Auto-aid plan prospects dim in partisan stalemate

Published 3:48 pm Tuesday, November 18, 2008

Prospects dimmed Monday for enactment of a $25 billion bailout for the faltering auto industry before year’s end, as congressional Democrats and the Bush administration seemed headed for a stalemate.

Help for Detroit’s Big Three, which have been battered by the economic meltdown that has choked their sales and frozen their credit, is falling victim to a partisan fight over where the money should come from.

Senate Democrats said they would press ahead with their plan to carve out a portion of the $700 billion Wall Street bailout to pay for the loans, but aides in both parties and lobbyists tracking the plan acknowledged they did not currently have the votes to do so. The White House and congressional Republicans insist that the automaker bailout money instead come from redirecting a separate $25 billion loan program approved by Congress to help the industry develop more fuel-efficient vehicles.

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In addition, besides opposing the use of any of the $700 billion for the automakers, the administration has told top lawmakers it does not plan to ask for the second half of that huge fund that Congress approved this fall to aid the financial industry, congressional officials said Monday.

The Treasury Department said its message on not tapping half the fund applied only to the next few days and that no decision had been made for the rest of the administration’s two months — but officials stopped short of saying the funds would be used before Bush leaves office.

Majority Leader Harry Reid, D-Nev., said he would hold a test vote this week on a broad economic aid plan — including spending on public works projects, aid to cash-strapped states, an extension of jobless aid, and the carmaker loans — that most now concede has virtually no chance of passing.

If that fails, he will seek a vote on the auto industry bailout and the unemployment benefits, Reid said. It could come as early as Wednesday.

“If we move forward, we can protect and create American jobs, help working families and prevent our economy from falling even further into recession,” Reid said as he opened a postelection session. “I ask my colleagues to show the American people that in the face of tremendous economic pain and uncertainty, we will not wait until January.”

The White House, meanwhile, took pains to clarify its position on the bailout, saying the administration “does not want U.S. automakers to fail.” Press secretary Dana Perino complained that reporting on the White House’s statements on this issue has involved “attempts to shorthand the administration’s position.”

Perino’s statement also made clear, however, that the administration steadfastly opposes drawing funds from the bailout plan to help Detroit. The White House opposes the idea of automakers getting an additional $25 billion.

The debate in Washington comes as the financial situation for General Motors Corp., Ford Motor Co. and Chrysler LLC grows more difficult.

“There’s a high degree of urgency” for federal action if GM is going to stave off a financial crisis, Rick Wagoner, GM chairman and chief executive, said Sunday in a joint appearance with United Auto Workers President Ron Gettelfinger on WDIV-TV in Detroit.

In her statement Monday, Perino said, “The auto industry is an important part of our manufacturing base, and we want the industry to succeed and compete in the global economy.” But she also said that media reports have erroneously depicted the administration as taking too harsh a stand on financial relief.

“We believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers — from the $25 billion Department of Energy loan program,” Perino said.

She said the $700 billion rescue program “was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector.” Perino also said that any new legislative effort to help the big carmakers should require that those manufacturers are viable companies, ones willing to restructure themselves for the long term.

President-elect Barack Obama said he believes aid for the auto industry is needed but that it should be provided as part of a long-term plan — not simply as a blank check.

“For the auto industry to completely collapse would be a disaster in this kind of environment,” Obama said in a “60 Minutes” interview aired Sunday night on CBS. “So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan — what does a sustainable U.S. auto industry look like?”