SCENARIOS: Where Washington stands on the auto bailout

Tue Dec 2, 2008 6:53pm EST
 
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(Reuters) - General Motors Corp., Ford Motor Co., and Chrysler LLC are presenting restructuring plans to Congress as they seek a $25 billion bailout that could help them survive the troubled economy.

Detroit is gambling that the automakers' plans show labor, management, creditors and investors sharing in sacrifices will win political support that has so far eluded the companies.

The industry's appeal for aid will be scrutinized in hearings by the Senate Banking Committee on Thursday morning and by the House of Representatives Financial Services Committee on Friday morning.

Here is where the political players in Washington stand:

THE WHITE HOUSE: The Bush administration, which remains in power through January 20, opposes spending any new money to bail out Detroit.

It also does not want to use the $700 billion that is earmarked for ailing financial institutions, worrying that other industries would feel entitled to a slice as well.

The White House has suggested redirecting $25 billion in loans that are intended to help Detroit retool factories and make more fuel-efficient vehicles.

CONGRESSIONAL DEMOCRATS: Democrats who control both chambers of Congress don't want to redirect the existing loans, a move that would anger their environmentalist allies.

Democrats are angry that automakers resisted their efforts for years to increase fuel efficiency and may attach tough conditions, such as forcing out senior management, to any bailout money.

But many feel a bailout is necessary to save millions of jobs represented by unions that worked hard to put Democrats in office.

One prominent advocate for Detroit, Michigan Rep. John Dingell, has lost control of the powerful House Energy and Commerce Committee to California Rep. Henry Waxman, a champion for environmental issues.

CONGRESSIONAL REPUBLICANS: Republicans are not inclined to back the bailout after getting an earful from conservative constituents who opposed the $700 billion Wall Street package. They are also less worried about the loss of union jobs.

Democrats need Republican support to push any rescue package through the Senate and for any bill to be signed by Bush.

PRESIDENT-ELECT BARACK OBAMA: Obama, who had solid support from labor unions during his presidential campaign, has come out firmly in favor of the auto bailout. During the campaign he touted a $150 billion clean energy program and promised to create 5 million new "green collar" jobs.

Voters in the manufacturing states of Michigan, Ohio and Indiana who helped him win the presidency will expect him to keep these promises.

Furthermore, the failure of one of the Big Three automakers would cast a shadow over the first few months of Obama's presidency, as he tries to extend health care to the uninsured and revive the broader economy.

(Reporting by Andy Sullivan in Washington; additional reporting by Tabassum Zakaria and Thomas Ferraro)

 

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