The $25 billion rescue plan for the auto industry,
desperately sought by Detroit CEOs, collapsed Thursday as Congress drew the
line at one more bailout.
The demise of the rescue left uncertain the fate of
General Motors Corp., Ford Motor Co. and Chrysler LLC, and sent Wall Street
spiraling to its lowest level in years. The carmakers have been clobbered by
lackluster sales and choked credit, and are battling to stay afloat through
Failure of one or more of the Big Three would be a
severe further blow to the floundering economy -- and to many Americans' view
of the nation's industrial strength -- and throw a million or more additional
workers off the job, the Associated Press reported.
But Democratic leaders scrapped votes on the auto
rescue, postponing until next month a politically tricky decision on whether to
approve yet another unpopular bailout at a time of economic peril, or risk
being blamed for the implosion of an industry that employs millions and has
broad reach into many aspects of the U.S. economy.
"It is all about accountability and
viability," Speaker Nancy Pelosi, D-Calif., said at a hastily called news
conference in the Capitol with other House and Senate leaders. "Until they
show us the plan, we cannot show them the money."
She and Senate Majority Leader Harry Reid, D-Nev.,
called the news conference to pre-empt a White House-supported plan offered by
senators from the states with big stakes in the auto industry, including Sen.
Christopher Bond, a Missouri Republican, and Sen. Carl Levin, a Michigan
Democrat, the New York Times reported. Those senators proposed loosening
restrictions on $25 billion in loans that have already been approved, but for
fuel-efficient and cleaner technologies.
The congressional leaders said the Bond-Levin plan
could not win passage this week. Instead, they said, the House and Senate will
hold hearings the week of Dec. 2 to consider plans put forward by the industry.
For now, however, the Democrats said the aid plan
lacked the support to pass Congress and President George Bush's veto pen.
President Bush and Republicans in Congress rejected
an earlier suggestion from the Democrats to draw emergency auto industry loans
from the $700 billion Wall Street rescue fund.
GM and Ford quickly issued statements promising to
submit the blueprint the Democrats demanded.
But as GM warned it could go under before year's
end, Democratic leaders were unwilling to close up shop for the year and let the
industry fail. They called for a Big Three viability plan by Dec. 2, scheduled
hearings that week on the report, and said a vote on a bailout could come the
week of Dec. 8.
"Yes, we're kicking the can down the road,
because that will give us the opportunity to do something positive," Reid
said. "But that will only happen if they get their act together."
The White House criticized the delay, saying the
plan to let the automakers tap the fuel-efficiency loans for their short-term
cash needs should be considered.
"If there are lawmakers who want to help the
automakers, and they have a path to do so, why are they going to kick the can
down the road?" White House spokeswoman Dana Perino said.
The chief executives of the Big Three automakers
appealed personally to lawmakers for the loans this week, saying their problem
was the economic meltdown that has walloped their industry -- not that they
were manufacturing unappealing cars.
But whatever support they found sagged when it
became known that each of them had flown into Washington on pricey corporate jets. Reid
observed that was "difficult to explain" to taxpayers in his hometown
of Searchlight, Nev.
Pelosi said she had little patience left for excuses
from the carmakers on why they haven't turned their businesses around.
Beyond the auto industry, lawmakers said the public
has little appetite for anything else that smacks of a bailout, following the
backlash against the $700 billion financial rescue.
In a painful one-two punch, the auto industry also
lost its most powerful defender in Congress yesterday, as House Democrats voted
to oust Michigan Rep. John D. Dingell as chairman of the Energy and Commerce
Committee. He will be replaced by Rep. Henry A. Waxman, D-Calif., a liberal
environmentalist unlikely to have much patience with industry complaints about the
high costs of auto emission standards.
A day after the industry bailout talks stalled, GM
told employees it will extend its holiday shutdown or make other production
cuts at up to 10 factories as it deals with a continued U.S. auto sales slump and fights to
Dave Green, president of a United Auto Workers local
in Lordstown, Ohio, told the AP that workers were told
Friday morning that the normal holiday shutdown will be extended until Jan. 20
at the sprawling factory complex, which stamps parts for and assembles the
Chevrolet Cobalt and Pontiac G5 small cars.
After Jan. 20, the Lordstown complex is expected to keep
operating, but assembly line speed will be reduced from the current 62 vehicles
per hour to 46.5 vehicles.
Details of the other cuts were not available and GM
spokesman Chris Lee would not comment on the announcements.