WASHINGTON — A Democratic Congress, unwilling or unable to approve a $25 billion bailout for Detroit’s Big Three, appears ready to punt the automakers’ fate to a lame-duck Republican president.
Caught in the middle of a who-blinks-first standoff are legions of manufacturing firms and auto dealers — and millions of Americans’ jobs.
U.S. auto companies employ nearly a quarter-million workers, and more than 730,000 other people have jobs producing the materials and parts that go into cars. About 1 million on top of that work in dealerships nationwide. If just one of the auto giants were to go belly up, some estimates put U.S. job losses next year as high as 2.5 million.
“If GM is telling us the truth, they go into bankruptcy and you see a cascade like you have never seen,” said Sen. George Voinovich, R-Ohio, who was working on one rescue plan Wednesday. “If people want to go home and not do anything, I think that they’re going to have that on their hands.”
The automakers — hobbled by lackluster sales and choked credit — are burning through money at an alarming and accelerating rate: about $18 billion in the last quarter alone.
General Motors has said it could collapse within weeks, and there are indications that Chrysler might not be far behind. Ford has said it could get through the end of 2008, but it’s unclear how much longer.
For now, however, with the federal emergency loan plan headed for a roadblock in the Senate, lawmakers in both parties are engaged in a high-stakes game of chicken, positioning themselves to blame each other for the failure.
“The Congress need do nothing” during its post-election session this week, Sen. Harry Reid, D-Nev., the majority leader, said Wednesday, although he also said he still hoped lawmakers could strike an elusive deal to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund.
But it’s really up to President Bush’s team to act, he said.
“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,” the Democratic leader said.
White House press secretary Dana Perino said there was “no appetite” in the administration for using the financial industry bailout money to help auto companies. The White House and congressional Republicans instead called on Democrats to sign on to a GOP plan to divert a $25 billion loan program created by Congress in September — designed to help the companies develop more fuel-efficient vehicles — to meet the auto giants’ immediate financial needs.
Voinovich and Sen. Kit Bond, R-Mo., were at work on that measure Wednesday, toiling to placate skeptical Democrats by including a guarantee that the fuel-efficiency loan fund would ultimately be replenished.
But there was little sign that Democratic leaders would go along. They are vehemently opposed to letting the car companies tap that money — set aside to help switch to vehicles that burn less gasoline — for short-term cash-flow needs.
All of which leaves the Big Three bracing for a bleak winter without government help.
GM chief executive Rick Wagoner told a House committee Wednesday that the downfall of his industry would ripple through communities around the nation. Pressed by lawmakers, Wagoner wouldn’t say precisely when GM would run out of money without a government lifeline, but disclosed that the company now was burning through “$5 billion each month.”
Bit with the $25 billion emergency package, “we think we have a good shot to make it through this,” he said.
