Full-Throttle Push for Auto Bailout
By: manybanking.com Staff
Senior Democrats are drafting legislation that would carve out part of the $700 billion Wall Street bailout for loans to the three major U.S. automakers.By Julie Hirschfeld Davis

WASHINGTON (AP) -- The auto industry and business groups have mounted a lobbying onslaught to thwart GOP opposition to a Senate vote next week on Democrats' plan for a $25 billion emergency loan plan for U.S. carmakers.

Senior Democrats are drafting legislation that would carve out part of the $700 billion Wall Street bailout for loans to the three major U.S. auto companies in exchange for a government ownership stake in the companies.

They hope to push the measure through during a postelection session of Congress that begins Monday. General Motors, Ford, and Chrysler are lobbying feverishly for Congress to approve the aid, citing an economic downturn that has choked off sales and frozen credit.

But the idea is running into resistance from Republicans and President Bush, who are reluctant to back any additional money for the struggling industry. House GOP leader John Boehner of Ohio issued a statement Thursday promising to oppose any new auto industry loans.

Senate Republican leader Mitch McConnell of Kentucky -- home to a General Motors and two Ford plants-- has been noncommittal about new aid. His office says Congress should instead speed release of $25 billion in loans approved by Congress last month to help automakers develop more fuel-efficient vehicles.

House Speaker Nancy Pelosi (D., Calif.) has yet to schedule a legislative session to consider the new loans as Democrats keep hunting for the votes to pass it.

"Right now, I don't think there are the votes," said Sen. Chris Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee. While supporting the proposal, Dodd cautioned against "bringing up a proposition that might fail." He suggested that Congress wait until President-elect Barack Obama is sworn in on Jan. 20 to provide further help to the carmakers.

Senate Majority Leader Harry Reid, (D., Nev.) rejected that idea. His office said he would press forward with a still-unwritten measure next week.

With feelings still raw from the election and the public outraged about the Wall Street rescue, the auto proposal remains a tough sell. Some Senate Republicans have expressed skepticism that the aid would lead to changes for the companies that could make them viable in the long run.

Still, supporters of the auto bailout hope they can snag 12 to 15 Republicans to join with Democrats in pushing it through. They are targeting lawmakers who represent states with auto plants and auto suppliers, as well as Republicans in states with high unemployment rates.

Sen. Carl M. Levin (D.,Mich.) an architect of the carmaker aid, said he was "confident that there will be bipartisan support for legislation to support the U.S. auto industry."

Auto dealers, who have major political clout because their operations are spread across every congressional district, are preparing a major lobbying effort, as well as asking for additional help from Congress, such as new tax breaks for buying cars.

The bill Democrats are writing would insert the government squarely into the car companies' operations. It would require that the companies submit a plan for long-term viability in exchange for the loans, share a portion of future profits with the government and reimburse taxpayers before any other shareholder, according to aides familiar with it.

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