Dem Leaders Want Bush To Aid Auto Industry

WASHINGTON — Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is bleeding cash and jobs as sales have dropped to their lowest level in a quarter-century.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout to include car companies.

"A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector's work force," they wrote. "The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its work force."

There was no immediate comment from the Bush administration about the request to broaden the $700 billion financial industry bailout so automakers could get a share.

Automakers already want an additional $50 billion in loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees. The companies are seeking the loans as part of an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month.

Top executives of General Motors, Ford, Chrysler LLC and the president of the United Auto Workers met with congressional leaders Thursday to discuss the loans. The money would be on top of the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

"We left the meetings convinced that our nation's automobile industry _ the heart of our manufacturing sector _ and the jobs of tens of thousands of American workers are at risk," Pelosi, D-Calif., and Reid, D-Nev., said in their letter to Paulson.

Automakers want the new loans included in an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month. If Congress approved more loans, it would come with strings attached. Potential protections include limits on executive compensation, awarding the government preferred stock in the companies and a suspension of dividend payments to investors.

GM, the nation's largest automaker, warned Friday that it may run out of money by the end of the year after piling up billions in third-quarter losses and burning through cash at an alarming rate. GM's chairman and chief executive, Rick Wagoner, said the company will take every action possible to avoid bankruptcy. GM has planned more job cuts, including another 5,500 salaried and factory workers, but company officials warn that those measures alone would not be enough and that federal aid was essential.

Ford, which recently announced it would slash more than 2,000 white collar jobs, also has seen a rapid decline in its cash supply. But it is in better shape because the company borrowed billions of dollars in 2007 by mortgaging its factories. The company said it had enough cash to make it through 2009.

"We must safeguard the interests of American taxpayers, protect the hundreds of thousands of automobile workers and retirees, stop the erosion of our manufacturing base, and bolster our economy," the Democratic leaders in Congress wrote.

President-elect Obama said Friday his transition team would explore policy options to help the auto industry. Obama's economic transition team includes two allies of the U.S. auto industry _ Michigan Gov. Jennifer Granholm and former Rep. David Bonior, D-Mich.

Comments

[KathyMilwaukee]

Idiots! GM, Chrysler and Ford deserve to fail with crappo products. Where do you possibly think more money thrown at them would go? Down the toilet. Let me tell you what my Dad taught me. I'm 40, I've owned two cars my entire driving life. I got rid of Toyota Corolla #1 ONLY because the Milwaukee salt strewn winter streets rusted the door away after so many winters. My current super engine Toyota is now 13 years old, runs like a dream. My next vehicle, based on excellent quality and fuel efficiency, will be a Honda or Toyota. Has the American auto industry produced any decent product since the 1970's? Please. No handouts and freebies for failures. I guess what the American government, and both sides make me sick now, is teaching is that if you are irresponsible, greedy and fail, you get rewarded. I feel the same way about anyone who purchased a home outside of their means. You deserve to lose, not get handouts. You are making MY responsible frugal life worse.

[therealredstateblues]

obviously you care little for the hundreds of thousands of workers in the midwest who directluy or indirectly depend on the auto industry for their livelihoods.

You think the economy sucks now try throwing 1/4 of the midwest out of work

Did you know that the Ford ranger gets the best truck mpg? not toyota, not nissan

the best mpg SUV is the Ford Escape - not Kia, not Honda

did you know that Chevrolet has the highest avg mpg car line up? not honda, not toyota

Detoits quality is every bit the equal of Japan according to qaulity reporting agencies like JD Power. And for the most part better than the Europeans.

[PatCroft]

A bailout to bad management would be bordering on criminal. The bad management in this case is the Detroit Auto industry.

Isn't it funny how GM has a history of doing everything they could to tear down mass transit. Isn't it funny how this Detroit Auto Club has faulted basic labor arbitration and basic labor rights such as pensions and living wage and health care and blaming these basics for their demise.

Give me a break. We the people are bailing out all these corporations that have track records of being anti labor and thus anti people.

If there is a bailout to these thugs then we the people I would imagine need them to lower to their knees and repent. Otherwise let us stick it to them. Either / or!

[philosopherkingtomas]

see the wall street journal today:
There's another thing the government could do with $50 billion. It could give a $4,000 to $5,000 tax rebate to everyone who buys a new car or truck made in the United States during the next year. The tax break could be scaled up for people who trade in a low mileage vehicle for a vehicle that burns 15%-20% less gas – a percentage that's roughly equivalent to the share of oil the U.S. imports from the Persian Gulf.

Leaving it up to consumers what auto companies should benefit from government subsidies might not save GM. But it would save the government from having to choose sides between America's two auto industries.

[MakeAWish]

Congress is dumb! These companies, should have seen the writing on the wall years ago. But, no, they kept right on making those gas hogs and stiffed any progressive or fuel alternative thinking. These auto companies, like the oil companies are becoming obsolete and should not be rewarded. Instead, Congress should be helping alternative companies who want to move this country forward and not backwards.

[Nomadius]

The auto industry is the worst listener in this country. These guys did not even listen to their own market-con­sumers-buy­ers. They kept doing cars un-exportable, un-reliable, lacking innovation and design although the market was hot for new propositions which have been attended first by Germans and Japanese and now by Koreans and soon who knows who else. The point is for people who do not listen their expectations to be listened are quite high.

[Yohomegirl]

It seems that the Gov should be able to muscle down on auto companies to start making more fuel eff cars, and STOP making all the monster SUV"s. And not project making them, do it NOW!

