House Speaker Nancy Pelosi called for "emergency and limited financial assistance" for the battered auto industry on Tuesday and urged the outgoing Bush administration to join lawmakers in reaching a quick compromise.
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.