Opposition To Automaker Bailout Grows
Opposition To Automaker Bailout Grows
by Paul Brown
NPR.org, November 16, 2008 · An emergency cash bailout for troubled U.S.
automakers is coming under increasing challenge as Congress gets ready
for its lame-duck session this week. Detroit auto executives say their
companies may not have enough operating funds to make it far into the
new year without government help.
Congress has already designated $25 billion to help the automakers
retool for more efficient models. Now the Bush administration wants that
money to be used for this cash flow emergency.
Massachusetts Democratic Rep. Barney Frank told CBS' Face the Nation
that's a bad idea because it would prevent the carmakers from retooling.
He said there should be a separate package.
On the same show, Republican Sen. Richard Shelby of Alabama said he'll
fight any emergency cash for companies proven incompetent.
Shelby likened the Detroit automakers to a "dinosaur" and said taxpayers
shouldn't prop them up.
Top Republican senators oppose automaker bailout
from The Associated Press
Top Republican senators said Sunday they will oppose a Democratic plan
to bail out Detroit automakers, calling the U.S. industry a "dinosaur"
whose "day of reckoning" is coming. Their opposition raises serious
doubts about whether the plan will pass in this week's postelection session.
Democratic leaders want to use $25 billion of the $700 billion financial
industry bailout to help General Motors Corp., Ford Motor Co. and
Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be
a mistake to use any of the Wall Street rescue money to prop up the
automakers. They said an auto bailout would only postpone the industry's
"Companies fail every day and others take their place. I think this is a
road we should not go down," said Shelby, the senior Republican on the
Senate Banking, Housing and Urban Affairs Committee.
"They're not building the right products," he said. "They've got good
workers but I don't believe they've got good management. They don't
innovate. They're a dinosaur in a sense."
Added Kyl, the Senate's second-ranking Republican: "Just giving them $25
billion doesn't change anything. It just puts off for six months or so
the day of reckoning."
House Speaker Nancy Pelosi, D-Calif., said over the weekend that the
House would provide aid to the ailing industry, though she did not put a
price on her plan.
"The House is ready to do it," said Democratic Rep. Barney Frank of
Massachusetts, chairman of the House Financial Services Committee.
"There's no downside to trying."
But Democrats have only a narrow majority in the Senate and President
George W. Bush opposes the idea. That raises the possibility that any
help for automakers will have to wait until 2009, when Barack Obama
takes office and the Democrats increase their majority in the Senate.
At least two Republican senators support an automaker bailout — George
Voinovich of Ohio and Kit Bond of Missouri. But if the Republicans are
seen as neglecting an industry that inevitably collapses, they risk
lasting political problems in Midwestern industrial states that can
swing for either political party.
Obama won most of the manufacturing states in the presidential race,
including Ohio, a perennial battleground, and Indiana, which had not
voted for a Democrat for president since 1964. Obama easily won Michigan
after Republican John McCain publicly pulled out weeks before Election Day.
Sen. Carl Levin, D-Mich., said automakers are working to adapt to a
changing consumer market, but they need immediate help to survive the
nation's current economic crisis.
"This is not a Big Three problem alone," Levin said. "This current
crisis is a crisis in the economy where there is no credit available to
purchase, and where people are not buying cars because they are afraid."
The companies are lobbying lawmakers furiously for an emergency infusion
of cash. GM has warned it might not survive through year's end without a
"It's not the General Motors we grew up with. It's a General Motors that
is headed down this road to oblivion," said Shelby. "Should we intervene
to slow it down, knowing it's going to happen? I say no, not for the
Obama said he believes that aid is needed but that it should be provided
as part of a long-term plan for a "sustainable U.S. auto industry" — not
simply as a blank check.
"For the auto industry to completely collapse would be a disaster in
this kind of environment," Obama said in an interview on CBS's "60
Minutes" that was set to air Sunday night. "So my hope is that over the
course of the next week, between the White House and Congress, the
discussions are shaped around providing assistance but making sure that
that assistance is conditioned on labor, management, suppliers, lenders,
all of the stakeholders coming together with a plan — what does a
sustainable U.S. auto industry look like?"
Automakers say bankruptcy protection is not an option because people
would be reluctant to make long-term car and truck purchases from
companies that might not last the life of their vehicles. But lawmakers
opposed to the bailout say Chapter 11 might be a better option than
government loans and they cite the experience of airlines that have gone
through the process of reorganization.
Shelby and Levin were interviewed on NBC's "Meet the Press" and Shelby
also appeared with Frank on CBS' "Face the Nation." Kyl spoke on "Fox