[TivoliEclipse]

Oil Companies should bail out the Auto Industry! They need each other. Frankly, I do not understand why the Auto Industry sat idly by while Oil Companies made billions this year at the expense of the Auto Industry. The Oil Companies cannot thrive -- they have a mutual interest -- in the survival of The Big Three. Those Corporate Gansters should have had a sit-down! What were they thinking?

[hypnotoad72]

Dem leaders, you are blind.

1. GM whines health care costs. So fix health care and they'll stop whining.
2. Ford forgot the principles Henry Ford used to build the company with. ( http://www.pbs.org/wgbh/aso/databank/entries/btford.html )
3. GM and Ford would rather build big trucks and SUVs than work on electric cars.
4. Didn't GM kill an electric car project in 1968?

If the government is to help, ditch the free market baloney and tell them what they need to do to earn the help. The free ride rips everybody off, or so we keep hearing regarding other forms of welfare.

[CarmanK]

I really get mad when I think the American auto industry failed their workers, shareholders, and country. They had plenty of opportunities to produce better cars and instead went for instant gratification and short term profits. It makes me mad to think they wast ed so much time and talent to avoid increases in mpg standards and environmental savvy cars. They failed to serve their country in time of war. Their economic downturns have threatened economic security of the US citizens as w.ell as our national security. No bail out money given to companies who keep current management. Management change should be an absolute requirement for any funds And the Boards of the companies should be examined for expertise and balance. Hey, they need public funds to operate, then they need transparancy and public scrutiny of operations. This bail out money is for the workers and future workers in America. None of that money goes overseas. None of that money is to be used to pay overseas salaries.

[ceasenake]

Wait a minute! I thought gas powered cars - especially big ones, along with SUV's and Pickups - were THE PROBLEM.

Why now would the Dems want to save the very companies and products most responsible for global warming and pollution.

Oh! that's right - follow the political contribution money.

More "change we can believe in"?

[SOLERSO68]

Who do you think is going to build to alt power and high efficiency cars. Microsoft? Birkenstock?

[ceasenake]

You're counting on GM to build the car of the future?

Let's see, what are they building right NOW for 2009?

Hummer, Suburban, Yukon, Tahoe, Envoy, Sierra, Avalanche, Silverado.

Oh yeah, I want to subsidise that outfit!

[SOLERSO68]

Oh i get it your a troll lol

[solarenergy]

It would be a change to save workers' jobs rather than the fortures of politically connected CEO thieves and incompetents.

Yep, it's a change.

[ceasenake]

Ever wonder what the average auto worker costs the company?

According to the Indianapolis Star:
Base wages average about $28 an hour. GM officials say the average reaches $39.68 an hour, including base pay, cost-of-living adjustments, night-shift premiums, overtime, holiday and vacation pay. Health-care, pension and other benefits average another $33.58 an hour, GM says.

About $75 per hour, per worker. Now the taxpayers are going to subsidize workers that cost the company $156,000 (75 x 40 x 52) on average per year to build cars?

[seanosul]

Maybe if GM wants to look at a model for selling cars in the future it looks to the mobile phone market. The car comes free with a minimum 18 month gas subscription. Once you have completed your contract you can go pay as you go.

[SOLERSO68]

Whats gas gonna have to do with it?

[ThePeacemakers]

The money should go to a fund for consumer loans for cars - not given directly to the auto industry (who just want to pay dividends and outrageous bonuses to CEOs).

The auto industry needs to beef up their finance divisions for loans to do thorough checks on people's ability to pay loans based on their CURRENT income vs debt/bills ratio and checks on employment history. The govt. then DOUBLE checks this. It would be a cumbersome process to get a car loan but if it means the interest rate will be reasonable, consumers won't mind.

The only way they can beef up their business is to go AROUND the banks until they let go of the credit score scam which is a ploy to gauge the people with criminal interest rates. The current credit score system does not take into account how someone's income may have been affected by a period of job loss or an unexpected health issue.

[eveningsky]

We need to tell Congress to "just say no" to bailing out the auto industry. The US auto industry deserves to fail: an industry that deliberately developed and then destroyed the electric car. It colluded with Big Oil and the Bush administration to literally destroy a viable greener alternative to gas cars (Its collusion was revealed in the film "Who Killed the Electric Car?"). This industry is failing because of its own doomed decisions: to make cars of inferior quality, and to stop developing fuel-efficient and alternative energy vehicles.

[solarenergy]

These are good points, all true. But it's the auto workers I'm worried about. So congress should require that any money comes with the requirement that they build the cars of the future, especially plug in electrics so we can free ourselves of oil dependency.

And while we're at it, make the electricity from solar, wind and other renewables, produced in the U.S. Get shares in GM, Forda and sell them later when the recovery is achieved.

[PineyWoods]

Business aren't good at following conditions. Their economic incentive is to do what they want with the money. So you get a lot of monkey business -- look at what the banks are doing with the bailout.

Let the Big Three fail and put those workers back to work building our new green economy.

[JoeBlough]

It's time for the car industry to stop whinning and pick itself up by its boot-straps. Make a Japanese quality car at a Japanese price and our auto industry will do just fine.

[rollingdivision]

Let failing businesses fail, do not socialize the losses.

Take $50 billion from working families and give it to GM, Chrysler and Ford to protect their investors and the gold plated pay and benefits of a handful of UAW workers? Why? Auto manufacturing is doing just fine in the US, it's just these three poorly run companies in trouble.

Of course Obama is selling the working families out with his 700 billion dollar present to his billionaire investment banking buddies, so you can be sure he'll help the wealthy who own the auto companies out. And his supporters will now say socializing losses is a good thing!

[ErnestineBass]

Are you referring to the $700 Billion that Booosh and Paulson asked for?