Admin repeats support for redirected auto aid

By Kevin Drawbaugh

WASHINGTON (Reuters) - A senior Bush administration official reiterated White House support on Tuesday for a bipartisan Senate bill that would redirect $25 billion to aid struggling U.S. automakers from a program already approved to help Detroit factories make more fuel-efficient vehicles.

Commerce Secretary Carlos Gutierrez said in a Reuters interview that the administration remained opposed to using money from a $700 billion bank rescue program to aid General Motors Corp, Ford Motor Co and Chrysler LLC.

"We all seem to agree that these firms have to show that they have a plan to be viable in the future. We all agree that this is an important industry," he said, declining to comment specifically on much-anticipated viability plans being issued by America's Big Three automakers as he spoke.

The secretary's comments signaled more debate in Washington over how the government can assist Detroit through one of its steepest slumps ever. Ford on Tuesday posted a nearly 31 percent drop in overall sales in November.

Congressional hearings are scheduled for Thursday and Friday where Big Three executives will plea again for aid, having left town empty-handed last month following an initial round of hearings that went poorly for them.

Some congressional Democrats, particularly in the House of Representatives, oppose using the $25 billion fuel efficiency loans program as a general auto maker bailout fund. But auto state senators from both parties support the approach.

Unveiled by Michigan Democratic Sen. Carl Levin and Missouri Republican Sen. Christopher Bond and others on November 20, the measure known as the Levin-Bond bill would raid funding for an Energy Department program known as Section 136.

Defenders of Section 136 have said the Bush administration has authority to get auto maker bailout money elsewhere, namely the $700 billion Troubled Asset Relief Program (TARP), but Gutierrez made clear the White House does not see it that way.

"We believe that Section 136 money should be used. ... TARP is for the financial industry," he said. "We would hope that Congress would see it with that clarity."

He added that if Levin-Bond is approved and Section 136 is redirected, then "we would replenish the fund. ... That's what we felt should make it acceptable to all parties."

(Reporting by Kevin Drawbaugh; Editing by Brian Moss)