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Congress Set to Debate U.S. Auto Industry Bailout

General Motors, Ford and Chrysler are seeking an infusion of $25 billion, a figure embraced by several Senate Democrats. The Bush administration has said that it supports help for the struggling automakers, but not at the expense of the $700 billion rescue program.

Senate Democrats plan to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits. A vote is expected as early as Wednesday.

White House press secretary Dana Perino issued a statement Monday saying the administration “does not want U.S. automakers to fail,” and added that reporting on the White House’s statements on this issue has involved “attempts to shorthand the administration’s position,” according to the Associated Press.

The Bush administration opposes using the bailout plan to help Detroit, Perino said. Instead, she said, the $25 billion should come from a Department of Energy program previously approved to develop fuel-efficient vehicles.

“The auto industry is an important part of our manufacturing base, and we want the industry to succeed and compete in the global economy,” Perino said. “We believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers — from the $25 billion Department of Energy loan program.”

Perino said the $700 billion rescue program “was never intended by Congress to assist automakers or other sectors of the economy. It was solely intended to deal with what is an ongoing credit crisis in our financial sector.”

On Sunday, top Republican senators said using any of the Wall Street bailout money to help carmakers would be a mistake, reported the AP. Alabama Sen. Richard Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee, called the U.S. auto industry a “dinosaur” whose demise would simply be stalled by a bailout.

“I don’t believe the $25 billion they’re talking about will make them survive,” said Shelby on NBC’s Meet the Press. “It’s just postponing the inevitable.”

Passage of the Democrats’ plan to bailout the auto industry is not certain in the Senate, where the majority Democrats will need at least a dozen Republican votes to prevent opponents from blocking the measure.

House Financial Services Committee Chairman Barney Frank of Massachusetts said this weekend he plans to continue pushing the $25 billion measure forward.

The measure “may not happen,” Frank said on CBS’s “Face the Nation” Sunday. Still, “the question is, how much pain do you inflict on an already very weakened economy by blithely saying, well, let them have Chapter 11,” he said, according to Bloomberg News.

The automaker legislation will also call for the creation of a government oversight board that “could veto ventures,” Frank said.

President-elect Barack Obama said on CBS’s “60 Minutes” on Sunday that he believes aid for the auto industry is needed but that it should be provided as part of a long-term plan.

“[M]y 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 labor, management, suppliers, lenders, all of the stakeholders coming together with a plan,” President-elect Obama said.

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