Both candidates vow to aid ailing auto industry

updated 5:03 p.m. ET Oct. 31, 2008

WASHINGTON - In Rust Belt states home to thousands of autoworkers, Barack Obama and John McCain have offered plans to develop advanced vehicles key to rebuilding U.S. automakers. But the next president may face decisions that run to the domestic auto industry's very core: their survival.

In the final weeks of the presidential campaign, General Motors has been discussing a potential acquisition of Chrysler and pressing the Bush administration for government assistance that could seal the deal between the two industrial giants.

Both campaigns have declined to take specific stands on the auto talks, which have been private, but they have vowed to help the industry build a green economy and reduce its dependence upon imported oil. Obama said Thursday that, if elected, he would meet with the leaders of the U.S. automakers and the United Auto Workers union shortly after Tuesday's election.

The falling fortunes of General Motors Corp., Chrysler LLC and Ford Motor Co., along with auto suppliers, have brought promises of billions of dollars in aid from the two campaigns to develop plug-in electric vehicles and advanced batteries.

It comes during one of the worst years for the auto industry in more than a decade. Auto sales have dropped sharply, the credit freeze has made it difficult for car shoppers to get loans and all three companies face uncertainty.

Any merger could factor into the presidential transition and early days of the next administration. GM is seeking billions of dollars in federal aid, an amount that is expected to dwarf the $1.5 billion loan guarantee for Chrysler approved by Congress in 1979.

GM has been talking with the Bush administration for much of October about government aid to help keep the company running or to facilitate a merger. The automaker is in talks with Chrysler majority owner Cerberus Capital Management LP about a consolidation, but a person briefed on the talks said Friday it's unlikely any deal will be reached before the election.

Candidates and cars A look at Barack Obama and John McCain’s proposals for the auto industry: Obama — Supported $25 billion in loans to domestic automakers and suppliers to help them modernize plants to build fuel-efficient vehicles. He has urged the government to expedite the funding and supports doubling the program to $50 billion. — Has set a goal of 1 million plug-in vehicles on the roads by 2015. He has shown interest in converting the fleet of White House vehicles to plug-ins, if security allows. — Has promised $4 billion in loans and tax credits to U.S. automakers to modernize older assembly plants to produce advanced vehicles and a $7,000 tax credit for buyers of early model plug-ins. — Said that, if elected, he would meet with the leaders of the Big Three and the United Auto Workers union shortly after the election. McCain — Supported $25 billion in loans to domestic automakers and suppliers to help them modernize plants to build fuel-efficient vehicles. He has urged the government to expedite the funding but has not supported additional funding. — Has proposed awarding a $300 million prize for researchers trying to develop a better automobile battery critical for plug-in vehicles. — Would also offer $5,000 tax credits for consumers who buy new zero-emission vehicles. — Said Friday he would “do whatever I think needs to be done” to help the auto industry. Source: Associated Press

Although talks continue about GM somehow accessing part of the $700 billion Wall Street bailout program, the person said government aid could come more quickly from the $25 billion in loans that Congress approved in September to develop more fuel-efficient vehicles. The person asked not to be identified because the talks are confidential.

The auto industry's hardships could play into the minds of voters throughout the Midwest. The UAW has targeted voters in Michigan, Ohio, Indiana and Pennsylvania, where more than half its 1 million active and retired members live.

Obama and McCain supported the $25 billion loan program for domestic automakers and their suppliers. Both campaigns have urged the Energy Department to get the funding into the pipeline as the first step to help the industry rebound.

McCain said in an interview Friday with ABC's "Good Morning America" that he would push to get the loans to the automakers quickly. "I would do whatever I think needs to be done to help out the auto industry. We need to keep this industry alive," McCain said.

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