WASHINGTON – Detroit's Big Three auto makers are begging Congress for a $25 billion government rescue, while the legislation clings to life support on Capitol Hill and top lawmakers and the White House suffer from bailout fatigue.
Democratic congressional leaders want to tap the $700 billion Wall Street rescue package for new loans to U.S. auto manufacturers and suppliers, but the White House and GOP lawmakers say the beleaguered industry shouldn't get any new funds.
President George W. Bush and GOP lawmakers instead propose diverting $25 billion in loans approved by Congress in September — designed to help auto manufacturers retool their factories so they can make more fuel-efficient vehicles — to cover the firms' immediate financial woes.
But auto executives, backed by leading Democrats, insist they need another $25 billion in emergency loans to avert a collapse of one or more of their companies before year's end. That would bring the total federal help for the industry to $50 billion this year.
The executives, along with the head of the United Auto Workers union, were making their case Tuesday at a hearing before the Senate Banking Committee as auto bailout backers hunted the votes necessary to pass the plan in a postelection session. Aides in both parties and lobbyists tracking the plan privately acknowledge they are far short.
The debate comes as the financial situation for General Motors Corp., Ford Motor Co. and Chrysler LLC grows more precarious. GM has said it could run out of cash by year's end without government aid.
"They're going to need to address what is the perception among some of our colleagues here that there's still some quality issues with the Big Three, and they haven't begun to do the necessary restructuring — because they have," said Sen. Carl M. Levin, D-Mich., an architect of the bailout.
Levin's bill would provide loans with initial interest rates of 5 percent to the U.S. automakers and suppliers in exchange for a federal stake in the companies or warrants that would let the government profit from future gains. Loan applicants would have to give the government a plan for "long-term financial viability."
But the measure stops short of giving the government a say over the firms' operations through an oversight board or hard limits on executive compensation. While taking advantage of the program, the companies could not pay dividends, award bonuses to executives making more than $250,000 a year, or give golden parachute payments to top people departing from the firms.
A vote on the measure — which includes an extension of jobless benefits — could come as early as Thursday. But in an acknowledgment of the long odds facing such a plan, Majority Leader Harry Reid, D-Nev., also laid the groundwork for a straight up-or-down vote on the more widely supported unemployment measure, which is probably all that can pass this week.
The Senate auto bailout bill notes that 355,000 U.S. workers are directly employed by the auto industry, and an additional 4.5 million work in related industries. That doesn't count the 1 million retirees, spouses and dependents who rely on the firms for retirement and health care benefits.
Critics argue that the industry's business practices — including lavish pay and benefits packages for auto workers — have created unsustainable costs for the faltering companies that can only be solved with bankruptcy.
"I can't see how injecting capital with all the legacy issues that each of these companies has is better than reorganization," said Sen. Bob Corker, R-Tenn.