Plano Courrier - Senate Leaders Face Problems In Trying To Obtain $25 Billion For The Automotive Industry

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Plano Courrier - Senate Leaders Face Problems In Trying To Obtain $25 Billion For The Automotive Industry

By Heather M. Smith, Staff Writer

Senate members began debates on a possible $25 billion bailout of the Big Three automotive companies, but Sen. John Cornyn and other Republican senators oppose the way the Democratic Senate leadership is pushing its passage.

Democratic leaders are pushing heavily for help for the auto industry's Big Three, General Motors, Ford and Chrysler, but leaders are facing problems when trying to secure the necessary votes. Majority Leader Harry Reid of Nevada began Monday's session by announcing a proposal to inject an economic stimulus package into the auto industry bailout plan. Reid's backup plan, if the economic stimulus package fails, is to couple an extension of unemployment benefits with the auto industry bailout.

"Senators have a choice to make: They can wait until January, when we have a new Congress and a new president, or we can start trying to work on some of these problems now," Reid said.

But Cornyn said that although he supports a strong, productive domestic auto industry, he would like to see a promise of reform by the automakers.

"I would like to see it -- the auto industry -- remain a viable part of our economy, particularly as we work to protect our environment," Cornyn said. "But also like most Americans who are concerned about the direction of our economy and more federal spending, I must also ask n when is enough enough?"

"You would think that they would have had an idea as to what to do with the bailout money," said Dan Dodd, Democratic party of Collin County chairman. "The auto companies have the option of filing Chapter 11."

Treasury Secretary Henry Paulson testified before Congress on Tuesday and voiced his opposition to dipping into the $700 billion bailout to help the auto industry. Paulson said the bailout plan was meant to help financial institutions and the auto industry falls outside that purpose.

"There are other ways to help them," Paulson said.

Paulson worked to defend the administration's stance that the $25 billion for the auto industry should come from legislation Congress passed in September. That legislation was designed to target the auto manufacturers specifically. The manufacturers were to use that legislation to retool factories to make more fuel-efficient vehicles.

"Democratic leaders in Congress want to pass a $25 billion handout to Detroit with no promises of reform, accountability, or transparency by the automakers and their union base," Cornyn said. "This is bad public policy and an affront to taxpayers who are demanding fiscal responsibility and accountability from their government."

The Big Three are asking for an additional bailout right on the heels of Thursday's announcement by the Treasury Department that the federal government, for the first month of the fiscal year, has a deficit of $237.2 billion. This is the highest monthly imbalance on record.

"The federal government is facing a record budget deficit which continues to rise. The reckless, and perhaps illegal, actions of some on Wall Street have forced us to pass a $700 billion economic stabilization bill to save Main Street businesses," Cornyn said. "The Federal Reserve has made an additional $2 trillion in taxpayer-funded loans to troubled financial institutions, but has refused to submit to even the most modest level of transparency."

Another problem Democrats in the Senate are facing, with trying to secure the necessary votes for the bill, is the question of if the top executives of the Big Three should step down and be replaced by new management.

General Motors CEO Rick Wagoner told the Senate Banking Committee on Tuesday the problem does not stem from mismanagement or lack of vision on the part of the industry, but is the direct result of the global financial meltdown.

He said the U.S. auto industry "needs a bridge to span the financial chasm that has opened before us."

"I don't believe they've got good management. They don't innovate. They're a dinosaur, in a sense, and I hate to see this," said Richard Shelby, the top Republican on the Senate Banking Committee.

Even while the Big Three executives pleaded to Congress to pass the measure, it appeared stalled on Capitol Hill by both Republicans and the White House.

The Associated Press contributed to this report.

Contact Heather Smith at HSmith@acnpapers.com.

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