Auto Bailout Vote Canceled
New Deal Enters Automakers Sights
The White House and congressional Republicans called on Democrats to sign on to a GOP plan to divert a $25 billion 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.Michigan Democratic Sens. Carl Levin D-Mich., Sen. Debbie Stabenow D-Mich. and GOP Sens. Kit Bond R-Mo. and George Voinovich, R-Ohio were at work on that measure Wednesday, toiling to placate skeptical Democrats by including a guarantee that the fuel-efficiency loan fund would ultimately be replenished."It is the only proposal now being considered that has a chance of actually becoming law," said Republican leader Mitch McConnell of Kentucky.But there was little sign that Democratic leaders would go along. They are vehemently opposed to letting the car companies tap that money -- set aside to help switch to vehicles that burn less gasoline -- for short-term cash-flow needs.The new bill would repurpose funds from the $25 billion previously approved Energy Department loan and make the money immediately available for the cash-strapped automakers' to use for items like payroll.The loans would be released in small increments such as $2 to $5 billion. Also, the loans would be paid back in installments, immediately after the funds are released, similar to a home equity line of credit.In order to get the money, car companies would have to submit to congressional oversight, including bonus and golden parachute restrictions.Bleak Future Forecasted For Automakers Without Aid
All the options leave the Big Three bracing for a bleak winter without government help. General Motors Corp. has said it could collapse within weeks, and there are indications that Chrysler LLC might not be far behind.Wagoner told a House committee Wednesday that the downfall of his industry could lead to a loss of 3 million jobs within the first year and ripple through communities around the nation.In sometimes contentious testimony, Wagoner was pressed on when GM would run out of money if the loans weren't extended.He wouldn't say precisely, but disclosed that the company now was burning through "$5 billion each month."Still, with the $25 billion emergency package, "we think we have a good shot to make it through this," Wagoner said.Rep. Carolyn Cheeks Kilpatrick, D-Mich., appeared before the House Financial Services Committee before the automakers took the hot seat and said the American military and the nation's security would be at stake if the Big Three go under.She added that the automakers build the Hummers that are used overseas and even though the Big Three have exited the defense business, many of their suppliers make parts for military vehicles."Do we want to turn that over to our competitor? I don't think so," she said.Many lawmakers in both parties, however, are now openly discussing whether bankruptcy might be a better option for auto firms they regard as lumbering industrial dinosaurs that have done too little to adjust their products and work forces for the 21st century.Survey Says: Big Three BankruptcyThe carmakers argue that bankruptcy would devastate their companies, but proponents say it would give them a chance to reorganize and emerge stronger and more competitive.It's unclear whether Democrats controlling Congress are willing to risk being blamed for letting one of the Big Three -- symbols of the nation's once-mighty manufacturing sector -- go under.Bailout-shy lawmakers got an earful from jittery constituents last month when the House let an early version of the Wall Street rescue fail, sending the Dow Jones industrials tumbling and erasing more than a trillion dollars in retirement savings and other investments. Congress took a deep breath and reconsidered, passing the plan a few days later.Faced with a similar collapse in the auto industry, the Bush administration might yet decide to use its authority under the $700 billion financial industry bailout to help the auto companies, or the Federal Reserve could step in -- though both have steadfastly refused to do so.If not, lawmakers have left themselves a contingency plan: Come back to Washington in December for yet another postelection session where they might be able to strike the deal that now seems beyond reach.Democratic leaders are planning to gather for an economic conference the week of Dec. 8, noted House Majority Leader Steny H. Hoyer, D-Md."That is available," Hoyer said this week. "The year has not ended."Michigan Gov. Jennifer Granholm is cutting short her trade trip to the Mideast and heading to Washington Thursday to offer her support behind a loan for Detroit’s Big Three automakers.Granholm said approval of the loans is critical to the country's economy, energy independence and security.Copyright 2008 by ClickOnDetroit.com. The Associated Press contributed to this report. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.





























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