Senate Getting Closer to Agreeing on Automakers Bailout Deal

AP Photo/Ron Lewis)WASHINGTON (RushPRnews)12/11/08- — The House of Representatives has approved a 14-billion-dollar government lifeline for the faltering US auto industry, but the proposal still faces stiff Republican opposition in the Senate.

The plan passed 237 to 170 late on Wednesday after senior Democrats in Congress and the White House agreed a bridge loan deal to rescue the Big Three automakers.

The bill now moves to the Senate, where strident Republican opposition in a chamber with a razor-thin Democratic majority threatens to derail the legislation.

While Democrats hoped for a quick vote on the bill this week, President George W. Bush on Wednesday sent top aides to Capitol Hill to lobby fellow Republicans in the Senate. But they encountered a hostile reception, US media reported.

Republican opponents, including Senator Richard Shelby of Alabama, warned the government intervention was doomed and would only postpone a day of reckoning for the car companies and autoworkers’ union.

Shelby of Alabama called it “a travesty” and vowed to block a vote on the plan.

“I’m going to oppose the package because I think this is just the down payment on billions and billions to come,” he said. “These are failed or failing companies.”

And Republican Representative Tom Feeney slammed it as a “short-term solution” that would merely drain federal coffers and burden taxpayers.

“Micro-managing a business from Washington is the supreme act of hubris. It will never work,” he said on the House floor.

But at the end of the House debate, Speaker Nancy Pelosi defended the plan as “a jumpstart for an industry and our country’s economic health.”

The bill “sets us on a new path to viability. It is a test. And we will soon see in a matter of weeks if the executive suites in Detroit are willing to make the choices” laid out in the legislation, the California Democrat said.

In the most sweeping intervention in US industry in years, The Auto Industry Financing and Restructuring Act calls for emergency government loans to the car companies within days to be overseen by a “car czar” appointed by outgoing President George W. Bush.

In return, automakers by March 31 would have to cut costs, settle debts and make other changes to show a path to profitability or face possible bankruptcy.

The government could choose to revoke the loans if the companies failed to make progress, or could refuse further aid after March 31 if the Big Three have no promising survival plan, officials said.

The rescue funds for the bailout are to be drawn from a loan program set up previously to bankroll the development of fuel-efficient cars.

The White House hailed the vote Wednesday night, with spokeswoman Dana Perino calling the bill “an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs.”

Influential House Financial Services Committee Chairman Barney Frank, one of the bill’s architects, acknowledged the extent of opposition in the Senate.

The proposed short-term loans are meant to sustain the car giants through March, allowing president-elect Barack Obama time to address the crisis after he takes office on January 20.

GM and Chrysler are first in line, after warning that they were fast running out of cash. Ford, though equally hampered by slumping sales, says it faces no immediate liquidity crisis but wants a nine-billion-dollar line of credit.

As global markets followed the debate in Congress, a representative of German auto manufacturers said the firms would want equal access to any emergency aid for their US operations.

“The crucial point for us is that all those who build in America, and not only American groups, be treated the same way under this plan,” the head of the automakers federation VDA, Matthias Wissmann, told the Berliner Zeitung daily.

Agency: AFP