Deadlock looms on automaker rescue plan
Source of $25 billion puts Democrats, GOP at odds
WASHINGTON — The Senate on Monday began debating how to rescue the teetering American auto industry, but the effort seemed destined for deadlock as Democratic lawmakers and the Republican president wed themselves to their respective plans to save General Motors from bankruptcy and help its U. S. competitors.
Senate Majority Leader Harry Reid, DNev., introduced a plan that would allocate $25 billion from the recent $700 billion financial bailout package for use by the automakers. But the proposal appeared to lack enough support among Republicans to withstand an expected filibuster.
“There are not the votes in the Senate to be able to do that,” White House spokesman Dana Perino said.
Perino also clarified the Bush administration’s stance on the issue, saying Congress should instead revise a previously approved $25 billion loan package for the automakers to make the funds — which had been targeted for long-range changes — available immediately.
“What we would like to do is allow for those funds to be able to be used not just for retooling the factories, but for actually helping them get through this rough patch,” Perino said.
Yet Democrats insist on using the financial bailout funds, saying that it would be shortsighted to tap into long-term restructuring money for short-term cash needs.
That left the two parties on a collision course over the rescue, which would give GM access to federal loans to pay for its operations if, as expected, the company runs out of operating cash by the end of the year.
“If ever there were a time for working together, this is it,” Reid said on the Senate floor. “Senators have a choice to make. We can wait until January when we have a new Congress and a new president, or we could start trying to work on some of the problems now. If we work together in the coming days, perhaps we can begin delivering solutions to the American people.”
Under Reid’s plan, automakers would have to deny bonuses to executives making more than $250,000 a year and must submit a plan for “long-term financial viability” to qualify for aid.
Only two Republican senators— George V. Voinovich of Ohio and Christopher S. “Kit” Bond of Missouri — have signed onto Democratic plans to use the financial bailout money to help GM, as well as possibly Ford and Chrysler.
As a result, Democrats appear to be seven votes short of the 60 votes they need to pass the auto rescue plan in the Senate. That means the issue could be turned over to the new president, Barack Obama, and a new Congress that take office in January.
Obama supports the auto bailout — but with auto sales plummeting as the economy weakens, GM might end up having to file for bankruptcy before he becomes president unless Congress acts now, auto industry analysts have said.
Nevertheless, Senate Minority Whip Jon L. Kyl, R-Ariz., said there’s no good reason why the federal government should rescue auto companies that pay workers nearly $30 more per hour than foreign auto manufacturers pay in their U. S. factories.
Bankruptcy would allow Detroit’s Big Three to escape their labor contracts and become more competitive, while a bailout “would simply be throwing good money after bad,” Kyl said.
“There’s no indication that the car companies would do anything different than what they’ve been doing, which has been a big failure, which is why they need a bailout,” Kyl said.
Despite the widespread Republican opposition, Reid said he would include aid to the auto industry in an economic-stimulus bill that would extend unemployment benefits, boost food stamp funding, provide fiscal relief to states and expand funding for infrastructure projects.
A test vote on the bill was likely later this week, after a Senate Banking Committee hearing this afternoon in which the top executives of GM, Ford and Chrysler make their case for the aid. A House committee will hold a similar hearing Wednesday.
The debate on the auto industry rescue holds huge stakes for both Buffalo and the nation.
GM, Ford and several of their major suppliers have factories in the Buffalo area that together employ about 8,200 people, state figures show.
The industry-affiliated Center for Automotive Research recently issued a report saying the collapse of America’s Big Three automakers could cost 3 million jobs while costing governments more than $150 billion in tax revenue.
Asked about the partisan rift over the rescue plan, GM spokesman Greg Martin said: “We continue to work with both the Congress and the administration to get the support the industry needs.”
Meanwhile, the top executives at 98 auto parts suppliers pressed Congress to act, sending lawmakers a letter saying their companies are “interwoven” with the Big Three and would suffer greatly if any of the major automakers fails.
That pressure seemed to matter little to Republican senators who cited public opinion and their belief in limited government as their reasons for opposing a bailout.
“Less than a third of the American public supports an auto industry bailout, and 80 percent of Americans believe that the government is getting too involved in the economy,” said Sen. Jeff Sessions, R-Ala. “The president and the Congress would be wise to respect those views.”
Sen. James M. Inhofe, ROkla., said that bailing out the automakers would set a bad precedent.
“It’s kind of a new way of life,” he said. “If you’re not successful, don’t worry about it; the federal government will be there to help you.”
News wire services contributed to this report. jzremski@buffnews.com .
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