Washington: White House and congressional negotiators sought on Sunday to resolve remaining differences over an emergency rescue for the struggling auto industry, a stark symbol of the deepening US economic crisis.
Prodded by shock unemployment figures that showed the country shed more than half a million jobs last month alone, negotiators tried to turn into legislation an agreement in principle to provide “The Big Three” US automakers with at least $15 billion in short-term loans.
In addition to reorganizing automakers and protecting taxpayer investment, possible conditions include creating a government “car czar” to oversee the bailout and additional concessions by the United Auto Workers (UAW) union as well as the corporate leadership.
The Senate is due back in session on Monday and negotiators hope to have a package ready that can be quickly approved and sent to President George W Bush as one of the last measures he signs into law before Democrat Barack Obama succeeds him as president on 20 January.
The amounts under discussion are less than half the $34 billion that the automakers asked Congress for last week. Some economists believe they may need $75 billion to $125 billion to survive in the longer term.
Nevertheless, lawmakers fear a recession will deepen if any of the three giants - GM, Ford and Chrysler - collapses soon. But some from Bush’s Republican party don’t want another rescue plan after a $700 billion Wall Street rescue package that triggered voter backlash in the 4 November congressional elections.
Critics also say market forces, not state intervention, ought to determine the fate of the auto industry.
Bailout backers say that since the government helped Wall Street, it must also help hundreds of thousands of blue-collar auto workers who have the support of Democrats.
Obama added his weight to the drive, saying while the car companies had made mistakes, letting them collapse was not an option - although they must be forced to radically revamp their operations.
Despite the progress in Washington, America’s auto industry is headed into an unknown future.
GM and Chrysler, along with Ford once bywords for U.S. industrial power, are both headed for wrenching restructuring under federal oversight that will hit their investors, creditors, dealers and workers almost as hard as if they had filed for bankruptcy protection.
Ford is in slightly better financial shape, but all three are expected to continue to mothball plants and dismiss tens of thousands of employees.