WASHINGTON – Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.
House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., hope for quick passage of the auto bailout during a postelection session that begins Monday.
Legislation being drafted by Rep. Barney Frank, chairman of the House Financial Services Committee, would dip into the $700 billion Wall Street rescue money, approved by Congress last month, for the auto aid.
President Bush is cool to that idea. But the White House says he is open to helping the industry, which is buckling under poor sales, tight credit and a sputtering economy.
In an Oval Office meeting Monday, President-elect Obama spoke to Bush about doing more to aid the industry, aides said, and Bush said he was open to it.
Any effort to throw the companies a lifeline could run into GOP roadblocks that could derail it in the Senate. In that chamber, Republicans, including some who believe their votes for the Wall Street bailout hurt, and in some cases doomed, their re-election bids, are loath to agree to any new money.
Sen. Mitch McConnell, R-Ky., the minority leader, was noncommittal about additional aid. In a statement, his spokesman said Congress should move to speed the release of a $25 billion loan program passed earlier to help the carmatives and dividends to their shareholders than the financial companies that get a piece of the original bailout.
Auto executives, labor leaders and other industry proponents are mounting an intense lobbying effort for a bailout, painting a grim scenario for the economy if even one of the Big Three companies were to go under. They want an immediate $25 billion loan to keep the companies operating and a separate $25 billion to help cover future health care obligations for retirees and their dependents.
The Big Three and United Auto Workers will have a high-profile chance to make their case at a hearing next Wednesday before Frank's committee, where executives from Chrysler LLC, Ford Motor Co. and General Motors Corp. and a UAW leader are scheduled to testify Wednesday.
"It is critical that the nation understand this isn't just a Michigan problem, that one in 10 jobs in the country are impacted by the auto industry," Michigan Gov. Jennifer Granholm said in an interview.
A House vote on Frank's measure could come as early as next Thursday.
Democratic leaders also are considering pairing the measure with a broader economic aid bill including money for unemployed workers whose jobless benefits have run out, aides said. It was not clear whether such legislation could get enough support to pass.
Pelosi on Tuesday urged "immediate action" for the industry, while Reid noted it would only happen with bipartisan support from Bush and Senate Republicans.
Her request came less than a week after GM and Ford posted bleak third-quarter earnings reports. GM, the nation's largest automaker, posted a $2.5 billion quarterly loss Friday and warned that it may run out of money by the end of the year without government aid.
"We're in a situation where there's a great unknown about what will happen," said Sen. Debbie Stabenow, D-Mich. "And a great concern that at least one of the companies will find themselves in a situation where they cannot make it until Jan. 20," when President-elect Obama is inaugurated.
Democratic leaders will need to convince some skeptical lawmakers who question whether a bailout would cause changes in the auto industry or simply lead to more handout requests from other industries.
"Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?" asked Sen. Jeff Sessions, R-Ala.