Dems Put Auto Bailout Vote On Hold

Congressional Leaders Demand Big 3 Automakers Show Viable Business Plan

(CBS/AP)  The $25 billion rescue plan for the auto industry, desperately sought by Detroit's beleaguered Big Three, collapsed Thursday as Congress drew the line at one more bailout and Democrats said they wouldn't even consider it until the companies produced a convincing plan for rebuilding their once-mighty industry.

The demise of the rescue - at least for now - left uncertain the fate of General Motors Corp., Ford Motor Co. and Chrysler LLC, and sent Wall Street spiraling to its lowest level in years. The Dow Jones industrials dropped 445 points, the second straight plunge of more than 400, and hit the lowest point in nearly six years.

The carmakers have been clobbered by lackluster sales and choked credit, and are battling to stay afloat through year's end. Failure of one or more of the Big Three would be a severe further blow to the floundering economy - and to many Americans' view of the nation's industrial strength - and throw a million or more additional workers off the job.

CBS News correspondent Sharyl Attkisson reports that Ford has said it's now burning through a billion dollars a month; GM, the biggest of the automakers at issue and the closest to collapse, has been losing just as much; and GM told Congress it might need $4-5 billion a month to keep afloat until April.

Help may be needed but as one senator told Attkisson: "It doesn't do any good if we just give them a bigger bucket to bail."

Just Thursday, the government reported that laid-off workers' new claims for jobless aid had reached a 16-year high and the number of Americans searching for work had soared past 10 million. Congress approved a measure to extend jobless benefits through the holidays, and the White House said President Bush would quickly sign it.

Rejection of the latest bailout plan by House leaders postponed until next month a politically tricky decision for the Democratic Congress on whether to approve yet another unpopular emergency plan at a time of economic peril, or risk being blamed for the implosion of an industry that employs millions and has broad reach into all aspects of the U.S. economy.

"Until they show us the plan, We cannot show them the money," Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.

GM and Ford quickly issued statements promising to submit the blueprint the Democrats demanded.

Pelosi and Senate Majority Leader Harry Reid, D-Nev., said Congress might return to work in early December for a vote on aid to the carmakers - but only if they show Congress they could use the funds to transform their struggling industry into a viable one.

For now, however, the Democrats said the aid plan lacked the support to pass Congress and be signed by Bush.

Bush and congressional Republicans had balked at Democrats' suggestion to draw emergency auto industry loans from the $700 billion Wall Street rescue fund. And most Democrats were unwilling to go along with a separate, bipartisan effort backed by the White House to temporarily divert an existing program to help carmakers produce vehicles that burn less gasoline to cover the companies immediate financial needs.

But with GM warning it could go under before year's end, Democratic leaders were unwilling to close up shop for the year and appear to turn a deaf ear to the industry. They scheduled hearings the week of Dec. 2 on the automakers' viability plans and said a vote on a bailout could come the week of Dec. 8.

"Yes, we're kicking the can down the road, because that will give us the opportunity to do something positive," Reid said. "But that will only happen if they get their act together."

The White House criticized the delay, saying the plan to let the automakers tap the fuel-efficiency loans for their short-term cash needs should be considered.

"If there are lawmakers who want to help the automakers, and they have a path to do so, why are they going to kick the can down the road?" said Dana Perino, the White House press secretary.

The chief executives of the Big Three automakers appealed personally to lawmakers for the loans this week, saying their problem was the economic meltdown that has walloped their industry - not that they were manufacturing unappealing cars.

But whatever support they found sagged when it became known that each of them had flown into Washington aboard multimillion-dollar corporate jets. Reid observed that was "difficult to explain" to taxpayers in his hometown of Searchlight, Nev.

Pelosi said she had little patience left for excuses from the carmakers on why they haven't turned their businesses around.

Beyond the auto industry, lawmakers said the public has little appetite for anything else that smacks of a bailout, following the backlash against the $700 billion financial rescue.

"There is a sense that we did not do a good enough job of safeguarding the use of those funds, or providing prevention against abuse. And you could not get, I believe, through either house of Congress today what some people might think was a repeat. That's why we need to take time," said Rep. Barney Frank, D-Mass.

Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans. Democrats and Republicans alike want the government to get a chance to share in future profits by the auto companies, require them to limit executives' pay packages and prohibit use of the funds for lobbying or paying shareholders dividends.

By scrapping plans for a vote this week, the Democratic leaders effectively sidetracked a bipartisan agreement to temporarily divert the fuel-efficiency funds to cover the auto companies' operations.

