the end of March. Ford has said it does not expect to need the money immediately.

Under the proposal, the government would get warrants for equity equal to at least 20 percent of the loan it provides to each firm. Bush would immediately name a car czar or trustee to manage the bailout and set broad goals for the industry in January. By March 31, the companies would be required to submit detailed proposals for cutting costs, restructuring debt and producing fuel-efficient vehicles that can succeed in the marketplace. Otherwise, the car czar could demand immediate repayment of the loans, a move that would effectively force the firms into bankruptcy.

In talks yesterday, Democrats bowed to the White House on a series of key demands, including that the car czar be allowed less discretion over whether to extend long-term government assistance to the car companies. A senior Democratic aide said the measure was being redrafted to make clear that the car czar would be required to recall any federal loans or to deny additional government support to the companies if they fail to meet certain benchmarks on the road to financial solvency.

Democrats also agreed to increase the size of the investments, asset sales or other transactions that must be reported to the car czar from $25 million to $100 million. The provision is intended to prevent the firms from using taxpayer dollars to make investments abroad, but the Bush administration argued that the lower figure would amount to "micromanaging," according to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, whose staff was leading the talks for House Democrats.

Democrats kept a provision, opposed by the White House, that bars car companies that accept federal cash from pursuing lawsuits against California and other states trying to implement tailpipe emissions standards that are tougher than the federal guidelines.

Republicans say the move would undercut the automakers' profits, but Sens. Dianne Feinstein (D-Calif.) and Bill Nelson (D-Fla.) said yesterday in a letter to Reid that GM and Ford have laid out business plans indicating that they already intend to exceed the California fuel economy standards within the next few years.

The administration official warned that if the provision stays in the measure, "it will not succeed."

Democrats also were pressing to include a provision stating that if the loans fail to save Chrysler from bankruptcy, the government could recover its money from Cerberus Capital Management, the private-equity firm that owns 80 percent of Chrysler's stock.

The White House was balking at that idea, congressional aides said. But even some Republicans are troubled by the possibility that public dollars could wind up in Cerberus's well-capitalized hands.

Yesterday, Sen. Charles E. Grassley (R-Iowa) said taxpayers should not pour cash into Chrysler if Cerberus was unwilling to do so. Grassley also objected to an unrelated provision in the developing measure that would enable transit agencies, such as the Washington area Metro, to continue benefiting from a financial arrangement that amounts to a tax shelter for foreign institutions.

"Taken together, these issues are a one-two punch. They insult the taxpayer by propping up tax evasion, and they insult every American feeling the brunt of the economic crisis by putting tax dollars on the line where private equity investors refuse to put any of their own money at risk," Grassley said in a statement.

In a statement, Cerberus said that it had "worked tirelessly to assist Chrysler" and would "continue to provide Congress with full transparency as to its financials."

Some high-profile convicts past and present are among more than 2,000 people asking President George W. Bush to pardon them or commute their prison sentences before he leaves office.

Junk-bond king Michael Milken, media mogul Conrad Black and American-born Taliban soldier John Walker Lindh have applied to the Justice Department seeking official forgiveness.

But with Bush's term ending Jan. 20, some lawyers are lobbying the White House directly to pardon their clients. That raises the possibility that the president could excuse scores of people, including some who have not been charged, to protect them from future accusations, such as former Attorney General Alberto Gonzales or star baseball pitcher Roger Clemens.

Those who have worked with Bush predict that will not happen. The White House has declined to comment on upcoming pardons.

"I would expect the president's conservative approach to executive pardons to continue through the remainder of his term," said Helgi C. Walker, a former Bush associate White House counsel.

"There would also be a concern about avoiding any appearance of impropriety in the waning days of his administration - i.e. some sort of pardon free-for-all," Walker said. "I don't think that is anything that is going to happen on this president's watch."

Last week, Bush issued 14 pardons and commuted two sentences - all for small-time crimes such as minor drug offenses, tax evasion and unauthorized use of food stamps. That brought his eight-year total to 171 pardons and eight commutations granted.

NEW YORK (AP) -- When Laura Bush and Hillary Clinton arrived at the White House, they brought with them styles that suited their hometowns in Texas and Arkansas, but that wouldn't have held up in any fashion capital.

Tastemakers have higher hopes for Michelle Obama, who is expected to fill her closet at 1600 Pennsylvania Avenue with sophisticated styles that match her modern image but maintain the sensibility inherent to Chicago.

