Senate leader calls off vote on auto bailout

updated 8:22 p.m. ET Nov. 19, 2008

WASHINGTON - A Democratic Congress, unwilling or unable to approve a $25 billion bailout for Detroit’s Big Three, appears ready to punt the automakers’ fate to a lame-duck Republican president.

Caught in the middle of a who-blinks-first standoff are legions of manufacturing firms and auto dealers — and millions of Americans’ jobs — after Senate Democrats canceled a showdown vote that had been expected Thursday. President George W. Bush has “no appetite” to act on his own.

U.S. auto companies employ nearly a quarter-million workers, and more than 730,000 other people have jobs producing the materials and parts that go into cars. About 1 million on top of that work in dealerships nationwide. If just one of the auto giants were to go belly up, some estimates put U.S. job losses next year as high as 2.5 million.

“If GM is telling us the truth, they go into bankruptcy and you see a cascade like you have never seen,” said Sen. George V. Voinovich, R-Ohio, who was working on one rescue plan Wednesday. “If people want to go home and not do anything, I think that they’re going to have that on their hands.”

The automakers — hobbled by lackluster sales and choked credit — are burning through money at an alarming and accelerating rate: about $18 billion in the last quarter alone. General Motors Corp. has said it could collapse within weeks, and there are indications that Chrysler LLC might not be far behind. Ford Motor Co. has said it could get through the end of 2008, but it’s unclear how much longer.

For now, however, with the federal emergency loan plan stalled in the Senate, lawmakers in both parties are engaged in a high-stakes game of chicken, positioning themselves to blame each other for the failure.

Senate Majority Leader Harry Reid, D-Nev., scrapped plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund.

It’s really up to Bush’s team to act, he said.

“I don’t believe we need the legislation,” Reid said. Treasury Secretary Henry Paulson can tap the financial industry bailout money to help auto companies, Reid said, but “he just doesn’t want to do it.”

Not our responsibility, countered the White House.

“If Congress leaves for a two-month vacation without having addressed this important issue ... then the Congress will bear responsibility for anything that happens in the next couple of months during their long vacation,” said Dana Perino, the White House press secretary.

She said there was “no appetite” in the administration for using the financial industry bailout money to help auto companies.

The White House and congressional Republicans instead called on Democrats to sign on to a GOP plan to divert a $25 billion loan program created by Congress in September — designed to help the companies develop more fuel-efficient vehicles — to meet the auto giants’ immediate financial needs.

Voinovich and Sen. Kit Bond, R-Mo., along with Democratic Sen. Carl Levin of Michigan, were at work on that measure Wednesday, trying to placate skeptical Democrats by including a guarantee that the fuel-efficiency loan fund would ultimately be replenished.

“It is the only proposal now being considered that has a chance of actually becoming law,” said Republican leader Mitch McConnell of Kentucky.

If an acceptable deal emerges, Reid said it could be passed as part of a measure to extend jobless aid to unemployed workers whose benefits have run out. A vote on that bill is likely on Thursday. Negotiators were discussing a scaled-down aid package of $5 billion to $8 billion to help the automakers survive through year’s end.

But there was little sign that Democratic leaders would go along.

MORE FROM AUTOS

Autos Section Front

Auto industry shows a pulse at L.A. show Whitacre steers GM onto new path Pontiac hits end of the road   Los Angeles Auto Show 2009 Automakers to reconsider dealer closings ‘Green Car of the Year’ at L.A. show is an Audi Now Whitacre can drive GM where he wants Ford gets small with Fiesta subcompact General Motors CEO Henderson out GM to phase out Saab without deal by year end Autos Section Front   Add Autos headlines to your news reader: