Detroit's embattled automakers have two weeks to show a skeptical Congress how a multibillion-dollar lifeline would help them keep the industry from imploding.
A bailout-shy Congress punted a US$25 billion auto industry rescue on Thursday, as Democratic leaders said they wouldn't help the beleaguered Big Three until the companies presented them with a plan showing how the federal funding would stabilize their faltering industry.
“The executives of the auto companies have not been able to convince Congress or the American people that this government bailout will be its last,” Senate Majority Leader Harry Reid said.
He said General Motors Corp, Ford Motor Co and Chrysler LLC needed to submit their plan to Congress by Dec. 2.
Hearings are expected and lawmakers could consider legislation during the week of Dec. 8, but only if the industry shows that taxpayers and auto workers would be protected, congressional leaders said.
US automakers are struggling to stay afloat heading into next year amid an economic meltdown, a precipitous drop in sales and a tight credit market. The three companies burned through nearly US$18 billion in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks.
Detroit's carmakers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. If just one of the automakers declared bankruptcy, some estimates put US job losses next year as high as 2.5 million.
Congress, meanwhile, is weighing a tricky political question: Should it spend billions more on government bailouts or run the risk of bearing the blame for a US auto industry meltdown?
The outgoing administration of President George W. Bush criticized the congressional delay, saying lawmakers should consider a plan to let the automakers tap a separate US$25 billion loan program for fuel-efficient cars for their short-term cash needs.
“Why are they going to kick the can down the road?” White House press secretary Dana Perino said.
Supporters of a bipartisan agreement to temporarily divert the fuel-efficiency funds to cover the auto companies' operations said they were hopeful of winning support next month.
“We need speed. This is a very, very important moment,” Democratic Senator Carl Levin said.
Reid and House Speaker Nancy Pelosi said a US$25 billion bailout proposal that would have tapped loan money from the US$700 billion bailout plan lacked enough support in Congress.
Also See: Auto industry stalls, waits for bailout
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