Automakers plead for aid plan, but votes lacking
WASHINGTON – Imperiled automakers and their union worked feverishly Wednesday to sell a skeptical Congress on a $34 billion aid plan, promising labor concessions and restructuring. The Senate’s Democratic leader said there still weren’t enough votes to tap the $700 billion federal bailout fund to prop up the foundering Big Three.
One day before the chiefs of the auto companies return to Capitol Hill to make their urgent cases for bailout billions from the fund, Sen. Harry Reid told The Associated Press in an interview, “I just don’t think we have the votes to do that now.”
In Capitol Hill meetings, industry officials said the collapse of one or more of the Big Three carmakers could greatly worsen the nation’s recession and undermine the companies’ ability to survive.
“We’re on the brink with the U.S. auto manufacturing industry. We’re down to months left,” Chrysler’s vice chairman, Jim Press, told The AP in a separate interview. “If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it’s a huge blow. It could trigger a depression.”
The United Auto Workers union, scrambling to preserve jobs and benefits, agreed at an emergency meeting in Detroit to allow the companies to delay payments to a multibillion-dollar, union-run health care trust and to scale back a jobs bank in which laid-off workers are paid most of their wages. The concessions could help mollify some lawmakers who have criticized the union’s benefits as too rich when compared with those of workers at foreign-brand auto plants in the U.S.
The Bush administration and auto-state Republicans and Democrats are pushing to help the automakers with aid from a different source: a previously approved $25 billion program that’s supposed to be used to help them produce more environmentally advanced vehicles.
Environmentalists — and a number of powerful friends in Congress — are vigorously opposing that idea.
Reid, D-Nev., said the administration could act unilaterally to use a portion of the Wall Street bailout program for loans to the automakers, but the White House has consistently resisted that approach.
“There’s talk going there’s around now that the Bush White House may ask for” the second $350 billion installment of the $700 billion financial industry rescue fund, Reid said. But if Bush’s team doesn’t act, he said, “I think that we are probably going to have to try to do something” in Congress.
Reid said he’d rely on Sen. Chris Dodd, D-Conn., the Banking Committee chairman, to determine what kind of legislation would be appropriate.
The autoworkers’ concessions are “a step in the right direction,” he said. “I think it’s too bad that negotiated contracts between labor and management are going to have to be changed. But it’s obvious to everyone — as strong of a union guy as I am — it’s obvious that there has to be some changes made,” Reid said.
Ahead of Thursday’s televised hearings, GM’s president and chief operating officer, Fritz Henderson, met with congressional aides and said bankruptcy for his company would further erode consumer confidence. About 25 auto dealers also combed through House and Senate office buildings, lobbying for the bailout package.
General Motors Corp., Chrysler LLC and Ford Motor Co. submitted three separate survival plans to Congress this week after flunking their first attempt to persuade lawmakers to throw them a lifeline.
GM and Chrysler said they needed an immediate infusion of government cash to last until New Year’s, and both said they could drag the entire industry down if they fail. Ford wants a $9 billion “standby line of credit” in case a competitor fails.
Chrysler said it needed $7 billion by year’s end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen.
Ford’s chief executive, Alan Mulally, and GM’s chief executive, Rick Wagoner, said they would work for $1 a year if each company accepted government loans. The carmakers also have offered to cancel bonuses and merit raises. Chrysler said its chief executive has cut his annual pay to $1.
All three plans envision the government getting a stake in the companies that would allow taxpayers to share in future gains if they recover.
The Senate Banking, Housing and Urban Affairs Committee was to hear testimony Thursday from the executives, the UAW’s president, Ron Gettelfinger, and the head of the Government Accountability Office on the companies’ plans. The House Financial Services Committee planned similar session Friday.
Officials at the White House and the Treasury and Commerce departments were scouring the plans. White House press secretary Dana Perino said it was “too early to say” whether the companies have outlined a path toward viability that justifies new federal assistance.
President-elect Barack Obama said it appeared that Big Three chiefs were returning to Washington with a “more serious set of plans.”