Despite Big 3 Pleas, Auto Bailout Stalling

Auto industry executives, from left, General Motors Chief Executive Officer Richard Wagoner; Chrysler Chief Executive Officer Robert Nardelli; Ford Chief Executive Officer Alan Mulally; and Ron Gettelfinger, president of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, testify on Capitol Hill in Washington, Wednesday, Nov. 19, 2008, before a House Financial Services Committee hearing on the automotive industry bailout. (AP Photo/Gerald Herbert)
AP Photo/Gerald Herbert
Top Senate Democrats suggested Wednesday that a bill to rescue the Detroit Three automakers was stalled and called on the Bush administration to take steps to help save the industry if congressional efforts falter.

Senate Majority Leader Harry Reid of Nevada sought to lower expectations of reaching a deal on the $25 billion proposal before Congress quits for the year.

While he told the Senate he still hoped lawmakers could agree to an auto deal in the "next day or two" of the current lame-duck session, he added: "If we can't do it here legislatively, I would hope that the secretary of Treasury would listen loud and clear because they could take this into their own hands and do what I think is appropriate from their perspective."

Banking Committee Chairman Chris Dodd, D-Conn., was even more downbeat, calling the possibility of reaching agreement "remote."

"I don't see how in the next few days this is going to move forward," Dodd said. Still, he added, "That does not mean that there are not opportunities." He suggested that the Federal Reserve could possibly step up to the job.

The difficulties of striking a deal on the package before a new president and a new Congress with expanded Democratic majorities take office appeared to be too great to overcome. The deadlock persisted even as the heads of General Motors, Ford and Chrysler returned to Capitol Hill Wednesday to ask skeptical lawmakers for a $25 billion lifeline to keep their crippled industry from collapsing.

General Motors Corp. CEO Rick Wagoner told the House Financial Services Committee that collapse of the U.S. auto industry could lead to a loss of 3 million jobs within the first year and ripple throughout communities around the nation.

In sometimes contentious testimony, Wagoner was pressed on when GM would run out of money if the loans weren't extended.

He said he couldn't say precisely, but estimated that the company now was burning through "$5 billion each month."

But, as CBS Evening News correspondent Bob Orr reports, the auto executives seemed to undercut their own "desperate times" pitch when lawmakers learned they flew separately to Washington on three expensive corporate jets.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo," Rep. Gary Ackerman, D-N.Y., said.

The Big Three executives were ridiculed for asking taxpayers to pay for years of production and management mistakes. As Rep. Jeb Hensarling, R-Tx, put it, "How do I know that you will not become the next AIG: $25 billion next month, $25 billion the month after that?"

CBS News asked the same question in an interview with GM CEO Rick Wagoner late Wednesday.

"We've really substantively restructured the cost side of the business and fed out a bunch of new models that are being well received," Wagoner said. But asked if he could promise taxpayers that he wouldn't be back for more money, he said, "I can't promise anybody because I don't know what's going to happen to the economy."

For General Motors, the goal is to limp to 2010, Orr reports. That's when new lower-cost labor contracts take effect, and when a revolutionary new electric car capable of going 40 miles with no gas will hit the market.

With the $25 billion emergency package, "We think we have a good shot to make it through this," Wagoner said. He said he anticipated that, if the package is approved, GM would qualify for about $10 billion to $12 billion of the money.

President George W. Bush and Republicans in Congress have been reluctant to use the Treasury Department's $700 billion financial bailout program to finance the loans. And White House press secretary Dana Perino has said Congress should draw the funds from an Energy Department program established by law last year to encourage production of fuel-efficient cars.

Earlier Wednesday, Sen. Richard Shelby, the senior Republican on the Banking Committee, said Wednesday he doesn't believe there will be a turnaround in the troubled U.S. auto industry until its top management is ousted and the manufacturing model sacked.

At a House hearing Rep. Barney Frank, D-Mass., pointedly suggested that Congress is betraying a classist bias by intervening to help white-collar bankers but not blue-collar auto workers.

CEOs weren't the only ones pressing lawmakers to step in with a rescue package. Local dealers blanketed congressional offices this week to make the argument to legislators that an auto bailout is necessary to prevent pillars of thousands of local communities from crumbling.

A Senate vote on an automotive bailout plan, which would also extend jobless benefits, could come as early as Thursday, but it currently lacks the support to advance.

In an op-ed essay in Wednesday's editions of The New York Times, Mitt Romney, a candidate for this year's Republican presidential nomination, wrote: "If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won't go overnight, but its demise will be virtually guaranteed."

The financial situation for the automakers grows more precarious by the day. Cash-strapped GM said Tuesday it would delay reimbursing its dealers for rebates and other sales incentives and could run out of cash by year's end without government aid.