automobiles - Democrats - financial crisis - USA

Congress delays vote on automobile rescue

Thursday 20 November 2008

The Democrat majority in Congress has decided to postpone a vote on a $25 billion bailout package for the ailing "Big Three" US car manufacturers, demanding them to come up with viable restructuring plans.

Democrats in Congress Thursday put off a vote on a bailout for crisis-hit "Big Three" auto makers off until at least December, and told industry chiefs to come up with a new rescue pitch.
   
Senate Majority leader Harry Reid said it was a "sad reality" that despite a bipartisan deal by senators from states which have millions of jobs depending on the industry, that there was not yet sufficient support for a bailout.
   
He said the chiefs of big auto firms would have another chance to come up with suggestions for a rescue package, likely to involve significant restructuring, and Congress could reconsider whether to back it in December.
   
"We do not have the votes," Reid said. "We want them to get their act together, we want to help.
   
"Yes, we are kicking the can down the road, because that will give us the opportunity to do something positive."
   
"The executives of the auto companies have not been able to convince the Congress or the American people that this government bailout will be its last," Reid told reporters.
   
"In light of the importance of this issue to all of us, we have decided that the best way to proceed is to give the auto companies another opportunity to make their case."
   
Reid said the auto industry chiefs must come up with a new plan by the week of December 2, and the Congress could hold another lame duck session to mull an emergency cash injection in the following week.
   
House Democratic speaker Nancy Pelosi said that the chiefs of top automakers who came to plead with Congress for bailout funds this week, had so far shown no clarity on how they wanted to restructure the industry for the future.
   
"Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future until we see the plan, until they show the plan, we cannot show them the money," Pelosi said.
   
Earlier a bipartisan group of senators from Michigan, Missouri and Ohio said they had reached a deal to support the industry with bridge loans.
   
The deal would have used funds from a 25 billion dollar Energy Department loan to the auto industry which was originally designed to spur development of fuel efficient vehicles as emergency funding.
   
Repayments by the recovering industry would replenish the fund and it would be returned to its original purpose.
   
Democrats had balked at using the fund for a bailout and said money to save Detroit should be taken from the 700 billion dollar financial industry rescue bailout but the White House refused.
   
"Obviously, we are disappointed we are not going to act today," said Michigan senator Carl Levin, one of the prime movers behind the compromise.
   
"We believe there is a reasonable chance that if this were put to a vote today or tommorow that it could gvet the 60 votes necssary."
   
Sixty votes would be needed in the 100-seat chamber to pass the bailout and overcome filibuster obstruction tactics.
   
Earlier, news of a possible deal for the struggling Big Three automakers jolted Wall Street out of a heavy sell-off, sending the Dow Jones Industrial up 36 points (0.45 percent) to 8,033.28 and also had the Nasdaq rebounding.
   
On Wednesday night, Harry Reid said nothing would happen towards bailing out the industry unless the White House budged.
   
"The Treasury already has the authority and resources to protect thousands of Americans who work in our nation's struggling auto industry," he said in a statement.
   
"If the Bush administration has any interest in saving Detroit, it has the power to do so."
   
White House spokeswoman Dana Perino accused Democrats of giving up the effort.
   
"It looks like Senator Reid just wants to pick up his ball and go home for the next two weeks -- two months for vacation," she said.
   
"If that is the case, then one can only deduct that the Democrats don't believe that the auto industry really needs help, and really needs help now. We disagree."
   
Top executives from General Motors, Ford and Chrysler this week begged Congress for the multi-billion-dollar loans and warned that the industry faces a "catastrophic collapse" if the lawmakers didn't fund them.