Log In

Reset Password
BERMUDA | RSS PODCAST

$14b auto bailout bid hit by Republican senators' opposition

WASHINGTON (AP) - Emergency aid for the nation's imperiled auto industry was thrown into jeopardy yesterday, opposed by Republicans who were revolting against a hard-fought deal between Democrats and the Bush White House to speed $14 billion to ailing carmakers.

The House was on track to vote on the bailout yesterday night, and Democrats held out hope that it could be enacted by week's end. But a growing number of GOP senators declared they would not go along.

The White House, though not formally endorsing an agreement with congressional Democrats, dispatched administration officials to Capitol Hill to make a case for the rescue package. During a contentious, closed-door luncheon with Senate Republicans, White House Chief of Staff Josh Bolten got an earful of criticism from the rank-and-file, some of whom have already announced plans to block the measure.

"They got a good dose," said opponent Tom Coburn (Republican - Oklahoma) as he emerged from the session.

Even auto state Republicans who have pushed hard for a bailout said the measure needed work. Senator Kit Bond (Republican - Missouri) said he wanted to see changes. And Sen. George Voinovich (Republican - Ohio) said the bill did not have the necessary Republican votes to pass Congress.

The Republicans' revolt came as the House began procedural votes on the package.

It would provide money within days to cash-starved General Motors Corp. and Chrysler LLC, while Ford Motor Co. - which has said it has enough liquidity to stay afloat - would be eligible for federal aid as well.

The plan would create a government "car czar", to be named by President George W Bush to dole out the loans, with the power to force the carmakers into bankruptcy next spring if they did not cut quick deals with labour unions, creditors and others to restructure their businesses and become viable.

With Republicans balking and some absent from the emergency, post-election debate, mustering the 60 votes needed to advance the auto rescue measure in the Senate was proving tricky.

Sen. Mitch McConnell, the GOP leader, said yesterday afternoon that his side had only recently gotten a copy of the measure. He said, "Everybody is still kind of poring through it, trying to figure out exactly what it does. But everybody understands the significance of the issue and the enormity of the problem."

Opposition was not limited to Republicans.

Democratic Sen. Max Baucus of Montana announced he was against the measure because of a provision to bail out transit agencies. The bus and rail systems could be on the hook for billions of dollars in payments because exotic deals they entered into with investors - which have since been declared unlawful tax shelters - have gone sour.

At the White House, Deputy Chief of Staff Joel Kaplan told reporters at a late-morning briefing that the administration had yet to read the fine print of its "conceptual agreement" with congressional Democrats.

However, he indicated clear support, saying Bush would personally lobby Republicans.

House Republicans swiftly voiced their opposition and called for a plan that would instead provide government insurance to subsidise new private investment in the Big Three automakers, demand major labor givebacks and debt restructuring at the companies, and encourage them to declare bankruptcy.

Representative John Boehner (Republican - Ohio), the minority leader, said the legislation "asks taxpayers to further subsidise a business model that is failing to meet the needs of American workers and consumers."