CQ TODAY PRINT EDITION
– ECONOMIC AFFAIRS
Nov. 18, 2008 – 5:44 p.m.
U.S. Automaker Executives Plead for Aid as Hopes Fade for Speedy Action
By Joseph J. Schatz and Edward Epstein, CQ Staff
Executives of the Big Three domestic automakers pleaded with Congress Tuesday for emergency assistance, even as chances for action this week faded.
General Motors Corp. chief executive officer G. Richard Wagoner warned the Senate Banking, Housing and Urban Affairs Committee of “catastrophic” economic consequences if the domestic industry collapses.
Wagoner and other auto chieftains joined leaders of the United Auto Workers in begging lawmakers to support $25 billion in emergency loan assistance for the industry. Wagoner said the cost of an industry collapse would “far exceed the government support our industry needs to weather this crisis.”
All three companies face a cash flow crisis as the economic downturn sends auto sales plunging.
Ford Motor Corp. is considered the least vulnerable of the Big Three, but CEO Alan Mulally said the collapse of either GM or Chrysler LLC would have a “severe impact” on Ford with “devastating ripple effects across the entire U.S. economy.”
Chrysler CEO Robert Nardelli said that if his company is forced into bankruptcy, “we believe that sales will plummet dramatically,” and that plants will remain “idle for a significant period of time.”
“We just can’t be confident we’ll be able to successfully emerge from bankruptcy,” Nardelli added.
Many Banking Committee members supported the idea of helping the auto industry, but differed sharply on the method. And the timetable for action appeared to be sliding.
House Speaker Nancy Pelosi , D-Calif., said Tuesday she did not know if the automakers can survive until next year if they do not get the federal loans that Democrats want to provide immediately. “Not doing it now is a chance we don’t want to take,” she told reporters.
Pelosi said the Democrats’ aid legislation is designed to carry the automakers into March, when the companies would be required to present a plan for achieving long-term viability. But Pelosi, unlike House Majority Leader Steny H. Hoyer , D-Md., made no mention of calling the House back into lame-duck session in December to tackle the issue if the Senate does not act this week on auto industry aid. “We’ll either have the votes to do this now or we’ll have to take it up in early January,” when the 111th Congress convenes, she said.
Still, Pelosi — like Hoyer — noted that House Democratic leaders will be in the Capitol during the week of Dec. 8 for meetings with experts on the economy and national security. If the Bush administration or Senate Republicans were to change their position on auto aid or strike a deal with Democrats on a new approach, the House could be called back into session then.
White House, Republicans Balk
Top Senate Republicans said Tuesday that an existing Energy Department loan program — not this year’s $700 billion financial industry bailout law — should be the source of aid for domestic automakers.
U.S. Automaker Executives Plead for Aid as Hopes Fade for Speedy Action
Democrats want to tap the Troubled Asset Relief Program (TARP), a financial rescue program created last month (PL 110-343), but the White House and Republican leaders in Congress have dug in against that idea.
“We don’t think that these funds should be taken from the TARP. That was never the intent of Congress,” White House spokeswoman Dana Perino said Tuesday. “That money is specifically for the financial industry, to help prevent collapse in our financial system.”
Perino said the Democrats’ proposal “fails to require automakers to prove viability. We don’t think that taxpayers should be asked to throw money at a company that can’t prove that it has a long-term path for success.”
Senate Democratic leaders will try Wednesday to call up legislation that would direct the Treasury Department to make emergency loans of $25 billion from the TARP program to struggling domestic automakers.
Calling the domestic automotive industry important to his state, Senate Minority Leader Mitch McConnell , R-Ky., said he supports the alternative pushed by the White House to authorize immediate use of a $25 billion Energy Department loan program enacted last year (PL 110-140) to help automakers shift to more fuel-efficient production.
Republican Sen. Jim Bunning , McConnell’s home-state colleague, said he too is “very concerned” about the crisis, noting that the auto industry is the largest manufacturing sector in his state. Still, he said, the Democrats’ $25 billion draft legislation is not a “serious” proposal. He called it “virtually a blank check.”
Kentucky is home to General Motors, Ford and Toyota plants. Toyota’s Georgetown, Ky., facility is the Japanese company’s largest outside Japan.
Sen. Carl Levin , D-Mich., a key advocate for the industry, said Tuesday that he had not seen the White House proposal to draw on the energy program loan instead of TARP.
“We need to see language from people who have different paths to the common goal and try to reconcile them and bring them together,” Levin said. “I don’t know what the next step would be if we don’t pass it this week. The stakes are great.”
House Financial Services Chairman Barney Frank , D-Mass., said that modifying the Energy Department loan program “would be a very bad idea.” Asked whether there was an alternative to using the financial industry bailout program to help automakers, Frank responded, “I can’t think of one.”
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