Automakers Need To Make Case For Government Aid

WASHINGTON – Democratic leaders began laying out conditions Friday that they say Detroit’s Big Three automakers need to meet before Congress will consider giving them an emergency $25 billion lifeline.

The White House sharply criticized the Democrats for letting the issue linger while taking a congressional recess.

“It is appalling that Congress decided to leave town without addressing a problem that they themselves said needed to be addressed,” White House press secretary Dana Perino said.

At the Capitol, House Speaker Nancy Pelosi said she and Senate Majority Leader Harry Reid are trying to get the reassurances lawmakers need before handing over the money. The two leaders were drafting a letter Friday to the U.S. auto executives requesting specific information on how federal loans would help them survive.

The assignment is meant to give General Motors Corp., Ford Motor Co., and Chrysler LLC another chance – after a disastrous pair of hearings this week on Capitol Hill – to make their case to lawmakers and the public, she said.

“It’s another opportunity for them to say to the American people, ‘Give us your money, because we will put it to good use,’ ” Pelosi, D-Calif., told reporters.

The embattled companies have two weeks to get back to the skeptical Congress, after top Democrats scrapped planned votes on an auto bailout they said lacked support – or a clear justification.

“The executives of the auto companies have not been able to convince Congress or the American people that this government bailout will be its last,” Reid said Thursday.

Hearings are expected the week after next and lawmakers could consider legislation during the week of Dec. 8, but only if the industry shows that taxpayers and auto workers would be protected, congressional leaders said.

U.S. automakers are struggling to stay afloat heading into 2009 amid an economic meltdown, precipitous drop in sales and a tight credit market. The three companies burned through nearly $18 billion in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks.

Detroit’s car makers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.

Perino called the Democratic plan “mind-boggling.”

“How in the world are 535 members of Congress going to determine the viability of a company?” she said. “They can’t even get together to pass a Mother’s Day resolution.”

Perino spoke to reporters while flying with President Bush to an economic summit in Peru.

Congress is weighing a tricky political question: Should it spend billions more on unpopular government bailouts or run the risk of bearing the blame of a U.S. auto industry meltdown?

The outgoing Bush administration criticized the congressional delay, saying lawmakers should consider a bipartisan plan to let the automakers tap a separate $25 billion loan program for fuel-efficient cars for their short-term cash needs.

“Why are they going to kick the can down the road?” said Dana Perino, the White House press secretary.

Senate Republican Leader Mitch McConnell of Kentucky described Democrats’ stop-and-start attempts to push through the auto bailout as a “bizarre and confusing” spectacle during this week’s postelection congressional session. He said the White House-backed plan “would be a way to get a law,” but he wouldn’t say whether he believes Congress should return next month to address auto industry’s predicament.

“I think we all accept that they’re in serious trouble. No one is happy about that. But what to do about it remains to be seen,” McConnell said.

Supporters of the bipartisan measure to temporarily divert the fuel-efficiency funds to cover the auto companies’ operations said they were hopeful of winning support in December. “We need speed. This is a very, very important moment,” said Sen. Carl Levin, D-Mich.

But Pelosi reiterated her opposition to that approach, which is vehemently opposed by environmentalists jealously guarding that money for the development of cars that use less gasoline.

“It’s like taking your kids’ college education fund and spending it on your credit card bills,” Pelosi said.

Still, Democratic leaders acknowledged yesterday that their favored approach – carving the $25 billion in loans from the $700 billion Wall Street bailout fund – lacked enough support in Congress, particularly after the auto executives’ poor performance in high-profile appearances on Capitol Hill.

The chief executives of the Big Three urged lawmakers to sign off on the loans this week, saying the economic meltdown had staggered their industry after they had taken steps to restructure and produce more fuel-efficient cars.

But they were roundly criticized for traveling aboard corporate jets to seek billions in government aid and failing to assure lawmakers they wouldn’t need more money.

“What happened here in Washington this week has not been good for the auto industry,” Reid said. “These guys flying in their big corporate jets doesn’t send a good message to people in Searchlight, Nev., or Las Vegas or Reno or anyplace in this country. We want them to get their act together.”

Automakers quickly issued statements Thursday promising to submit the blueprint Democrats have demanded. But even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans, including a chance to share in future profits by the auto companies and limits on executives’ pay packages.

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Associated Press writers Julie Hirschfeld Davis and Jim Abrams contributed to this report.