The White House on Friday threw its support behind a plan to speed release of $25 billion in existing loans to the Big Three automakers but rejected a Democratic proposal to use money from a financial bailout to help the troubled industry.
The $700 billion financial rescue package was never intended to help automakers and shouldn't be now, White House spokeswoman Dana Perino told The Associated Press. But since Democratic leaders in Congress are pressing forward with a proposal to carve out a piece of its for the auto industry, she said the White House has decided to pursue a different approach: accelerating the availability of federal loans Congress first approved in September.
Those loans were approved to help automakers build more fuel-efficient vehicles and become more competitive companies in the global marketplace. The administration now supports allowing the loans to be released more quickly than the original legislation prescribed and to be used for more urgent purposes as the companies struggle to stay afloat.
"Democrats are choosing a path that would only lead to partisan gridlock," she said. "We are now actively calling on Congress to amend the loan program."
Earlier Friday, Senate Majority Leader Harry Reid said that the Senate will take up a bill to extend $25 billion in emergency loans to the auto industry on Monday and plan a test vote on it two days later.
That bill would carve out part of the $700 billion Wall Street bailout for loans to the three major U.S. auto companies. The measure would provide for the government to hold some kind of ownership stake in the companies for the duration of the loan to ensure that taxpayers shared in any gain and would ultimately be reimbursed.
But supporters were scrambling for votes to break an expected filibuster by opponents. They expect to need between a dozen and 15 GOP votes to attach the measure to a $6 billion bill the House passed in October that would extend jobless benefits. So far, however, they had only one firm commitment, from Sen. George Voinovich of Ohio, a state with several auto plants and manufacturers of auto supplies.
"Right now, I don't think there are the votes" for the auto rescue, Sen. Chris Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, said Thursday.
But Sen. Carl M. Levin, D-Mich., an architect of the carmaker aid, said he was "confident that there will be bipartisan support for legislation to support the U.S. auto industry."
Reid, D-Nev., rejected Dodd's suggestion to wait until next year when Democrats will have bigger majorities in the House and Senate as well as Barack Obama in the White House.
But Jim Manley, Reid's spokesman, noted Thursday night that nothing can be done without the agreement of Senate Republicans.
Citing an economic downturn that has choked off sales and frozen credit, General Motors Corp., Ford Motor Co. and Chrysler LLC are lobbying feverishly for Congress to approve the aid.
Senate Republican leader Mitch McConnell of Kentucky - home to General Motors and Ford plants - has been noncommittal about new aid. His office says Congress should instead revise a $25 billion loan program it approved last month to speed the release of the money, which is designed to help automakers develop more fuel-efficient vehicles. This is the idea endorsed by the White House and Treasury Secretary Henry Paulson.
With feelings still raw from the election and the public dismayed by the Wall Street rescue, the auto proposal remains a tough sell. Some Senate Republicans are skeptical the aid would lead to changes by the companies that could make them viable in the long run. But several states with Republican senators have Detroit Three auto factories.
"Spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy," House Republican Leader John Boehner of Ohio, said in announcing his opposition to the measure.
Supporters of the auto bailout are targeting lawmakers who represent states with auto plants and auto suppliers, as well as Republicans in states with high unemployment rates.
Sen. Kit Bond of Missouri, R-Mo., left open the possibility that he could be persuaded to back a carmaker rescue. "While I have real concerns with another taxpayer funded bailout, there are also thousands of workers in Missouri whose jobs are on the line so the devil will be in the details," Bond said in a statement.
Democrats would have no problem passing the bill in the House, where they have a much larger majority than the narrow 50-49 one they will have in the Senate once President-elect Barack Obama resigns on Monday. But Speaker Nancy Pelosi, D-Calif., has been reluctant to convene a formal session until she is sure the measure will pass the Senate.
Lawmakers in both houses will be in Washington next week to reorganize their leadership teams and committee assignments for the 111th Congress that will convene on Jan. 3.
The bill Democrats are writing would insert the government squarely into the car companies' operations. It would require that the companies submit a plan for long-term viability in exchange for the loans, share a portion of future profits with the government and reimburse taxpayers before any other shareholder, according to aides familiar with it.
"We certainly want to make sure that there's a plan how are you going to get out of this mess," said Sen. Charles E. Schumer, D-N.Y.
The car companies also would face tougher restrictions on pay for their executives and dividends for their shareholders than did the financial companies that got a piece of the original bailout.