Senate Majority Leader Harry Reid says the Democrats’ plan to tap the Wall Street rescue fund to save U.S. automakers doesn’t have the votes to pass.
One day after Detroit’s Big Three sent survival plans to Capitol Hill in an urgent plea for $34 billion in government aid, Reid said there’s still not enough support in Congress for using some of the $700 billion bailout to help the teetering carmakers.
He told The Associated Press in an interview, “I just don’t think we have the votes to do that now.”
The Bush administration and auto-state Republicans and Democrats are pushing instead to take a $25 billion program to help the carmakers produce green vehicles and convert that into emergency loans.
Automakers and their union worked feverishly Wednesday to sell a skeptical Congress on a $34 billion aid plan, promising labor concessions and restructuring in advance of a second round of hearings.
In Capitol Hill meetings, industry officials said the collapse of one or more of the Big Three carmakers could deepen the recession and undermine the companies’ ability to survive.
“We’re on the brink with the U.S. auto manufacturing industry. We’re down to months left,” Chrysler’s vice chairman, Jim Press, told The Associated Press in an interview. “If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it’s a huge blow. It could trigger a depression.”
GM’s president and chief operating officer, Fritz Henderson, who met with congressional aides, said choosing the bankruptcy route would further erode consumer confidence in his company. About 25 auto dealers also combed through the House and Senate office buildings surrounding the Capitol, lobbying for the bailout package.
The UAW, scrambling to preserve jobs and benefits, agreed at an emergency meeting in Detroit to delay the companies’ payments to a multibillion-dollar, union-run health care trust and scale back a jobs bank in which laid-off workers are paid most of their wage. The concessions could help soothe some lawmakers who had criticized the union’s benefits as too rich when compared with those of workers at foreign-brand auto plants in the U.S..
“It should be helpful. It’s additional evidence that the UAW’s willing to participate in the painful restructuring,” said Sen. Carl Levin, D-Mich., a top supporter of the industry.
General Motors Corp., Chrysler LLC and Ford Motor Co. submitted three separate survival plans to Congress this week after flunking their first attempt to persuade lawmakers to throw them a lifeline.
GM and Chrysler said they needed an immediate infusion of government cash to last until New Year’s, and both said they could drag the entire industry down if they fail. Ford wants a $9 billion “standby line of credit” in case a competitor fails.
Chrysler said it needed $7 billion by year’s end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen.
Ford’s chief executive, Alan Mulally, and GM’s chief executive, Rick Wagoner, said they would work for $1 a year if each company accepted government loans. The carmakers also have offered to cancel bonuses and merit raises. Chrysler said its chief executive has cut his annual pay to $1.
All three plans envision the government getting a stake in the companies that would allow taxpayers to share in future gains if they recover.
The Senate Banking, Housing and Urban Affairs Committee was to hear testimony Thursday from the executives, the UAW’s president, Ron Gettelfinger, and the head of the Government Accountability Office on the companies’ plans. The House Financial Services Committee planned similar session Friday.
Officials at the White House and the Treasury and Commerce departments were scouring the plans. White House press secretary Dana Perino said it was “too early to say” whether the companies have outlined a path toward viability that justifies new federal assistance.
President-elect Barack Obama said it appeared that Big Three chiefs were returning to Washington with a “more serious set of plans.”
The bailout faces a skeptical public. Sixty-one percent oppose providing the auto companies with billions in federal assistance, according to a CNN-Opinion Research Corp. poll released Wednesday. Fifty-three percent said it would not help the economy.
Few saw any quick impact if the U.S. auto industry were to go bankrupt — only one in three said it would affect them immediately or in a year. Most of the rest said they thought it would affect them eventually, though nearly one-quarter said they would never feel its impact.
Earlier Wednesday, GM's Henderson said that bankruptcy isn’t a viable option because it would further erode consumer confidence in the automaker and “we want them to be confident in their ability to buy our cars and trucks.”
Henderson appeared on the network morning news as leaders of the UAW was immersed in intense discussions on possible givebacks for the companies at an emergency meeting in Detroit.
Henderson said that GM is ready to undertake a host of steps needed to resize. But he also said on NBC television that "to win, you've got to win with product and technology. ... And we do not want to give consumers a reason not to buy our cars and trucks."
Chrysler LLC and Ford Motor Co. — as well as GM — have ditched their corporate jets for hybrid cars and replaced vague pleas for federal help with detailed requests for as much as $34 billion in their second crack at persuading Congress to throw them a lifeline.
Henderson acknowledged Wednesday that the initial appearance by the heads of the car makers was a public relations failure.
"Yeah, it certainly was not our finest hour," he told NBC. "We were not as clear about what we wanted to do." He also conceded that the decision by the executives to travel to Washington by private jet "was a problem" for lawmakers.