WASHINGTON, Nov. 11, 2008
Pelosi Pushes Aid For Auto Industry
House Speaker Calls For "Emergency And Limited Financial Assistance" During Lame Duck Session
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House Speaker Nancy Pelosi of Calif. gestures during a news conference on Capitol Hill in Washington, Wednesday, Nov. 5, 2008. (AP Photo/Susan Walsh)
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Play CBS Video Video GM Borders Bankruptcy General Motors is losing $2 billion a month and is on the brink of bankruptcy. GM, Ford and Chrysler may receive emergency financial aid for the government. Anthony Mason reports.
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Video Obama's Reality Check President-elect Barack Obama made some expensive promises on the campaign trail. With the federal budget collapsing, Obama must now decide what steps to take next. Wyatt Andrews reports.
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In-Depth Q&A: Big Three Bailout? Why Detroit's automakers might get a rescue package
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Four days after dismal financial reports from General Motors Corp. and Ford Motor Co., Pelosi backed legislation to make the automakers eligible for help under the $700 billion bailout measure that cleared Congress in October.
In a written statement, the California Democrat said the aid was needed "in order to prevent the failure of one or more of the major American automobile manufacturers, which would have a devastating impact on our economy, particularly on the men and women who work in that industry."
"Congress and the Bush administration must take immediate action," she added. Administration officials have concluded that the bailout bill that passed earlier does not permit loans to the auto industry, but lawmakers are expected to return to the Capitol for a brief post-election session beginning next week.
Senate Majority Leader Harry Reid, D-Nev., also supports help for the industry, and he issued a statement saying Democrats were "determined to pass legislation that will save the jobs of millions" as part of a post-election session.
"This will only get done if President Bush and Senate Republicans work with us in a bipartisan fashion, and I am confident they will do what is right for our economy," he said.
In 1979, the government famously bailed out Chrysler with a $1.5 billion loan, which the company paid back just four years later. But this time, critics complain General Motors, Ford and Chrysler should not be rewarded for bad management, reports CBS News business correspondent Anthony Mason.
"The Big Three make products that Americans don't want to buy," Dan Ikenson, of the Cato Institute, told CBS News. "So shouldn't you at least do that before you ask for a subsidy from the U.S. taxpayer?"
Michigan Gov. Jennifer Granholm has a different view.
"This industry supports one in ten jobs in the country," Granholm told CBS' The Early Show on Wednesday.
"If this industry is allowed to fail, there will be a ripple effect throughout the nation," she said. "This government decided that it was going to step in and throw $700 billion at the financial sector. We're just asking for a fraction of that."
The plight of the industry has drawn attention from the White House and the incoming Obama administration in recent days, as well as among lawmakers.
Last week, President-elect Obama prodded the Bush administration to do more to help the industry, and on Monday, aides said he raised the issue with President Bush in an Oval Office conversation meant to underscore a smooth transition of power.
Officials familiar with the conversation said the president replied he was open to the idea.
Before adjourning for the elections, Congress passed legislation providing for $25 billion in government-backed loans to the automakers to prod them to retool their factories to make more efficient vehicles.
Since then, executives from GM, Ford and Chrysler LLC and officials in the United Autoworkers union have called for more than that to avert a possible collapse of one of the nation's most basic industries, including a $25 billion loan to help keep the companies afloat and $25 billion more to help cover future health care payments for about 780,000 retirees and their dependents.
GM and Ford reported last week that they spent down their cash reserves by a combined $14.6 billion in the past three months. Ford said it would slash more than 2,000 white collar jobs.
GM's sales fell 45 percent in October; it's bleeding $2 billion a month and can't borrow, leaving the world's biggest automaker on the brink of bankruptcy, reports Mason.
"We are down to days; maybe a couple of weeks," Rebecca Lindland, an auto analyst at Global Insight, Inc., told CBS News.
If even one of Detroit's Big Three fails, according to a new study, 2.5 million jobs could be lost as the impact spreads from workers to dealers to suppliers, reports Mason.
"This is not a vacuum," said Lindland. "This is not just one company. This is a domino effect. Where one company goes down, you're going to see the industry go down as well."
Pelosi's statement did not specify how large an aid package she prefers.
Instead, she said she had asked Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, to draft legislation.
A companion effort is under way in the Senate.
The Senate is scheduled to meet next week in a post-election session, but until Pelosi issued her statement, it was not clear the House would follow suit.
The House already has passed legislation to provide additional unemployment insurance benefits for some of the growing ranks of the nation's jobless, as well as a separate measure to stimulate the economy.
