New calls for Treasury to help carmakers
WASHINGTON (Reuters) - There were fresh calls on Sunday for the Bush administration to help stalled U.S. automakers, but Democratic and Republican officials said taxpayers cannot repeatedly support business rescues.
Republican Sen. Mel Martinez of Florida delivered important backing for those urging the Bush administration to use a recently launched $700 billion corporate bailout program to rescue General Motors Corp, Ford Motor Co. and Chrysler LLC with desperately needed cash.
"Within the authority of that package, I think it's possible for the secretary of the treasury to direct a loan to that -- to those entities," Martinez said.
Martinez is a member of the Banking Committee, which oversees administration of the financing program.
The Bush administration, which recently rebuffed a request for capital from GM to help facilitate a possible merger with Chrysler, has not decided whether it will -- or can, by law -- expand the bailout initiative beyond banks and other financial services firms.
GM, Ford and Chrysler are burning through cash at a rapid rate and are seeking at least $25 billion in immediate federal loans to help them survive.
Manufacturers blame their problems on the credit meltdown, which has restricted corporate and consumer borrowing. Most consumers finance auto sales, which are plunging industrywide.
Detroit and supporters in Congress essentially argue GM, Ford and Chrysler are too big to fail. They employ 250,000 people in the United States and support more than 4 million additional jobs in other areas of the economy.
Martinez did not advocate an aid amount but said taxpayers cannot be asked multiple times for bailouts, especially of companies that have already received significant government assistance already -- like the Detroit manufacturers.
"There's a limit to what government can do for a failing industry. There's got to be some things they do to restore the confidence of the people that might invest in their companies," Martinez said.
Congress in September approved $25 billion in low-interest loans for Detroit to help it develop more fuel-efficient cars. Although automakers sought the financing, they now do not believe the money -- with conditions on its use -- can be unlocked fast enough or help them survive.
Support by Martinez for action by the Bush administration followed a request by House and Senate Democratic leaders on Saturday for Treasury Secretary Henry Paulson to consider using his bailout powers for Detroit.
Expanding the rescue is a politically tricky question in the waning days of the Bush administration since it might prompt a flood of requests from other troubled manufacturers.
John Podesta, transition co-chair for President-elect Barack Obama, said on CNN's "Late Edition" that short-term assistance is warranted for auto companies but "you can't expect taxpayers to keep coming back and back and back."
Podesta urged the administration to use its authority to try to "quite literally put a tourniquet on the bleeding" and stabilize the auto industry. He also said the Obama camp is exploring possible legislative remedies.
The third-ranking Democrat in the U.S. House of Representatives, James Clyburn of South Carolina, believes Paulson has the authority to act and should move quickly to help GM, Ford and Chrysler.
"They are about to drift out to the edge, and I think we need to bring them back in," Clyburn said.
