White House, Democrats back auto bailout; Republicans revolt (Lead)December 11th, 2008 - 5:17 am ICT by IANS
Washington, Dec 11 (DPA) Conservative lawmakers in the US are resisting plans to keep the country’s car industry afloat with a $14-billion emergency loan, vowing to block a deal being pushed through Congress.The Republican-led White House and leaders of the Democratic Party, which holds a slim majority in both houses of Congress, reached an agreement earlier Wednesday to keep US carmakers out of bankruptcy in exchange for heavy government oversight.
But it remained unclear if enough Republican legislators - who question whether the embattled carmakers deserve a bailout - were on board for the deal to pass the US legislature.
US politicians have been haggling for weeks on the details of a car industry rescue. A vote in the House of Representatives was expected late Wednesday, but leaders in the upper Senate said discussions may continue into the weekend.
Many Republicans and some Democrats in Congress have resisted any bail-out for the car industry. Some have argued bankruptcy protection is a better option for an industry that has failed to modernise and keep up with foreign competitors.
“This plan will really doom them to failure by not demanding … fundamental restructuring which is necessary for them to survive,” Republican Senator David Vitter told reporters.
General Motors Corp, the world’s largest carmaker, and Chrysler LLC have said they will likely declare bankruptcy if they don’t get the federal “bridge loan”, which they argue is needed because of a sharp drop in car sales during the US recession.
Ford Motor Co has said it does not need the cash now, but warns that the failure of one of its competitors could bring it down as well. Millions of job would also be lost at a time when the US is hoping to battle out of the year-long recession.
White House chief of staff Josh Bolton met with legislators on Capitol Hill to help secure a deal, but President George W Bush’s outgoing administration has limited clout remaining with his fellow Republicans in Congress.
President-elect Barack Obama, who takes office Jan 20, has said he supports a rescue but has been silent during the negotiation process.
Under the draft bill, the carmakers will have to demonstrate by April 30 at the latest that they have a plan in place to return to profitability or the money will be withdrawn.
The White House will appoint what has been dubbed a “car czar”, who will oversee the restructuring process and judge whether the carmakers have met the conditions to keep the taxpayer funds.
“This is a bridge to either fundamental restructuring, or bankruptcy,” said White House deputy chief of staff Joel Kaplan. “They either have a long-term plan that’s viable, or we get our money back.”
The money is less than half what carmakers originally asked for. The proposed rescue was also slashed another $1 billion over the course of Wednesday to $14 billion, the minimum GM and Chrysler have said they need to survive the coming months.
But Republican legislators argued the carmakers must go through more restructuring moves first - if necessary through bankruptcy - before getting access to federal aid. That includes renegotiating labour contracts and speeding up the delivery of more fuel-efficient vehicles.
“This (bill) is only delaying their funeral,” said Senator Richard Shelby, the top Republican on the Senate’s Banking Committee.
Passage of the bill was much more likely in the House than in the Senate.
Democrats currently have a 50-49 vote edge in the Senate, and 60 votes are needed to prevent opponents from using a bill-blocking procedural manoeuvre known as a filibuster. By contrast, a simple majority is required in the House.
A group of Republican senators Wednesday promised to block the legislation and it appeared they had enough backing. Only one Republican senator has publicly said he supports the rescue.
Tags: conservative lawmakers, david vitter, ford motor co, general motors corp, government oversight, republican legislators, republican senator, senator david vitter, us legislature, white house chief of staff