Hardline opponents of an auto-industry bailout branded the industry a “dinosaur” whose “day of reckoning” is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress.
The companies are seeking $25 billion from the financial industry bailout for emergency loans, though supporters of the aid for General Motors Corp., Ford Motor Co. and Chrysler LLC have offered to reduce the size of the rescue to win backing in Congress.
Senate Democrats intended to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits; a vote was expected as early as Wednesday.
A White House alternative would let the car companies take $25 billion in loans previously approved to develop fuel-efficient vehicles and use the money for more immediate needs. Congressional Democrats oppose the White House plan as shortsighted.
Majority Democrats will need at least 12 GOP votes in the Senate to prevent opponents from blocking their measure. So far two Republicans publicly have voiced support for the idea. Several others, including Minnesota Sen. Norm Coleman on Sunday, have indicated they might accept a rescue under strict conditions.
Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any Wall Street rescue money to prop up automakers because a bailout would only postpone the industry's demise.
“Companies fail every day and others take their place. I think this is a road we should not go down,” said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.
“They're not building the right products,” he said. “They've got good workers, but I don't believe they've got good management. They don't innovate. They're a dinosaur in a sense.”
Added Kyl, the Senate's second-ranking Republican: “Just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning.”
At least two GOP senators support an automaker bailout – George Voinovich of Ohio and Kit Bond of Missouri. But if the Republicans are seen as neglecting an industry that inevitably collapses, they risk lasting political problems in Midwestern industrial states that can swing for either political party.
Obama won most of the manufacturing states in the presidential race, including Ohio, a perennial battleground, and Indiana, which had not voted for a Democrat for president since 1964. Obama easily won Michigan after Republican John McCain publicly pulled out weeks before Election Day.
The auto companies are lobbying lawmakers furiously for an emergency infusion of cash. GM has warned it might not survive through year's end without a government lifeline.
“It's not the General Motors we grew up with. It's a General Motors that is headed down this road to oblivion,” said Shelby. “Should we intervene to slow it down, knowing it's going to happen? I say no, not for the American taxpayer.”
United Auto Workers President Ron Gettelfinger would not flat-out reject further concessions by members on top of the two-tiered wage system and other concessions the union gave automakers last year, but he bristled at calls for further sacrifices.
“Let's go to AIG, Bear Stearns, active and retired workers: Did anybody go in and ask them to give back wages and benefit levels?” Gettelfinger said on WDIV-TV in Detroit. “What about the bond traders? Did anybody ask them? What about the cleaners in the building? Why would the UAW be any different?”
Obama said aid is needed but should be provided as part of a long-term plan for a “sustainable U.S. auto industry” – not simply as a blank check.
“For the auto industry to completely collapse would be a disaster in this kind of environment,” Obama said in a “60 Minutes” interview Sunday night on CBS. “So my hope is that over the course of the next week … discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan – what does a sustainable U.S. auto industry look like?”
Automakers say bankruptcy protection is not an option because people would be reluctant to buy from companies that might not last the life of their vehicles. But lawmakers against the bailout say Chapter 11 might be a better option than government loans, citing the experience of airlines that have gone through reorganization.