Democrats push to aid car industry
Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered U.S. auto industry in exchange for a government ownership stake in the Big Three car companies -- General Motors, Ford and Chrysler.
House Speaker Nancy Pelosi (D-San Francisco) and Senate Majority Leader Harry Reid (D-Nev.) hope for quick passage of the auto bailout during a post-election session that begins Monday.
Legislation being drafted by Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, and Sen. Carl M. Levin (D-Mich.) would dip into the $700-billion Wall Street rescue fund, approved by Congress last month, for the auto industry aid.
The Treasury Department could take warrants to share in a portion of future profits and would have to be paid back before any other shareholder. The car companies would face tougher restrictions on awarding pay packages to executives and dividends to their shareholders than the financial companies that get a piece of the original bailout.
Treasury Secretary Henry M. Paulson is opposed to the auto assistance. But the White House says President Bush is open to helping the industry, which is buckling under poor sales, tight credit and a sputtering economy.
Any effort to throw the companies a lifeline could hit GOP roadblocks that could derail it in the Senate. In that chamber, Republicans are loath to agree to any new money.
Sen. Mitch McConnell (R-Ky.), the minority leader, was noncommittal about additional aid. In a statement, his spokesman said Congress should move to speed the release of a $25-billion loan program passed earlier to help the carmakers develop fuel-efficient vehicles.
“It may be that there are changes that need to be made in order to expedite these low-interest loans,” McConnell spokesman Don Stewart said. “Other ideas have been floated and all will receive a review as we approach the Senate’s return next week.”
Meanwhile, Sen. Barbara A. Mikulski (D-Md.) said she would introduce legislation that would make interest payments on loans, as well as sales or excise taxes, deductible for autos purchased the rest of this year. A family would save $1,553 on a $25,000 car. “Targeted, temporary and timely assistance to the auto industry makes sense,” she said in a statement.
