US seeks to save auto industry

General Motors CEO Rick told the House Financial Services Committee that collapse of the US auto industry could lead to a loss of 3 million jobs.

Top Senate Democrats suggested Wednesday that a bill to rescue the three major US automakers was stalled, and called on the Bush administration to take steps to help save the industry if congressional efforts falter. Senate Majority Leader Harry Reid sought to lower expectations of reaching a deal on the $25 billion proposal before Congress quits for the year. While he told the Senate he still hoped lawmakers could agree to an auto deal in the "next day or two" of the current session, he added: "If we can't do it here legislatively, I would hope that the secretary of Treasury would listen loud and clear because they could take this into their own hands and do what I think is appropriate from their perspective." Banking Committee Chairman Chris Dodd, a Democrat, was even more downbeat, calling the possibility of reaching agreement remote. "I don't see how in the next few days this is going to move forward," Dodd said. Still, he added, "That does not mean that there are not opportunities." He suggested that the Federal Reserve could possibly step up to the job. The difficulties of striking a deal on the package before a new president and a new Congress with expanded Democratic majorities take office appeared to be too great to overcome. The deadlock persisted even as the heads of General Motors, Ford and Chrysler returned for a second day to plead for relief and as their congressional backers urged colleagues not to punish them for past mistakes. General Motors CEO Rick Wagoner told the House Financial Services Committee that collapse of the US auto industry could lead to a loss of 3 million jobs within the first year and ripple throughout communities around the nation. In sometimes contentious testimony, Wagoner was pressed on when GM would run out of money if the loans were not extended. He said he couldn't say precisely, but that the company now was burning through "$5 billion each month." Still, with the $25 billion emergency package, "We think we have a good shot to make it through this," Wagoner said. He said he anticipated that, if the package is approved, GM would qualify for about $10b. to $12b. of the money. President George W. Bush and Republicans in Congress have been reluctant to use the Treasury Department's $700b. financial bailout program to finance the loans. And White House press secretary Dana Perino has said Congress should draw the funds from an Energy Department program established by law last year to encourage production of fuel-efficient cars. Earlier Wednesday, Sen. Richard Shelby, the senior Republican on the Banking Committee, said he did not believe there would be a turnaround in the industry until its top management is ousted and its manufacturing operations are revamped. "I don't think they have immediate plans to change their model, which is a model of failure," he said. Shelby said he thinks a large part of any such bailout would amount to "life support" for the automakers. "I believe their best option would be some type of Chapter 11 bankruptcy," he said. "These leaders have been failures and they need to go." At a hearing of his House Financial Services Committee, Rep. Barney Frank, a Democrat, pointedly suggested that a congressional bias exists to the extent that lawmakers seem more inclined to intervene to help white-collar bankers than blue-collar auto workers. But Rep. Spencer Bachus, a Republican, said the bailout would only "push the problem further down the path." Rep. Brad Sherman, a Democrat, asked the three auto chiefs seated at the witness table before him to raise their hands if they had come to Washington on commercial airliners. No hands went up. Then he asked if any planned to sell their corporate jets. Again, no hands went up. Sherman and Rep. Gary Ackerman, a Democrat, told the auto executives they were having a hard time justifying to their constituents bailing out companies whose chiefs fly around in expensive private jets. Ackerman said there was "a delicious irony in seeing private jets flying into Washington, DC, and people coming off them with tin cups in their hands." A Senate vote on an automotive bailout plan, which would also extend jobless benefits, could come as early as Thursday, but it currently lacks the support to advance.