Bailout for automakers dims as lawmakers debate relief
WASHINGTON - Prospects dimmed yesterday for the $25 billion bailout US automakers say they desperately need to get through a bleak and dangerous December.
Though all sides agree that Detroit's Big Three carmakers are in peril, battered by the economic meltdown that has choked their sales and frozen loans, the White House and congressional Democrats are headed for stalemate over the government money that might go toward helping them.
Behind the logjam is a troubling reality for the car companies: Bailout fatigue has set in at the White House and on Capitol Hill.
The new debate comes as the financial situation for
A Senate auto bailout bill unveiled yesterday noted that 355,000 US workers are directly employed by the auto industry, and an additional 4.5 million work in related industries.
Still, not only has President Bush made it clear he doesn't want to dole out new aid for the automakers, congressional officials say his administration has privately informed top Democrats it won't even use at least half of that huge rescue fund approved last month to aid the financial industry.
The Senate Democrats' measure would carve out a portion of the Wall Street bailout money to pay for loans to US automakers and their domestic suppliers, but aides in both parties and lobbyists acknowledge they do not have the votes to pass it.
The White House and congressional Republicans insist that any automaker bailout money instead come from redirecting a $25 billion loan program approved by Congress in September to help the industry develop more fuel-efficient vehicles. The GOP would lift restrictions on that money to speed it to the carmakers.
Democrats want to leave that money alone and give the industry an additional $25 billion from the financial bailout funds.
Majority leader Harry Reid, a Nevada Democrat, said he would hold a vote this week on a bill that pairs the auto industry bailout with an extension of jobless aid.
The Senate's proposed auto aid bill would provide loans with initial interest rates of 5 percent in exchange for a stake in the companies or warrants that would let the government profit from future gains. While taking advantage of the program, the companies could not pay dividends or award bonuses to executives making more than $250,000 a year.
A House version drafted by Massachusetts Democrat Barney Frank goes further, requiring that US automakers immediately repay the loans next spring if they don't give the government an acceptable restructuring plan that shows they can survive, including details on how they will transition to making vehicles that use less gasoline.