Congress girds for fight over automaker bailout

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.

Senate Democrats intended to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits; a vote could come 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. So far only two Republicans — George Voinovich of Ohio and Kit Bond of Missouri — have publicly 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,” Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee, said Sunday on NBC’s “Meet the Press.” “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.”

Kyl, the Senate’s second-ranking Republican, told “Fox News Sunday”: “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. “The House is ready to do it,” Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee told CBS’ “Face the Nation.” “There’s no downside to trying.”

Frank’s committee has scheduled a Wednesday hearing on an auto bailout.

But it will be a more difficult fight in the Senate, given the Democrats’ slim edge and President Bush’s opposition. Bush wants to speed the release of $25 billion from a separate loan program intended to help the automakers develop fuel-efficient vehicles and have that money go toward more urgent purposes as the companies struggle to stay afloat. The loan program was approved by Congress last year, but more legislation would be necessary to change its purpose.

“That should be done this week,” Commerce Secretary Carlos Gutierrez told CNN’s “Late Edition.” He said reopening the Wall Street bailout and including automakers could attract other industries looking for bailouts.

“If you start that, where do you stop?” he asked. “There’s a line … of industries waiting at Treasury just to see if they can get their hands on those $700 billion.”

The disagreement raises the possibility that any help for automakers might have to wait until 2009, when President-elect Barack Obama takes office and the Democrats increase their majority in the Senate.

But if the Republicans are seen as neglecting an industry that inevitably collapses, they risk lasting political problems in Midwestern industrial states that can swing for either political party.

However, former GOP House Speaker Newt Gingrich said young voters, who overwhelmingly supported Obama over Republican John McCain, could be turned off by expensive corporate bailouts that they eventually will have to pay for.

If “those 20-year-olds and 30-year-olds start to figure out they’re going to pay the taxes, they’re not getting the billions, I think you might find a lot of dissatisfaction by next summer,” Gingrich said.

Sen. Carl Levin (D-Mich.), also speaking on “Meet the Press,” said automakers are working to adapt to a changing consumer market, but they need immediate help to survive the current economic crisis. “This is a national problem,” Levin said. “The auto industry touches millions and millions of lives.”