That meant the Senate could have passed either or both bills and sent them to the White House for Bush's signature without further action by the House.
Pelosi's announcement changed that, and raised the possibility of a post-election session that covers more areas.
The Bush administration, for example, has said that enactment of a free trade agreement with Colombia is its top priority in Congress.
Many Democrats oppose the proposed agreement as written. But it is unclear what, if any, compromise might be possible that would allow auto assistance and a trade agreement to be the last major measures signed into law by the outgoing president.
In her statement, Pelosi said any assistance to the industry should include limits on executive compensation, rigorous government review authority and other taxpayer protections.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 106 CommentsI think all politicians should share our pain by taking an immediate 50% pay cut. Don''''t want to, then quit. In addition they should set up a bailout corp., put all their life savings in it and lend it to the auto companies.
Posted by triplet-man at 04:41 PM : Nov 12, 2008
Wake up and do WHAT???
We tried voting, and look how that turned out.
What OTHER options do we have???
This isn''''t kindergarten.
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Posted by txgrouch2007
Exactly my point - Nationalize everything with our tax dollars.
Hugo Chavez did it - but he just TOLD them. It''s mine.
We...(YES..... YOU too) are just sitting here idle while the Govt (both parties) are taking over finacial, credit, and possibly manufacturing.
Wake UP America
Freedoms were taken away through FEAR after 9/11 and now freedoms are being usurped through fear again in economic ways.
Posted by JT_Lancer at 12:24 PM : Nov 12, 2008
You realize, don''t you, that the hidden meaning of this was to mock the expression "COMMUNISM IS DEMOCRACY." This was a common theme of the Communist Manifesto, which explained that the only TRUE democracy is a Marxist state that does not give its citizens the right to vote, travel, own property, or speak freely.
Marx argued that if citizens are allowed to do any of these things, then they might be misled by "bad people" who might make them vote in a way that is really AGAINST the will of the people.
So, Marx concluded that the only way for the TRUE will of the people to be expressed is for the government leaders to decide for them, regardless of what the people THINK they want.
Sort of like what Congress has been doing for the past month or so, ever since these bailouts started AGAINST public opinion.
Yup, COMMUNISM IS HERE.
War is peace. Slavery is freedom. Ignorance is strength.
Ingsoc has spoken!
Posted by triplet-man at 09:54 AM : Nov 12, 2008
SIGH! We''re staring COMMUNISM in the face, and all you want to do is argue about "who started it."
This isn''t kindergarten.
I''m a Democrat. But I wish we would have had a "viable" independent canidate.
Posted by triplet-man at 09:36 AM : Nov 12, 2008
So are you saying the DEMOCRATS ARE USING THE TACTIC THEY ACCUSED THE GOP OF USING?????
Oh, golly! D''ya THINK??? LOL!
With the plummeting oil prices, they''re sure to need a "rescue" soon.
WORD TO THE WISE!!!!!!!!! Once one she drops, it''s just a matter of time before the other one drops. And then the next one, and the next, and the next...
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Posted by txgrouch2007 at 09:33 AM : Nov 12, 2008
Exactly And they are doing it by telling us that "...it''s good for you" Too many people are SCARED... once again like 9/11 "fear-mongering" control. USing the human phsychy to gain control. Take away rights. Socialism
Posted by nor-one at 09:26 AM : Nov 12, 2008
Obama is the "new guy." While he was visiting with Bush, he asked the President to SUPPORT PELOSI''S PROPOSAL TO "RESCUE" THE AUTO MAKERS (by nationalizing them).
What do YOU think are the chances he WOULD remove any Democrat, even if he could?
BTW, isn''t it interesting that Pelosi waited until AFTER the election to propose nationalizing the auto makers.
Posted by triplet-man at 09:22 AM : Nov 12, 2008
Some morning, people are going to wake up and notice that they''re living in A COMMUNIST STATE.
And those of us who are not a "non-person" by then will remind them that it all started as a "rescue" of companies that were failing due to an economic crisis that "mysteriously happened for some reason..."
Posted by rxzyu at 08:22 AM : Nov 12, 2008
You''ll be paying 100% TAXES after Pelosi and the Democrats finish NATIONALIZING ALL BUSINESSES.
You say you''re a business owner. Are you ready for Pelosi to NATIONALIZE YOUR BUSINESS, too????
Taking "ownership" of the banks, loans, credit lines, Automakers. What is next?
Someone else in South America did this. Hugo Chavez - The only difference is, he just said it outright. I''m "nationalizing" all of this. It''s MINE now. The Feds are using FEAR tactics to take over this nation.
We the people..... are falling for it.
WAKE UP AMERICA!
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