UPDATE 1-U.S. automakers bailout outlook in doubt-senator

Thu Nov 13, 2008 10:18pm EST

(Updates with Dodd, Grassley comments)

By John Crawley and Rachelle Younglai

WASHINGTON Nov 13 (Reuters) - A senior Democratic senator raised doubts on Thursday that an attempt to bail out U.S. automakers had enough support to clear Congress this year.

As Republicans amplified their concerns about a bailout, Senate Banking Committee Chairman Christopher Dodd raised the biggest red flag for fellow Democrats trying to craft a $25 billion rescue and pass it during a post-election session set to start next week.

"Right now, I don't think there are the votes," Dodd of Connecticut told reporters about prospects in the Senate. "I want to be careful of bringing up a proposition that might fail," he said.

Although Dodd said "we ought to do something" and personally backed using money from the ongoing $700 billion financial services rescue program to help Detroit, he was skeptical that enough Republicans would support a bailout.

Senate Majority Leader Harry Reid, a Nevada Democrat, also cautioned that success of a bailout rests with Senate Republicans and the White House. With their slim majority, Democrats cannot force a measure through the Senate or trump a White House veto.

The White House opposes the approach being taken by congressional Democrats but has not threatened to block any bailout. Bush administration officials have said they would consider other steps Congress can take to help General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC.

Dodd said there have been "legitimate issues raised" about how to help. He plans to hold a hearing next Tuesday, and a House of Representatives Financial Services Committee hearing is set for Wednesday.

House Financial Services Chairman Barney Frank, a Massachusetts Democrat, is trying to write a bill that would amend the financial services rescue package to include $25 billion for carmakers.

The government would likely take an equity stake in the firms and Congress would impose stiff conditions.

CONCESSIONS FROM AUTOMAKERS

In a letter to automaker chief executives on Thursday, the senior Republican on the Senate Finance Committee recommended specific concessions from the automakers.

"They should take every step possible, including cutting executive salaries and bonuses, and exhaust all alternatives before coming to the taxpayers for tens of billions of dollars in help," Charles Grassley of Iowa said.

The stakes for action in Washington rose earlier in the day when Goldman Sachs suspended its rating on GM and said the automaker needs at least $22 billion in aid. Goldman also said it would be difficult for Chrysler to survive without help.

House lawmakers are not formally scheduled to meet next week and Republicans on Thursday voiced greater skepticism about the rescue approach and Detroit's long-term viability.

Senior Republicans are open to considering changes in terms of the $25 billion in federal loans approved in September to help automakers retool factories and make more fuel efficient vehicles. They do not, however, favor extracting more money from the Treasury Department's rescue program.

"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 a statement.

The administration is also encouraging lawmakers to expedite the retooling loans, which automakers have said are loaded with requirements and cannot help them survive their worst-ever financial crisis.

Democratic Sen. Charles Schumer of New York, chairman of the Joint Economic Committee, expects some Republican support for a bailout but he did not know if it would be enough for congressional passage.

Explaining the White House opposition to using Treasury bailout money, Commerce Secretary Carlos Gutierrez said in an interview with Reuters that a number of other industries have also knocked on that agency's door asking for help.

"Where do you draw the line?" Gutierrez asked. (Additional reporting by Caren Bohan, Doug Palmer, Rick Cowan and Kevin Drawbaugh in Washington and Soyoung Kim in Detroit, editing by Jackie Frank and Vicki Allen)