Create a free account to continue

Auto Rescue Unsure Amid GOP Opposition

House-passed bill to speed $14 billion in loans to Detroit's automakers stands on shaky ground, undermined by Republican opposition that could derail the emergency aid in the Senate.

WASHINGTON (AP) -- Prospects for a $14 billion auto industry rescue bill dimmed Thursday amid growing opposition in both parties and despite urgent appeals by both President-elect Barack Obama and President George W. Bush.

Senate Republican Leader Mitch McConnell came out against the legislation -- the product of a hard-fought behind-the-scenes compromise between the majority Democrats and the White House. And not even the White House's argument that it was crucial at a time of rising joblessness seemed to restore lost momentum for enactment.

The automakers employ thousands in Ohio.

Proponents scrounged for the votes to clear the legislation as early as Thursday afternoon. President George W. Bush was lobbying for the bill, as well, arguing that the economy can't stand massive new layoffs. Obama said the country can't stand by and watch the industry collapse.

The measure already was stalling, in no small part because it was the last train out of the legislative station this year, and had taken on excess baggage.

But McConnell said the measure "isn't nearly tough enough." The Kentucky Republican also called for a different bill -- one that would force U.S. automakers to slash wages and benefits to bring them in line with Japanese carmakers Nissan, Toyota and Honda -- in return for any federal aid.

That approach was virtually certain to be a nonstarter among Democrats who count labor unions among their strongest supporters.

And the measure was losing support on the other side as well. Democratic Sen. Claire McCaskill of Missouri, who represents an automobile manufacturing state, announced she would oppose it because of an unrelated provision giving federal judges a pay raise.

The stalemate highlighted the difficulty of pushing another rescue package through a bailout-fatigued Congress, particularly one designed to span the administrations of a lameduck president and his successor. Forced together by growing economic turmoil, they were united in pressing hard for its swift approval.

In Chicago, Obama told reporters that an industry shutdown would have a "devastating ripple effect" on the already ragged economy.

Earlier, just after the Labor Department reported new applications for jobless benefits were at their highest level in 26 years, White House Press Secretary Dana Perino said the country couldn't afford an auto industry meltdown: "We don't think the economy can sustain it," she said.

On Capitol Hill, patience was wearing thin as the clock ticked down on the current Congress and Democratic leaders were short of the votes they would need to pass the measure.

Sen. Harry Reid, D-Nev., the majority leader, called for swift separate votes Thursday on compromise legislation backed by Democrats and the White House as well as the GOP proposal. If not, he promised a test-vote Friday morning to force a final up-or-down vote within days.

"We have danced this tune long enough," Reid declared.

But many Republicans remained staunchly opposed to it, and some Democrats were ill or absent from the emergency, postelection congressional session. Supporters of the bailout acknowledged that in this scenario, getting the requisite 60 votes to pass it would be very difficult.

"It's a challenge for us, but we're working as hard as we can and I would just say it's very close," said Sen. Debbie Stabenow, D-Mich.

Republicans are directly challenging Bush, arguing that any support for the domestic auto industry should carry significant, specific concessions from autoworkers and creditors. They're also bitterly opposed to tougher environmental rules carmakers would have to meet as part of the House-passed version of the rescue package -- something that also faces some Democratic opposition.

Behind the scenes, Senate leaders were negotiating to schedule possible votes on the House-passed bill, a Senate version that omits the environmental provision, and the GOP alternative, sponsored by Sen. Bob Corker, R-Tenn.

The House approved its plan late Wednesday on a vote of 237-170. It would infuse money within days into cash-starved General Motors Corp. and Chrysler LLC. Ford Motor Co., which has said it has enough cash to make it through 2009, would also be eligible for federal aid. A Bush-appointed "car czar" would dole out the money and be required to yank it back next spring if the carmakers didn't cut swift deals with labor unions, creditors and others to restructure.

Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks.

The majority of Senate Democrats were expected to back it, but some were on the fence.

Democratic Sen. Max Baucus is opposing it because of a provision to bail out transit agencies that were involved in transactions now considered unlawful tax shelters.

McCaskill said judges' pay raise, inserted by Reid, "sends the wrong message to the United States of America at this scary moment."

More in Supply Chain