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Congress to tackle Detroit bailout today

WASHINGTON — Hard-line opponents of an auto industry bailout branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700-billion Wall Street rescue in this week's lame-duck session of Congress.

The companies are seeking $25-billion from the financial industry bailout for emergency loans, though supporters of the aid for General Motors Corp., Ford Motor Co. and Chrysler LLC have offered to reduce the size of the rescue to win backing in Congress. GM has warned it might not survive through year's end without a government lifeline.

Senate Democrats intended to introduce legislation today attaching an auto bailout to a House-passed bill extending unemployment benefits; a vote was expected as early as Wednesday.

A White House alternative would let the car companies take $25-billion in loans previously approved to develop fuel-efficient vehicles and use the money for more immediate needs. Congressional Democrats oppose the White House plan as shortsighted.

Majority Democrats will need at least a dozen GOP votes in the Senate to prevent opponents from blocking their measure — assuming all Senate Democrats support it.

President-elect Barack Obama, while saying he thought it was necessary to help the auto industry, said, "I think that it can't be a blank check. So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance, but making sure that that assistance is conditioned on labor, management, suppliers, lenders — all the stakeholders coming together with a plan."

Two Republicans — George Voinovich of Ohio and Kit Bond of Missouri — publicly have voiced support for the idea. Several others, including Minnesota Sen. Norm Coleman on Sunday, have indicated they might accept a rescue under strict conditions.

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers because a bailout would only postpone the industry's demise.

"Companies fail every day and others take their place. I think this is a road we should not go down," said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee. "They're not building the right products," he said. "They've got good workers but I don't believe they've got good management. They don't innovate. They're a dinosaur, in a sense."

Added Kyl, the Senate's second-ranking Republican: "Just giving them $25-billion doesn't change anything. It just puts off for six months or so the day of reckoning."

House Speaker Nancy Pelosi, D-Calif., said over the weekend the House would aid the ailing industry, though she did not put a price on her plan.

Lawmakers opposed to the bailout say Chapter 11 might be a better option than government loans. They cite the experience of airlines that have reorganized.

The impasse, a fitting end for the 110th Congress given the stalemates that marked the past two years, makes it likely that any separate bailout for the auto industry will have to wait until after Obama is sworn in on Jan. 20. The odds are also against a broader measure sought by Democrats in an effort to boost the economy.

The legislation with the best chance of clearing Congress this week is a 13-week extension of unemployment benefits for those who have exhausted their aid in states with high unemployment.

Also this week, Senate Democrats are set to consider whether to punish Sen. Joe Lieberman, the Connecticut independent who aligns with Democrats, for his ardent support of Sen. John McCain in the presidential election.

Senate Republicans are being urged from within to expel Sen. Ted Stevens of Alaska from their caucus and strip him of committee posts because of his conviction on federal ethics violations.

Information from the New York Times was used in this report.

Congress to tackle Detroit bailout today 11/16/08 [Last modified: Tuesday, November 18, 2008 7:30pm]
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