Sen. Carl Levin, D-Mich., said that plan had a "reasonable chance" of passing, and that the leaders' decision to delay it was "risky and unnecessary."

"We need speed. This is a very, very important moment," Levin said.

Indeed, the Democratic Congress - having just expanded its majorities in this month's elections - was under immense pressure to show it could govern in a difficult situation.

"I can't imagine a scenario where they wouldn't come back, unless the answer is that they just don't care. And if that's the case, then the American people ought to know that," Perino said.

The leaders of the Big Three automakers have painted a grim picture of their financial position. They burned through nearly $18 billion in cash reserves during the last quarter - about $7 billion at GM, almost $8 billion at Ford and $3 billion at Chrysler. GM and Chrysler have said they could collapse in weeks.

The stakes are high. The Detroit automakers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. About 1 million more people work in dealerships nationwide. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.

Meanwhile, the Big Three automakers are taking a page out of their unions' playbooks as they deploy grassroots tactics to drum up public support for the proposed $25 billion bailout.

"Mobilize Now!" cries a Web site created by General Motors Corp. at GMfactsandfiction.com. "Tell your U.S. senators and representatives that support for the U.S. auto industry is in America's best economic interest."

As GM, Ford Motor Co. and Chrysler LLC approached Congress with hat in hand, a whirl of activity in the traditional and new media intensified over the last two weeks to mount public pressure on lawmakers.

[newbie43]

And I''''ll sign up for those Obama "freebie" handouts. I want my something for nothing now!
Posted by TheMasses10

What ''freebie'' handouts are you talking about? Name a couple, please. And the ''average working man''s'' taxes will go DOWN under the Obama tax plan, unless you''re an ''average working man'' making over $200,000. We can also remind you that the Republicans and McCain supported the bailout, too.

[specialty8]

Just a few weeks ago Pelosi was doing all she could to get the bailout money.Now she has changed her mind,again.Now she wants a blueprint. I would like to see a blueprint on what her plans are.It probley would be a half page of "I have no idea"period.Vote her out.

[craigh9]

WOW! An actual lucid, appropriate, people oriented decision by members of Congress - is it possible that change is really at hand?

[rixmix98]

Democrats said they wouldn''t even consider it until the companies produced a convincing plan for rebuilding their once-mighty industry.

Sounds like an excellent idea to me. Our Federal government refers to this as accountability.

[xpineapple]

The automaker execs could sell their multimillion dollar private jets...and cut back on their plush salaries and golden parachutes. That''s a good place to start. And, then, of course, when times are bad, the union bosses should take a pay cut, and the workers might need to shave off a couple dollars too. That''s what you do to survive.

[harbinger09]

A sign: earlier this year when for 300 jobs at WAlmart in Atlanta, over 7500 people stood in line to get them. Ignore the government line/lies--pay attention to for sale signs, the # of want ads in the media and the number of people leaving, also the # of layoffs--the rest is just to fool us--to try to keep the game going because without a true mfg base only the idea of consumerism and servicing it--is almost the only games we have left in America--well that, and diversions like cabletv , movies, sports and music.

[harbinger09]

Our economy is now based primarily on a shell game--the stock market. We make or are the source producer leaders in almost nothing else. Our biggest product now is selling the belief in the markets and smart people exploit that belief or they did until it all went to hell in a handbasket.

the idea was--that as long as you told the public that all was well, lied about the numbers--then they would buy and the game could continue.

somewhere along the way, someone declared the emperor was butttt naked--that made the shell game hiccup. Then someone started looking at books and tried to clean theirs up--that caused others to do the same--so they stopped lending. Bush tried to start it all back up again, by telling us to buy and handing out the rebate checks--but that only made a lot of people scared and made lenders tighten up even more--because they KNEW that there was no ball. (Remember a shell game has to have a ball hidden or it is a sham/scam) Faking employment data has been going on for years. We used to not count part time jobs of less than 20 hours as a new job--now we do. Making hamburgers is considered a mfg job--all accounting sleight of hand to keep those numbers looking good--so Americans would keep buying and stocks would keep being sold. the problem--the unemployment figures do NOT count those who are laid off who no longer are eligible for benefits.

[itdfactsu]

Posted by harbinger09 at 01:50 AM : Nov 21, 2008

Had to respond to that before I go

Paul Craig Roberts wrote an excellent article on the subject back in 2005

Watching The US
Economy Crumble
Good News! Soon You''ll No Longer Need An
Expensive College Education to Work in the US
By Paul Craig Roberts
8-11-5

The US continues its descent into the Third World, but you would never know it from news reports of the Bureau of Labor Statistics'' July payroll jobs release.

