Republicans leave aid for Detroit in balance

December 11, 2008

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dodge-durango BUSH Administration officials were frantically trying to convince Republican senators yesterday to pass the $US14 billion in emergency funds for the US car industry, after a revolt by senior legislators cast doubt on whether the bailout would become law.

The House of Representatives passed the rescue package 237 to 170 on Wednesday after a marathon negotiation with the White House over its terms. But the Senate poses a much tougher test to bring the bill up for a vote.

Earlier in the day the Vice-President, Dick Cheney, and the White House chief of staff, Josh Bolten, were dispatched to Capitol Hill to persuade recalcitrant Republican senators. One senior senator described the bailout as “ass-backwards” because the car makers were getting emergency funds upfront before they committed to specific restructuring measures.

Republican opposition centres on a desire to mandate big concessions from unions and creditors as a condition of aid. They also oppose an environmental clause in the measure included by Democrats. Some just oppose the bailout outright.

Senator George Voinovich of Ohio said after meeting fellow Republicans:

“I don’t think the votes are there on our side of the aisle, and I think that some effort needs to be made to respond to some of the concerns of my colleagues,”

The funds are designed to ensure General Motors and Chrysler can avoid bankruptcy over the Christmas period. Ford may avail itself of the aid package but at the moment has sufficient funds to remain solvent.

Congress has been recalled to deal with the bail-out, and it was possible the Senate vote could be held yesterday. Yet if the numbers were not there, the Democrats were likely to hold the Senate in session and defer a vote as they worked on crafting a majority.

The Democrat House financial services committee chairman, Barney Frank, said before the House vote:

“To give up now on the auto industry would be to condemn the American economy at one of its most vulnerable periods in our economic history to a degree of further hurt, and the American people deserve better.”

The House Speaker, Nancy Pelosi, pleaded for the bill to be passed, calling it “tough love” for the car makers that gave “one more chance” to the domestic car industry.

The bill agreed between the White House and the Democrats that has passed the House taps $US25 billion in funds earmarked for retooling to make fuel-efficient cars. It also creates a government “car tsar” to distribute the funds and have the power to send the car makers into bankruptcy if they do not move quickly enough to restructure deals with creditors, unions and others.