Specter says automakers face skeptical Congress

By Jon Hurdle

PHILADELPHIA (Reuters) - Struggling U.S. automakers will have to work hard to persuade skeptical lawmakers that they deserve federal bailout funds to enable them to stay in business, Sen. Arlen Specter said on Tuesday.

Specter, a Republican from Pennsylvania, said the mood in Congress was not currently in favor of providing $34 billion emergency funding that the industry said on Tuesday it was seeking.

"The mood of Congress candidly isn't supportive," Specter told reporters on the day that General Motors Corp, Ford Motor Co and privately held Chrysler LLC submitted restructuring plans to Congress.

Specter was speaking after calling a meeting in Philadelphia with auto industry executives, representatives of labor and dealers.

The meeting included Chrysler sales chief James Press and financier Wilbur Ross, a bankruptcy expert who helped to restructure the U.S. steel industry.

Specter said the industry had been "on notice" for years that it needed to produce more fuel-efficient vehicles to compete with overseas carmakers, but had failed to heed those warnings.

"There's a skepticism about their ability to formulate plans to survive," he said.

Auto executives went home empty-handed when they asked Congress for bailout funds last month but on Tuesday submitted new business plans intended to establish that they can emerge from the current downturn if federal aid is provided.

While General Motors Corp has said it cannot survive beyond the end of 2008 without bailout funds, it is unclear whether it would actually close its doors if Congress declined to provide the funding, Specter said.

"They are still going to have to produce a plan that is reasonably likely to succeed, and that's a tall mountain to climb," he said.

But if any one of the Big Three automakers shut down, the others could too, and the effects on the wider economy could be "cataclysmic," Specter said.

Chrysler has also said it will be unable to survive without federal bailout money. It has requested a $7 billion bridge loan from the government this month.

GM has asked for $18 billion in aid and says it needs the first $4 billion by this month to avoid the risk of a failure.

Ford says it wants a credit line of $9 billion from the government to be made available if a turnaround on its own falters.

(Reporting by Jon Hurdle; editing by Kevin Krolicki, Gary Hill)