The media gives a bare bones jobs report that is misleading. The public heard that 207,000 jobs were created in July. If not a reassuring figure, at least it is not a disturbing one. On the surface things look to be pretty much OK. It is when you look into the composition of these jobs that the concern arises.

Of the new jobs, 26,000 (about 13%) are tax-supported government jobs. That leaves 181,000 private sector jobs. Of these private sector jobs, 177,000, or 98%, are in the domestic service sector.

Here is the breakdown of the major categories:

http://www.rense.com/general67/wrt.htm

Gotta go

[harbinger09]

Continued post

Even our shell fish comes primarily from China and S. America now--what does that mean? That we are truly global and are only as viable as our dollar which is very weak--due to it being based on nothing more than promises and those promises being used up.

If all of this is scary--it should be--because though we have had recessions before, we have always still had enough of our mfg economy to reboot our country. We don''t have that anymore.

We are a service economy and with the exception of only a few company, we depend on primary or mfg companies. When a country is a service economy, that means their well being depends almost solely on the markets created by producers.

Take a good look around you--restaurants are not producers--the producers are the agriculture firms.

Dentists, Drs, Optometrists, Mechanics, stores, tax preparers, malls, car dealerships, teachers, lawyers, etc are not producers, they only service the needs of those who work for producers. A producer is a source industry. Car makers is a source industry--but a producer can exist without a service industry (though miserably) BUT a service industry cannot survive without producers. Either they must start producing themselves or they die.

Coal, steel, iron ore are producers. We sold our steel secrets and iron ore rights to much of this country to China in the 1980s.

[harbinger09]

Posted by itdfactsu at 01:29 AM : Nov 21, 2008

The bailout does not matter.
I''ve read up and been studying this for years. I predicted the economic pickle we are now in as early as 2005 and said it would hit within 5 years. We are not doomed--we are just headed for a world of hurt. It is because I have read up that I know this.

The USA no longer has a manufaturing/economic base to bounce back from having sold resources, intellectual property, etc to the global markets. That plus outsourcing means that resurgence cannot depend on the mfg of products or consumerism to rebuild the economy. This is the first time in US history that we have destroyed all of our known means to recoup. after WWII, we became preeminent by being the primary supplier and rebuilder of Europe and much of the world. We floated loans and our economy boomed. IN the 1970s, we began selling that legacy, dismantling textile and other production and allowing non taxed plants to be built in foreign countries like Japan. We even destroyed our "breadbasket agriculture status by dev monocultures. Now, over 80% of all produce in most grocery stores comes from overseas. Most American land is devoted to alfalfa, wheat, corn and soybeans.

[itdfactsu]

Feb 2009--if you thought times were tough this year--just wait--people who can''''t afford food/gas, etc have to make hard choices like not paying their mortgage--we are all going to get fvcked, no matter what industry--unless we are in a service industry to help misguided fools or in Congress.


Posted by harbinger09 at 01:42 AM : Nov 21, 2008

I agree 09 is going to be rough to say the least

I think there''s going to be a manufactured event or crisis though aside from the economic problems, will see

Gotta go

Be safe

[harbinger09]

Posted by harbinger09 at 01:22 AM : Nov 21, 2008

You keep harping about that $25 billion but you keep ignoring the fact that $700 billion was already approved for the bailout


Posted by itdfactsu at 01:28 AM : Nov 21, 2008


I was against the 700 billion dollar bailout and blogged furiously against it also. I agree the CEOs should be fired with no bonus--also the mgmt and CEOs of the banks-hell--put term limits on Congress while we are at it. Neither bailout will work. I harp on the one, because the other is a done deal--but it was wrong and already shows signs of failing according to the treasury. I suspect you have ties to the auto industry and are scared. You should be--we all should be--because as goes the auto industry--so goes the rest of us--the major difference between my words and yours is I''d rather start taking the bad medicine now--not waste 25 billion more and take it later. As for the 350 billion already given to treasury--it will not stop the horror pit---just make it that much deeper to dig out of. That 350B will send inflation soaring by Feb 2009--if you thought times were tough this year--just wait--people who can''t afford food/gas, etc have to make hard choices like not paying their mortgage--we are all going to get fvcked, no matter what industry--unless we are in a service industry to help misguided fools or in Congress.

[itdfactsu]

Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans. Democrats and Republicans alike want the government to get a chance to share in future profits by the auto companies, require them to limit executives'' pay packages and prohibit use of the funds for lobbying or paying shareholders dividends.

