Michigan Gov. Jennifer Granholm said on CBS’ “Early Show” that one in 10 American jobs are supported by the auto industry and that if it collapsed, “”there would be a ripple effect throughout the nation.”
Granholm urged quick government action to aid the domestic auto industry, which is based in Michigan. Auto sales hit a 25-year low in October, according to the Detroit Free Press, as a result of high gas prices earlier in the year and the credit crunch.
In Congress, Democrats began plans to give the so-called Big Three — General Motors, Ford Motor Co. and Chrysler LLC — a $25 billion chunk of the $700 billion financial rescue plan, according to the AP.
The Bush Administration has resisted calls to direct part of that legislation to the auto industry, saying it was passed to aid the struggling financial sector and not industrial companies.
White House spokesman Tony Fratto said that the $700 billion will be used, “consistent with the law and congressional intent. If Congress wants to change the law, we’ll see how they intend to do it,” according to Bloomberg.
House Speaker Nancy Pelosi, D-Calif, pushed President Bush to act quickly.
“In order to prevent the failure of one or more of the major American automobile manufacturers, which would have a devastating impact on our economy, particularly on the men and women who work in that industry, Congress and the Bush administration must take immediate action,” Pelosi said in a statement.
Majority Leader Harry Reid, D-Nev., said on Tuesday that he would try to pass emergency legislation to help save millions of jobs supported by the auto industry when Congress returns for its lame-duck session.
Despite Congressional gains in the November election, emergency legislation called for by Democrats will need to pass in the lame-duck session while they hold a slim majority in the Senate and face President Bush’s veto pen.
In reaction, GM said in a statement: “We appreciate the speaker’s call for urgent action.” Ford said it would” work together with all of our nation’s leaders to continue our transformation to greater fuel efficiency and to help protect jobs,” according to the Detroit Free Press.
On Monday during his meeting with President Bush at the White House, Democratic President-elect Barack Obama urged the president to support the auto industry. If it is not wrapped into the financial rescue plan, Democrats could push for a separate auto industry bailout or include it in a future stimulus package.
General Motors stock slipped 13 percent to $2.92 per share — its lowest price in decades — on Tuesday as it continues to burn through cash reserves and moves closer to bankruptcy. Shares in other automakers including Ford and foreign companies Toyota and Honda also recorded losses, according to the New York Times.
In September, Congress approved $25 billion in loans to help the auto industry update plants and focus on more fuel-efficient vehicles.