Bush May Tap Wall St. Bailout Fund For Automakers
The White House said Friday it is considering tapping into the Wall Street rescue fund to extend emergency loans to Detroit automakers after Senate Republicans scuttled an alternate bailout plan for the Big Three. Amid the worst sales slump in decades, General Motors announced it will cut production by 250,000 vehicles in the first quarter of 2009.
The president's press secretary, Dana Perino, said it would be "irresponsible" to further weaken the economy by letting the car manufacturers fail.
The Treasury Department, meanwhile, said it was standing by to act on behalf of the automakers.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said Treasury spokeswoman Brookly McLaughlin.
Although the White House had earlier resisted using any of the $700 billion financial industry bailout to help the automakers, Perino said that given the economy's shape, President Bush is considering the option.
The $14 billion bill lost a 52-35 procedural vote late Thursday, with at least 60 votes needed to avoid a filibuster. The defeat prompted lawmakers in both parties to call on the White House to approve such a move to help General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks.
"Plan B is the president," Sen. Carl Levin (D-MI) said after the vote failed.
Democrats pushed the auto industry aid measure through the House on Wednesday, but it became clear quickly that the lifeline faced an uphill battle in the Senate.
Earlier, the White House said it is disappointed by the Senate's vote and that the legislation "presented the best chance to avoid a disorderly bankruptcy."
President-elect Barack Obama on Thursday echoed concerns over the fate of the automakers, saying an industry shutdown would have a "devastating ripple effect" on the already battered economy.
GM and Chrysler say they are in immediate danger of collapse, while Ford Motor Co. says it doesn't need help yet, but could need it later.
Republicans have blamed the United Auto Workers' unwillingness to make substantial concessions as one reason the deal collapsed.
UAW President Ron Gettelfinger hit back at a news conference in Detroit on Friday, saying the union had done what it could.
"We've already stepped forward and made enormous concessions," Gettelfinger said.
"We made it clear last night we were prepared to make further sacrifices, but we could not accept the effort by the Senate GOP caucus to single out workers and retirees for different treatment and to make them shoulder the entire burden of any restructuring," he said.
"If we work for nothing, it wouldn't help them (GM) limp into January," he said.
Gettelfinger said he's confident that a solution will emerge despite the Senate vote.
GM announced Friday that it will cut its first-quarter 2009 production schedule by 250,000 vehicles, slashing its output to about a half-million units. The cut will allow the automaker to temporarily shut down assembly lines in 21 factories in the U.S., Canada and Mexico. Spokesman Tony Sapienza said normal production would be around 750,000 cars and trucks for the quarter.
Detroit's Big Three employ nearly 250,000 workers, with more than 730,000 others producing materials and parts for cars.
Many congressional Republicans have said that Chapter 11 bankruptcy is the best option for the carmakers to restructure. They fear that intrusive government oversight would hamstring the manufacturers and leave taxpayers on the hook for even larger loans down the road.
The Big Three have rejected the bankruptcy option.
GM said it is "deeply disappointed" that the plan failed, adding that it will continue in efforts to "obtain the means to weather the current economic crisis." Chrysler also said it is disappointed and will "continue to pursue a workable solution to help ensure the future viability of the company."
World stock markets plunged Friday on news that the bailout failed to pass the Senate, with Japan's Nikkei closing down 5.6 percent, and the FTSE 100 Index of leading British shares trading substantially lower. But the Dow Jones industrial average closed up 64 points to 8629 on optimism that the Bush administration would assist the carmakers if Congress didn't.
From NPR staff and wire reports
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