WHY DIDN''T BUSH/PAULSON AND THE REPUBLICANS RANT AND RAVE AND MAKE THESE KIND OF DEMANDS TO THE BANKING INDUSTRY

YOU KNOW WHY I HOPE?

[standlee5]

Put the vote on hold? Put the vote on hold? Why don''t they just vote "present" that ought to solve the problem. That''s what obama does.

[harbinger09]

Posted by itdfactsu at 01:19 AM : Nov 21, 2008


This only validates what I and many others have stated that the first bailout was a huge waste of money and no way should be entrusted to one man or dept. We could see the futility and failure to track that one. I am consistent. The bailouts do not and cannot work--the reasons are that this collapse is a culmination of a lot of chickens coming home to roost:

Outsourcing and insourcing undermining and destroying/weakening the American consumer.

Failure to ensure and protect American domestic markets

Deregulation

Greed by companies for short term profits in the stock market with no regard that the market has little to do with reality of a company or its worth (numbers are fudged/books cooked)

Arrogance of a spend happy Congress and government with no one thinking of the longterm consequences of a consumer driven economy where the jobs are continually destroyed and shipped overseas or cheaper labor is brought in.

The problem with short term profit free for alls is like musical chairs--sooner or later, the music stops and someone has to pay--Bush hoped to forestall this until he was out--he miscalculated when the music would end--but notice how many Republicans resigned last year that were not up for reelection--then note the rebates--stalling tactic--coincidence?

[itdfactsu]

Read up and stop making the charge that the whole thing is doomed

The scheduled hearings the week of Dec. 2 on the automakers'' viability plans and said a vote on a bailout could come the week of Dec. 8.

[itdfactsu]

Posted by harbinger09 at 01:22 AM : Nov 21, 2008

You keep harping about that $25 billion but you keep ignoring the fact that $700 billion was already approved for the bailout

And that money can be used to help the US auto makers
to be paid back at a interest rate of %5

Making GM, FORD and Chysler come back with a plan isn''t a bad idea

Why didn''t the Congress stipulate that for any of the funds before they were handed out

I don''t see this as a hand out

Obama should take over all three auto makers fire all their CEO''s and put three qualified men or women in charge to turn them around

[harbinger09]

In bad times, people do not buy new cars,

Posted by harbinger09 at 01:10 AM : Nov 21, 2008

That''''s true but not a revelation


Posted by itdfactsu at 01:16 AM : Nov 21, 2008


Nope--but it is a root cause analysis: The big 3 want the bail out and "hope" that people will bail them out by buying either what they have on the floors now or what is coming in the pipeline--so the revelation is this: there is NO model that can be put forth in the present environment which acknowledges the resistance of the consumer--that would justify the 25 billion dollar bailout.

Remember the money is supposed to be a floater loan until about April--when the big 3 "hope" the economy will pick up- but if what I wrote is true--then there will be NO pick up of the economy in April--which means the loans would be a WASTE. Not a revelation but a validation of the futility of the bailout.

[harbinger09]

Posted by harbinger09 at 01:10 AM : Nov 21, 2008


US automakers are charge a tariff on vehicles ship to Malaysia

In Europe you''''ll pay the same for a toyota as a BMW because the Euro''''s protect their automakers

Something the US Govt doesn''''t do for it''''s own companies here

look it up that''''s just one point of this discussion i''''ll state now that you don''''t know anything about

Posted by itdfactsu at 01:14 AM : Nov 21, 2008


I don''t need to look it up. The US is the only western country that does nothing to protect it''s own markets. I know that--no need to be rude. Not only cars, but all American goods are heavily taxed as are any companies that have to reimport their goods. Europe especially, is very strict about protecting their local markets,to the point that America is not allowed to compete or even build plants in many markets in Asia, India, etc and when they are allowed (like in Europe) they have to pay even higher wages than in America.

I know all of that--but that does not change the fact that the 25 billion handed out would be a failure and that the 3 will fall anyway. Americans have a hard time imagining this--but it is very likely our economy will experience a full collapse--throwing money at it, instead of the hard work of looking at government and industry failures will only prolong the agony.

America is the only Western country which fails to protect its society, citizens and industry, within the globalk markets. It''s because the US creed is greed.

[itdfactsu]

Posted by harbinger09 at 01:15 AM : Nov 21, 2008

$700 billion has already been approved for the bailout

Paulson already changed his mind on how he wanted to pass out $350 billion and I haven''t heard where the money went how much to who at what rate will the money be paid back and all the other stipulations this inept Congress is demanding from the Big 3


It''s nuts