Michigan: Detroit Bailout Failure Would Be 'Devastating'

Federal loans for the domestic automakers are crucial to keep the national recession from becoming a depression, Michigan Gov. Jennifer Granholm said.

LANSING, Mich. (AP) -- Federal loans for the domestic automakers are crucial to keep the national recession from becoming a depression, Gov. Jennifer Granholm said Thursday.

The Democratic governor told CNN that withholding the loans would "devastating" to the U.S. economy. One in 10 jobs are tied to the industry, so millions of people would be affected if the automakers aren't helped, she said.

Granholm appeared on CNN as the heads of the U.S. auto companies were pleading with Congress for an expanded $34 billion rescue package.

"It's an issue that affects every community," Granholm said. "If you know somebody who is a trucker, if you know somebody who works on the railroad, if you know somebody in advertising, if you know somebody who is in a business that manufactures one of the thousands and thousands of tiny parts that is in the most sophisticated, technically advanced mass-produced product in the world β€” your carβ€” then you will be affected. And your neighbors will be affected."

Granholm says the auto industry hasn't done a good enough job explaining to people outside the industry why saving the automakers is important to their jobs and economic well-being. She said she hopes people understand that General Motors Corp., Ford Motor Co. and Chrysler LLC have been hurt by the financial meltdown the same as many other businesses.

"The auto industry is a victim of the financial meltdown just like everybody else is. When people can't buy cars because they don't have access to credit, and when the auto industry can't borrow because it doesn't have access to credit, it means everything stops," she said.

She added: "For the future of our nation and the jobs and the industry and manufacturing, it is critical to save this industry through a loan. And it's only a loan."

Speaking later Thursday to reporters during a Lansing news conference, Granholm implored President George W. Bush to take steps to help the auto industry, noting the loss could cost the already battered national economy 3 million jobs.

The Bush administration has said that it has no intention of tapping an already enacted $700 billion financial bailout program to help the auto industry, instead preferring aid be taken from an earlier $25 billion program to help the industry retool its plants to make their vehicles more fuel-efficient. But analysts say the latter program won't provide enough money.

Granholm said she fears GM will go down the tubes if it doesn't get a federal loan this month.

"What they've been saying is, if they don't get the loan by the end of the year, it's game over," she said. "I believe what they've been saying."

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