US automakers' rescue stalls in Senate
A plan to give troubled U.S. automakers billions of dollars in government-backed loans is on life support, leaving the fate of hundreds of thousands of workers and the once-venerable U.S. car companies hanging in the balance.
By Agencies |
WASHINGTON: A plan to give troubled U.S. automakers billions of dollars in government-backed loans is on life support, leaving the fate of hundreds of thousands of workers and the once-venerable U.S. car companies hanging in the balance.
Senate Majority Leader Harry Reid canceled plans Wednesday for a vote on a bill to carve $25 bn in new auto industry loans out of the $700 billion financial sector rescue fund. The Bush administration and congressional Republicans have rejected the Democrats' plan to dip into that pot of money.
Warning of economic disaster, a bipartisan group of senators from auto industry states is trying to reach a deal on an alternative package. Even if an agreement could be reached, Democratic leader Reid indicated Thursday that the Senate probably would not be able to consider the bill until after the end-of-November break for the Thanksgiving holiday.
``We have some procedural roadblocks,'' Reid said. With all sides sensing doom for a Big Three automaker rescue, the finger-pointing began. White House press secretary Dana Perino said that if Congress ``leaves for a two-month vacation without having addressed this important issue, ... then Congress will bear responsibility for anything that happens.''
Congressional Democrats countered that the Treasury Department already had the power to grant emergency funds to the automakers, but the Bush administration opposed the approach.
Former Massachusetts Gov. Mitt Romney, a failed Republican presidential candidate this year, stood steadfastly behind forces opposing the bailout. Speaking Thursday morning amid growing signs of gridlock in Congress, Romney said, ``There's no question but that if you just write a check, you're going to see these companies go out of business ultimately.''
He told CBS's ``The Early Show'' that he doesn't want to see the carmakers go out of business, ``but we don't want them to continue business as usual.'' The leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC painted a grim picture of their financial position during two days of congressional hearings, warning that the collapse of the auto industry could lead to the loss of 3 mn jobs.
Senate Majority Leader Harry Reid canceled plans Wednesday for a vote on a bill to carve $25 bn in new auto industry loans out of the $700 billion financial sector rescue fund. The Bush administration and congressional Republicans have rejected the Democrats' plan to dip into that pot of money.
Warning of economic disaster, a bipartisan group of senators from auto industry states is trying to reach a deal on an alternative package. Even if an agreement could be reached, Democratic leader Reid indicated Thursday that the Senate probably would not be able to consider the bill until after the end-of-November break for the Thanksgiving holiday.
``We have some procedural roadblocks,'' Reid said. With all sides sensing doom for a Big Three automaker rescue, the finger-pointing began. White House press secretary Dana Perino said that if Congress ``leaves for a two-month vacation without having addressed this important issue, ... then Congress will bear responsibility for anything that happens.''
Congressional Democrats countered that the Treasury Department already had the power to grant emergency funds to the automakers, but the Bush administration opposed the approach.
Former Massachusetts Gov. Mitt Romney, a failed Republican presidential candidate this year, stood steadfastly behind forces opposing the bailout. Speaking Thursday morning amid growing signs of gridlock in Congress, Romney said, ``There's no question but that if you just write a check, you're going to see these companies go out of business ultimately.''
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He told CBS's ``The Early Show'' that he doesn't want to see the carmakers go out of business, ``but we don't want them to continue business as usual.'' The leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC painted a grim picture of their financial position during two days of congressional hearings, warning that the collapse of the auto industry could lead to the loss of 3 mn jobs.
Detroit's automakers, hurt by a sharp drop in sales and a nearly frozen credit market, burned through nearly $18 bn in cash reserves during the last quarter, and GM and Chrysler both said they could collapse in weeks.
``I don't believe we have the luxury of a lot of time,'' GM CEO Rick Wagoner told a House hearing.
Alan Mulally, the CEO of Ford Motor Co., said the company had enough cash reserves to make it through 2009. But United Auto Workers union president Ron Gettelfinger said a bankruptcy could spawn others.
``If there's a Chapter 11 (for) one of the companies, it will drag at least one other with them, if not all of them. And I do not believe Chapter 11 is where it will end. It will go to liquidation,'' he said ominously.
Automakers ran into more resistance from House lawmakers, who chastised the executives for fighting tougher fuel-efficiency standards in the past and questioned their use of private jets while at the same time seeking government handouts.
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``My fear is that you're going to take this money and continue the same stupid decisions you've made for 25 years,'' said Rep. Michael Capuano, D-Mass. The stakes are high. The Detroit automakers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. About 1 million more people work in dealerships nationwide. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 mn.
The White House and congressional Republicans have urged Democrats to support a GOP plan to divert a $25 bn loan program created by Congress in September _ designed to help the companies develop more fuel-efficient vehicles _ to meet the auto giants' immediate financial needs.
Sens. Carl Levin, D-Mich., Kit Bond. R-Mo., and George Voinovich, R-Ohio, are trying to broker an alternative that could provide bridge loans or a guarantee that the fuel-efficiency loan fund ultimately would be replenished. Negotiators were discussing a scaled-down aid package of $5 bn to $8 bn to help the automakers survive through year's end.
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But it was unclear if any progress could be made. Democrats strongly oppose letting the car companies tap into the energy loans for short-term cash-flow needs. Despite the gridlock in Congress, there could be a contingency plan: a return to Washington in December for another postelection session to try to strike a deal.
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House Majority Leader Steny Hoyer, D-Md., noted that Democratic leaders were planning to gather for an economic conference the week of Dec. 8. ``That is available,'' Hoyer said. ``The year has not ended.'' Download
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