The image of Obama walking the inaugural parade route in something like the domed, wide-brimmed hat that has haunted Clinton since 1993 seems unlikely. And she probably won't show up to the inaugural ball in mother-of-the-bride-style gowns with dyed-to-match pumps like Bush has worn -- twice.

Over time, both Clinton and Bush did grow more accustomed to their new surroundings, and their wardrobe reflected that. Learn more about inaugural events and history »

For example, Bush wore a Sunday-best peacock blue coat with sensible shoes to the chilly inaugural ceremony in 2001, but chose a chic winter-white coat ensemble with camel-colored high heels -- a top pick of fashion insiders -- in 2005.

Clinton also chose a modern, luxe gold lace gown by Oscar de la Renta for her second tour of inaugural balls unlike the fussy purple princess number the first go-around. (Remember the sparkly belt buckle?) Watch how extravagant should Obama's inauguration ball be? »

Still, Bush and Clinton fit into the expectations of what earlier generations thought a president's wife should look like. Obama has the opportunity to break the mold.

"Most previous first ladies have appeared to believe that displaying an interest in fashion and style undermines the importance of their role. They've subscribed to the old-fashioned view that a woman should de-sexualize herself or dress like a man if she wants to be regarded as intelligent and of good conscience," says Mandi Norwood, the former editor in chief of Shop Etc. who is now writing a style guide directed to Obama for publisher Avon A.

"Mrs. Obama, however, has a much more modern view," Norwood says. "She's demonstrated that it's smart to be stylish; that strong and positive statements can be made through the right choice of outfit."

The right outfit can't be too cutting edge, though, says Andrea Reynders, chair of the fashion department at the Art Institute of Chicago. This is where Obama's roots will come in handy.

"Trends seem to happen on both coasts, but in the Midwest we look for the value in clothing. Chicago is a wonderful place where you can find women buying garments with wonderful fabrics, detailing and fit. It lends itself wonderfully to a strong classic fashion with a lot of independence -- and not being too trendy will serve Michelle well in Washington," Reynders says.

While Clinton also grew up in the Chicago suburbs, her pre-White House adult life was largely spent in Little Rock and her eye adjusted to the local look, says communications consultant Ruth Sherman, who advises business leaders, celebrities and politicians.

So far, Obama has chosen designers that alternately appeal to style insiders and everywomen. They range from retail giant J. Crew to fashion favorite Narciso Rodriguez to Chicago's own Maria Pinto.

Pinto, who was a student of Reynders, epitomizes what Chicago style is -- and what Obama needs to do, the professor says: Take a good silhouette, embellish it enough to get noticed, but don't go over the top.

By making some off-the-radar choices, Obama already greatly reduces her risk of making the same faux pas as Bush did at a 2006 Kennedy Center Honors event when she wore the same red de la Renta gown as three other women.

There is so much to consider when developing a first lady's wardrobe -- and the rush to do it in a few short weeks between Election Night and moving day further complicates things, says Michael Faircloth, the Dallas-based designer who outfitted Bush.

He says he tried to add touches of Texas by using bright colors and native fabrics such as cotton and mohair.

"In creating Mrs. Bush's inaugural wardrobe, I wanted to convey confidence and graciousness, but there's a certain level of femininity and appropriateness that needs to be there too, and you need to strike a celebratory tone," he says.

A first lady should simultaneously appear graceful and formal, Faircloth adds, and the garments themselves must photograph well.

(Obama may have learned that lesson firsthand when the black sides of her red Rodriguez dress seemed to disappear into the backdrop in Election Night pictures.)

Once she arrives in Washington, Obama should stay true to herself, says Sherman, author of "Get Them To See It Your Way, Right Away."

But Sherman also wonders what will happen to Obama's sometimes-sportier look, one that likely resonates with the younger people who so strongly support her and her husband.

"If the Obamas are being considered the next generations of leaders, will the Obamas reflect that this generation is so much more casual? What does it mean when you see Michelle Obama in jeans? ... Are people's tongues going to be wagging or is it part of her job to appeal to that generation?"

Reynders hopes Obama will look further back in first-lady history and follow the model of Jackie Kennedy -- whom Obama has already been compared to many times.

"There was not a `don't' in the lot of Jackie's wardrobe. She matched the figure and fashion of the time," she says.

Reuters – U.S. President George W. Bush speaks during the Asia-Pacific Economic Cooperation (APEC) CEO Summit in …

Among the small number of White House staff announcements made so far by President-elect Barack Obama, most of the top spots have gone to recent Capitol Hill veterans.

