Will Congress bail out Detroit or let it bankrupt?
A Congress, burned before by bailouts, returns to work this week to consider a once almost-unthinkable pitch: Put up billions of dollars in taxpayer-backed loans, and we just might save the domestic auto industry. Equally remarkable is the response by some members of Congress: We'll have to get back to you [as many think it best to let the USA automakers fall into bankruptcy].
It's a deal Detroit's automakers are anxious to close, with weak vehicle sales, high costs, frozen credit lines and dwindling cash reserves calling into question whether they can survive much longer without government help. But it largely depends on the automakers and their supporters convincing skittish lawmakers that the economy at large depends on the bailout and that -- perhaps most importantly -- the United States won't be throwing good money after bad.
"It's a loan, it's a bridge loan," said General Motors spokesman Tony Cervone. "The fact is we're looking at a short-term liquidity crisis that needs a bridge loan."
What promises to be one of the most consequential weeks in U.S. automaking history begins Monday, when legislation tying up to $25 billion in loans to an unemployment insurance extension is expected to be introduced in the Senate.
House Speaker Nancy Pelosi on Saturday rejected the White House's demand that the money come from retooling loans meant to build fuel-efficient models, saying automakers should get aid from the $700-billion financial bailout.
The tenor of several GOP senators has been one of wait-and-see reluctance, and there is always the chance of compromises being reached before the legislation is introduced. Many of the details remained under debate Saturday, including whether the bill would provide less than $25 billion or offer a more temporary solution.
"It sure would be helpful to actually see the bill before commenting on it," Senate Minority Leader Mitch McConnell of Kentucky said Friday.
That means automakers and their supporters -- including the Michigan delegation -- may have to react on the fly as withering criticisms are raised and the week's special session centers squarely on the auto industry, its failures and its future viability. That effort continues today with one of the chief architects of the bill, Democratic Sen. Carl Levin of Michigan, going on NBC's "Meet the Press."
Alabama Republican Sen. Richard Shelby will be making the rounds of today's talk shows in opposition.
On Tuesday, expect chiefs from General Motors Corp., Ford Motor Co. and Chrysler LLC --as well as the UAW -- to testify before a Senate committee; on Wednesday, they will be in the House, talking to another panel.
The special session is expected to conclude by the end of the week. More at Detroit Free Press