Financial-Industries Bailout Hurts Chances for Auto Deal
Fairly or not, U.S. automakers are paying a political price for the perceived haste and lack of oversight with which Congress passed the much bigger $700 billion bailout for the financial services industry.
Sen. Jeff Sessions, R-Ala., who favors bankruptcy as a prerequisite for a bailout for the Detroit car companies, made just that point in a Dec. 9 statement, calling for more oversight.
"Is this not the same mistake we made with the Secretary of the Treasury when we gave him $700 billion to parcel it out to his friends on Wall Street, however he felt like giving it?" Sessions said.
U.S. Treasury Secretary Henry Paulson added fuel to that fire last month, when he announced that the first half of the $700 billion wasn't working as intended. Paulson said that despite the name, he would stop using the Troubled Asset Relief Program to buy bad mortgages.
Paulson appears to have won at least one point in the latest proposal to bail out the auto industry. Initially the money for the auto industry will come out of a $25 billion package passed separately, which had been intended to go towards building more fuel-efficient cars. The automakers and their allies had wanted the money to come out of Paulson's financial-services bailout package on top of the earlier $25 billion, but Paulson and the Bush Administration objected.
Congress and the Administration tentatively agreed on a compromise auto industry bailout package on Dec. 9, but the compromise still needs Congressional approval. That's going to be especially tough in the Senate, where the Democrats, who generally favor the bailout, have only a one-vote majority.
Sen. Carl Levin, D-Mich., a longtime auto industry ally, said the bailout needs at least 60 votes in the Senate, to close off debate on the issue and head off the possibility of a Republican filibuster.
"Bipartisan hard work has paid off and I understand an agreement has been reached. This gets us to the 20 yard line, but getting over the goal line will take a major effort, particularly in the Senate where we need 60 votes," Levin said in a written statement on Dec. 10.
"We will need the personal involvement of President Bush and President-elect Obama to reach our goal of securing bridge loans to ensure America's auto industry is not only viable but vibrant in the years ahead," Levin said.
If the auto industry bailout passes, it will be over the objections of opponents like Sen. Mitch McConnell, R-Ky., the Senate Republican leader. He and Sessions object to what they see as the open-ended nature of the loans, with a government-appointed "car czar" to see that the car companies are making sufficient progress.
"I want to support a bill that revives this industry," McConnell said in a written statement on Dec. 9. "But I will not support a bill that revives the patient with taxpayer dollars, yet doesn't secure a commitment that the patient will change its ways so future help isn't needed," he said.