U.S. auto bailout support battle heats up

WASHINGTON, Nov 16 (Reuters) - A key Republican Senator said on Sunday it was "pretty clear" a $25 billion bailout proposal for U.S. automakers will fail in the U.S. Senate, while Democrats argued saving the industry was critical to the U.S. economy.

The Senate is slated on Monday to begin debating emergency legislation to General Motors Corp (GM.N), Ford Motor Co (F.N), and Chrysler LLC in a special post-election session to deal with the economic crisis.

The leading Democratic plan would authorize up to $25 billion in loans from the Treasury Department's $700 billion corporate rescue program to help Detroit survive its financial crisis. In return, the government would take equity stakes in the companies and impose limits on executive compensation.

On television news shows Sunday, Republican critics argued the government should not be in the business of choosing which companies survive and which fail, while Democrats said an auto industry collapse would hurt millions of workers beyond the auto industry and undermine the U.S. manufacturing base.

Arizona Republican Sen. Jon Kyl told "Fox New Sunday" the Democrats appeared to be trying to score political points by pushing the bill now "since it's pretty clear that it's not going to pass." He said they should wait until next year.

"The people who would be paying the bill for this, the average worker in the United States, I don't think should be burdened with bailing out the auto companies that have been sick for a long time," he said. Kyl is the second ranking Republican in the Senate.

Democratic Sen. Byron Dorgan of North Dakota conceded it "might be the case" that Congress would only be able to pass a more modest plan to expand unemployment benefits during the lame duck session before the new Congress is seated on Jan. 6.

"We're going to try to do more," he told Fox News and repeated his party's argument that millions of jobs were at risk and that a fraction of the $700 billion was a small price to pay to maintain U.S. manufacturing viability.

"This is not just about an industry or three companies. This is about jobs -- 350,000 direct, probably as much as three to five million jobs in total," he said.

"I don't think you long remain a strong economic power in this world unless you have a manufacturing base," added Dorgan.

Michigan Democratic Sen. Carl Levin, co-chairman of the Senate Auto Caucus, said he saw bipartisan backing for helping the car sector survive the economic crisis, which he argued was "a different issue from the need to restructure the auto industry."

Levin told NBC's "Meet the Press" he would support calls for a shake-up in the auto industry management in order to get the bailout bill passed. Critics say management is to blame for Detroit's troubles.

"I'd be happy to tell Rick Wagoner that he ought to consider resigning if that is the difference between getting this kind of support and not," he said. Wagoner is GM's CEO. (Reporting by Paul Eckert, editing by Jackie Frank)