The latest wave, announced early Sunday morning, includes Senior Adviser Pete Rouse, who served as Senate chief of staff to Obama and former Majority Leader Tom Daschle, D-S.D., and Deputy Chief of Staff Jim Messina, who was the chief of staff to Senate Finance Committee Chairman Max Baucus.

They join incoming White House Chief of Staff Rahm Emanuel, a Chicago congressman who is the fourth-ranking Democrat in the House leadership, and White House lobbyist Phil Schiliro, who worked as Daschle's policy director and was House Oversight and Government Reform Committee Chairman Henry A. Waxman's top aide before joining the Obama campaign as a liaison to Capitol Hill.

While Capitol Hill experience is not the primary reason for the appointments, the hires reflect Obama's sensitivity to the importance of Congress in governance, according to a senior transition official who spoke on the condition of anonymity

Bush calls meeting with Obama 'friendly'

President Bush had a "relaxed" and "friendly" meeting with President-elect Barack Obama after he and first lady Laura Bush welcomed their successors to their future home Monday, a White House spokesman said.

"The president and the president-elect had a long meeting, described by the president as good, constructive, relaxed and friendly," White House press secretary Dana Perino said in a statement. "The president enjoyed his visit with the president-elect, and he again pledged a smooth transition to the next administration."

Perino said the two discussed both national and international issues but did not provide specifics of the conversation. Bush also gave Obama a tour of the White House's living quarters, including the Lincoln bedroom.

Bush and Obama held a private meeting in the Oval Office, while the first lady gave incoming first lady Michelle Obama a tour of the residence.

The president and president-elect walked together along the Colonnade by the Rose Garden before entering the Oval Office together. They briefly waved to reporters along the way.

Obama and Bush were not expected to speak on camera after their meeting.

An aide to Obama said they were "going to let the pictures speak for themselves."

The two met in the Oval Office for just over an hour. When President George H.W. Bush hosted President-elect Bill Clinton after the 1992 election, the two talked for nearly two hours.

Monday's meeting was a historic formality, but it was also a time for serious talks. It marked the first time that Obama has visited the Oval Office. Watch Bush welcome Obama to the White House »

The two were expected to discuss "a broad range of issues," focusing on the economy, according to a leader of Obama's transition team.

"It's clear that we need to stabilize the economy, to deal with the financial meltdown that's now spreading across the rest of the economy. The auto industry is really, really back on its heels," transition team leader John Podesta said.

Podesta told CNN's "Late Edition" that Obama will push Congress to enact "at least part" of an economic package before he takes office in January, but said the problems Americans face need short- and long-term approaches.

The president and president-elect also were expected to talk about national security and the war in Iraq.

Perino said earlier Monday that Bush and Obama were going to have a "private meeting" in which they would discuss "a range of issues." Go inside the Oval Office

"I don't think any of us can understand what it's like for two people ... who understand what it's like to be the commander in chief, to be the leader of our great country," she said. "And so they'll have a private conversation. I'm sure they'll talk about a range of issues."

Despite the negative tone of the campaign season -- in which Obama frequently campaigned against what he called Bush's "failed policies" -- Bush has pledged to do everything he can to make sure they have a smooth transition. iReport.com: What's your message for Obama?

"When I called President-elect Obama to congratulate him on his historic victory, I told him that he can count on my complete cooperation as he makes his transition to the White House. Ensuring that this transition is seamless is a top priority for the rest of my time in office," Bush said in his radio address this weekend.

Podesta said cooperation with Bush administration officials has been "excellent" since Tuesday's election. Watch more on the transition to power »

Obama said he was "gratified by the invitation" to meet with the president and his wife.

"I'm sure that, in addition to taking a tour of the White House, there's going to be a substantive conversation between myself and the president," he said at a news conference Friday.

"I'm going to go in there with a spirit of bipartisanship and a sense that both the president and various leaders in Congress all recognize the severity of the situation right now and want to get stuff done," he said.

Given their drastically different views on foreign policy, Mark Preston, CNN's deputy political editor, predicted an "uncomfortable meeting at best." Watch CNN's Mark Preston talk about the meeting »

"Let's not forget that Barack Obama ran against President Bush every day when he was taking on John McCain. While they will be cordial, I bet you it will be uncomfortable," Preston said.

As the president and president-elect met in the Oval Office, Perino gave Robert Gibbs a tour of the White House press office.

Gibbs was the communications director for Obama's presidential campaign. He has not officially been named the incoming press secretary, but he is widely considered the top contender for the position