US Automakers plead with skeptical Congress3 min read . Updated: 04 Dec 2008, 11:36 AM IST
US Automakers plead with skeptical Congress
US Automakers plead with skeptical Congress
Washington: Imperiled automakers and their union worked feverishly to sell a skeptical Congress on a $34 billion aid plan, promising labour concessions and restructuring a day before the chiefs of the auto companies return to Capitol Hill to make their urgent cases for loans.
The Senate’s Democratic leader said on Wednesday there still weren’t enough votes to tap the $700 billion federal bailout fund to prop up the foundering Big Three.
Sen Harry Reid said the money was unlikely to come from the Wall Street rescue fund.
“I just don’t think we have the votes to do that now," Reid said in an interview.
The White House called the timing of his comments “interesting" coming on the eve of high-stakes congressional hearings Democrats demanded.
Indeed, the reception the Big Three were getting from Congress was anything but friendly. Even a top Democrat in charge of evaluating their aid requests made it clear he was eager to avoid voting on a bailout.
Sen Chris Dodd, Democratic chairman of the Senate Banking Committee, wrote to Federal Reserve Chairman Ben Bernanke on Wednesday asking the central bank chief whether there was anything stopping him from using his considerable lending authority to help the automakers.
In Capitol Hill meetings, industry officials said the collapse of one or more of the Big Three carmakers could greatly worsen the nation’s recession and undermine the companies’ ability to survive.
The United Auto Workers union, scrambling to preserve jobs and benefits, agreed at an emergency meeting in Detroit to allow the companies to delay payments to a multibillion-dollar, union-run health care trust and to scale back a jobs bank in which laid-off workers are paid most of their wages. The concessions could help mollify some lawmakers who have criticized the union’s benefits as too rich when compared with those of workers at foreign-brand auto plants in the US.
The Bush administration and auto-state Republicans and Democrats are pushing to help the automakers with aid from a different source: a previously approved $25 billion program that’s supposed to be used to help them produce more environmentally advanced vehicles.
Environmentalists and a number of powerful friends in Congress are vigorously opposing that idea.
Reid said the administration could act unilaterally to use a portion of the Wall Street bailout program for loans to the automakers, but the White House has consistently resisted that approach.
Ahead of Thursday’s televised hearings, GM’s president and chief operating officer, Fritz Henderson, met with congressional aides and said bankruptcy for his company would further erode consumer confidence. About 25 auto dealers also combed through House and Senate office buildings, lobbying for the bailout package.
General Motors Corp., Chrysler LLC and Ford Motor Co. submitted three separate survival plans to Congress this week after flunking their first attempt to persuade lawmakers to throw them a lifeline.
GM and Chrysler said they needed an immediate infusion of government cash to last until New Year’s, and both said they could drag the entire industry down if they fail. Ford wants a $9 billion standby line of credit in case a competitor fails.
Chrysler said it needed $7 billion by year’s end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen.
Ford’s chief executive, Alan Mulally, and GM’s chief executive, Rick Wagoner, said they would work for $1 a year if each company accepted government loans. The carmakers also have offered to cancel bonuses and merit raises. Chrysler said its chief executive has cut his annual pay to $1.
Officials at the White House and the Treasury and Commerce departments were scouring the plans. Perino said it was “too early to say" whether the companies have outlined a path toward viability that justifies new federal assistance.
President-elect Barack Obama said it appeared that Big Three chiefs were returning to Washington with a “more serious set of plans."
The bailout faces a skeptical public. Sixty-one percent oppose providing the auto companies with billions in federal assistance, according to a CNN-Opinion Research Corp. poll released on Wednesday. Fifty-three percent said it would not help the economy.
Few saw any quick impact if the US auto industry were to go bankrupt only one in three expected to be affected immediately or in a year. Most of the rest said they thought it would affect them eventually, though nearly one-quarter said they would never feel its impact.