WASHINGTON — The $25 billion rescue plan for the auto industry, desperately sought by Detroit’s beleaguered Big Three, collapsed Thursday as Congress drew the line at one more bailout and Democrats said they wouldn’t even consider it until the companies produced a convincing plan for rebuilding their once mighty industry.
The demise of the rescue — at least for now — left uncertain the fate of General Motors Corp., Ford Motor Co. and Chrysler LLC, and sent Wall Street spiraling to its lowest level in years.
The Dow Jones industrials dropped 445 points, the second straight plunge of more than 400, and hit their lowest point in nearly six years.
The carmakers have been clobbered by lackluster sales and choked credit and are battling to stay afloat through year’s end. Failure of one or more of the Big Three would be a severe further blow to the floundering economy — and to many Americans’ view of the nation’s industrial strength — and throw a million or more additional workers off the job.
Thursday, the government reported that laid-off workers’ new claims for jobless aid had reached a 16-year high and the number of Americans searching for work had soared past 10 million.
Congress approved a measure to extend jobless benefits through the holidays, and the White House said President Bush would quickly sign it.
Rejection of the latest bailout plan by House leaders postponed until next month a politically tricky decision for the Democratic Congress on whether to approve yet another unpopular emergency plan at a time of economic peril or risk being blamed for the implosion of an industry that employs millions and has broad reach into all aspects of the U.S. economy.
“Until they show us the plan, we cannot show them the money,” Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.
GM and Ford quickly issued statements promising to submit the blueprint the Democrats demanded.
