Congress, White House race clock on automaker rescue

By John Crawley

WASHINGTON (Reuters) - The White House and congressional Democrats launched a post-election showdown on Monday over how to rescue U.S. automakers with millions of jobs, more than a century of iconic brands, and potentially economic confidence, riding on the outcome.

As the year that celebrates the 100th anniversary of the Model T races to a close in volatile political environment, the Bush administration and many lawmakers agree that up to $25 billion in loans should be extended to General Motors Corp, Ford Motor Co and Chrysler LLC.

But there are key differences on the details. Democratic leaders plan to forge ahead with an industry-backed proposal that would offer $25 billion from the Treasury Department's $700 billion financial industry rescue fund.

The White House wants Congress to amend a law passed in September that made a separate $25 billion in financing available to Detroit for retooling factories to make more fuel efficient cars.

Either path requires quick congressional action in a short lame-duck session following the November 4 elections, with a new Congress to be seated next year.

"We want the automakers to succeed," White House spokeswoman Dana Perino said. "These are great historical companies in the United States and they have a way to get back on a path to be better companies."

The companies that for decades have rolled out Cadillacs, Jeeps, and Mustangs, and their allies in Congress, argue a bailout is justified on grounds they back one in 10 U.S. jobs.

But segments of the public disagree. In interviews from New York to Los Angeles, Americans said the planned rescue was unfair and would make it harder to reform U.S. automakers.

Detroit is bending under the weight of the global financial crunch that has choked off corporate and consumer credit and is fast depleting its available cash and magnifying the drag on its operations of high operating expenses and legacy costs.

Industry's problems are compounded by consumer tastes moving away from bread-and-butter pickups and sport utility vehicles to more efficient brands made by overseas rivals.

"They need to restructure. If they get bailed out they are not going to do it," said Eric Smith, a paint contractor interviewed in Chamblee, Georgia, on the outskirts of Atlanta.

ECONOMIC IMPACT

Kicking off Senate debate on Monday, Sen. Arlen Specter, a Pennsylvania Republican, said he was open to supporting help for automakers under certain conditions. Another Republican, Sen. Christopher Bond of Missouri, expressed a similar sentiment and said action was needed now.

"I'm pleased to see there seems to be broad support for assisting the auto industry despite disagreements," Bond said.

U.S. automakers say they are urgently trying to overhaul their businesses to meet a global demand for fuel efficient products, like better performing gasoline engines, electric cars and more hybrids.