Democrats consider aid package for automakers
WASHINGTON — House Democratic leaders are considering a $25 billion rescue package for the auto industry as part of an effort to bolster the sagging U. S. economy.
The aid proposal, with its clear political implications for key battleground states in this year’s presidential election, is likely to be put on a legislative fast track, possibly clearing Congress in weeks.
“This is very, very important. It’s an important industry in our country,” House Speaker Nancy Pelosi, D-Calif., said. “It’s about jobs. Jobs, jobs, jobs, jobs.”
Coming just days after the Treasury Department stepped in to bolster housing and financial markets with a takeover of mortgage titans Fannie Mae and Freddie Mac, the Democrats’ proposal reflects a new readiness in Washington to intervene in economic trouble spots. It also is a sign of the intensifying efforts by both parties’ presidential candidates to woo voters in the battered but politically pivotal states that are home to the auto industry — especially Michigan and Ohio.
Democratic leaders said they had not yet decided whether to include the aid, which would come in the form of low-cost government loans focused on helping Detroit develop more fuel-efficient vehicles, in an energy bill or in a broad new economic- stimulus package.
The proposal drew immediate fire from some budget hawks. Sen. Jim Demint, R-S. C., said: “Washington’s misguided bailout of the mortgage industry has sparked a run on the federal Treasury, and taxpayers simply can’t afford it.”
The still-emerging Democratic plan would pile new spending onto a deficit for next year that will exceed $400 billion, more than double this year’s $161 billion, according to congressional budget analysts.
President Bush, arguing that the $168 billion in checks mailed out to taxpayers over the summer was sufficient, opposes any broad new stimulus plan. But White House officials said they were willing to work with Congress, which will adjourn its fall session in three weeks, on aid for Detroit.
Democratic presidential nominee Barack Obama and Republican John McCain both are promising federal help for the auto industry.
“What we have to do is invest in retooling the auto industry to make our cars more efficient and make sure they’re made not in Japan, not in South Korea, but right here in Michigan and right here in the United States of America,” Obama said Tuesday at a town-hall-style event in Farmington, Mich.
McCain also has expressed support for such action. “I believe we should . . . take action that will assist Detroit and its suppliers in making it through this difficult time of transition,” he said last month.
Michigan has the highest unemployment rate in the United States, at 8.5 percent, with some areas of the state experiencing double-digit joblessness.
The largest U. S. automakers, Ford and GM, lost more than $24 billion in the second quarter of this year as high gasoline prices and the slowing economy sent vehicle sales plummeting.
The misery has spread to neighboring states as the industry’s troubles have rippled to parts suppliers and other auto-related companies.
Lawmakers from the affected states have been pushing the White House to consider a rescue package.
Nate Bailey, a spokesman for Rep. Joseph Knollenberg, RMich., said his boss had discussed the assistance with Bush administration officials and was hopeful that the measure would win the support of Congress and the president.
“We’re confident that the White House will come to see how important this is for the economy,” he said. “There are a lot of states that are touched by the auto industry, and we’re confident that all of those members will understand the importance to their hometowns.”
Rep. Mike Rogers, R-Mich., and auto-industry representatives bristled at talk of a “bailout,” noting that the terms of the program were quite specific. The money would take the form of low-interest loans and would have to be used to develop technologies delivering at least a 25 percent increase in fuel efficiency. Also, the loans could not go to any company in danger of bankruptcy without federal support.
“There is this image here that this is just like what [Treasury Secretary Henry] Paulson did with Fannie and Freddie, and this is nothing like it,” Rogers said. “These are loans.”
The effort to aid Detroit comes as House Democratic leaders are working to bring an energy bill to the floor this week. It would allow new drilling off the southeastern United States and off the Gulf Coast of Florida.
Pelosi previously had softened her opposition to amending the long-standing ban on new offshore energy exploration.
The bill under consideration reflects the political heat some Democratic lawmakers are feeling over repeated Republican complaints that the Democratic- controlled Congress has not done all it could to bring down gasoline prices.
Tuesday, Democratic leadership aides were working on a proposal to allow, at the very least, new energy exploration off the coasts of Virginia, Georgia, North Carolina and South Carolina and off the Gulf Coast of Florida.
