McCain cautious on U.S. auto industry bailout

By Donna Smith

WASHINGTON (Reuters) - Republican presidential candidate John McCain on Sunday declined to embrace the idea of $15 billion more in government aid for the struggling U.S. automobile industry but did not rule it out.

In an interview on NBC's "Meet the Press," McCain was asked about a suggestion by a Michigan economist that the government provide $15 billion cash to help the U.S. auto industry survive the financial crisis.

McCain noted the U.S. Congress recently authorized $25 billion in low-interest loans to help the industry retool to produce more fuel-efficient vehicles.

"Let's get the $25 billion to them to start with and see how that goes," McCain said.

That financing might not be available to the auto industry for several months as federal regulators write the rules for the loans. The industry and Michigan lawmakers have been pushing to expedite the money.

Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan, told the Detroit Free Press last week that a $15 billion cash bailout, with no restrictions except that the money be spent in the United States, is needed to help General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC survive the current crisis.

McCain economic adviser Douglas Holtz-Eakin said on CBS's "Face the Nation" the government must first move quickly to get the $25 billion already approved into the hands of the U.S. auto industry.

"The top priority should be get it out quickly, not take 18 months, which seems to be the current plan," Holtz-Eakin said.

Former Treasury Secretary Robert Rubin, an adviser to Democratic presidential candidate Barack Obama, did not rule out additional aid for the U.S. auto industry.

"The auto industry clearly is extremely important to the economy and now has enormous difficulties," Rubin said on "Face the Nation."

"We do need to face those difficulties and see if there are ways that public policy can be helpful that make sense ... without having a whole raft of unintended consequences."

(Additional reporting by Randall Mikkelsen; Editing by Bill Trott)