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WASHINGTON — Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit auto makers, calling the U.S. industry a “dinosaur” whose “day of reckoning” is coming. Their opposition serious raises doubts about whether the plan will pass in this week's postelection session.
Democratic leaders want to use $25-billion of the $700-billion financial industry bailout to help General Motors Corp., Ford Motor Co. and Chrysler LLC.
Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the auto makers. They said an auto bailout would only postpone the industry's demise.
“Companies fail every day and others take their place. I think this is a road we should not go down,” said Mr. Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.
New trucks are displayed for sale at a Ford dealership in Encinitas, California Nov. 11, 2008. (REUTERS/Mike Blake)
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“They're not building the right products,” he said. “They've got good workers but I don't believe they've got good management. They don't innovate. They're a dinosaur in a sense.”
Added Mr. Kyl, the Senate's second-ranking Republican: “Just giving them $25-billion doesn't change anything. It just puts off for six months or so the day of reckoning.”
House Speaker Nancy Pelosi said over the weekend that the House would provide aid to the ailing industry, though she did not put a price on her plan.
“The House is ready to do it,” said Democratic Representative Barney Frank of Massachusetts, chairman of the House Financial Services Committee. “There's no downside to trying.”
But Democrats have only a narrow majority in the Senate and President George W. Bush opposes the idea. That raises the possibility that any help for auto makers will have to wait until 2009, when Barack Obama takes office and the Democrats increase their majority in the Senate.
At least two Republican senators support an auto maker bailout — George Voinovich of Ohio and Kit Bond of Missouri. But if the Republicans are seen as neglecting an industry that inevitably collapses, they risk lasting political problems in Midwestern industrial states that can swing for either political party.
Mr. Obama won most of the manufacturing states in the presidential race, including Ohio, a perennial battleground, and Indiana, which had not voted for a Democrat for president since 1964. Obama easily won Michigan after Republican John McCain publicly pulled out weeks before Election Day.
Sen. Carl Levin said auto makers are working to adapt to a changing consumer market, but they need immediate help to survive the nation's current economic crisis.
“This is not a Big Three problem alone,” Mr. Levin said. “This current crisis is a crisis in the economy where there is no credit available to purchase, and where people are not buying cars because they are afraid.”
The companies are lobbying lawmakers furiously for an emergency infusion of cash. GM has warned it might not survive through year's end without a government lifeline.
“It's not the General Motors we grew up with. It's a General Motors that is headed down this road to oblivion,” said Mr. Shelby. “Should we intervene to slow it down, knowing it's going to happen? I say no, not for the American taxpayer.”
Mr. Obama said he believes that aid is needed but that it should be provided as part of a long-term plan for a “sustainable U.S. auto industry” — not simply as a blank check.
“For the auto industry to completely collapse would be a disaster in this kind of environment,” Mr. Obama said in an interview on CBS's 60 Minutes that was set to air Sunday night. “So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labour, management, suppliers, lenders, all of the stakeholders coming together with a plan — what does a sustainable U.S. auto industry look like?”
Auto makers say bankruptcy protection is not an option because people would be reluctant to make long-term car and truck purchases from companies that might not last the life of their vehicles. But lawmakers opposed to the bailout say Chapter 11 might be a better option than government loans and they cite the experience of airlines that have gone through the process of reorganization.
Mr. Shelby and Mr. Levin were interviewed on NBC's Meet the Press and Mr. Shelby also appeared with Mr. Frank on CBS' Face the Nation. Mr. Kyl spoke on Fox News Sunday.
