Auto crisis: ‘Hey, it’s not our fault’

Not surprisingly, neither the outgoing Bush administration, President-elect Barack Obama nor the Democratic leaders of Congress wants to be blamed for the loss of a once-proud domestic auto industry and the disappearance of hundreds of thousands of jobs.

But that’s not the same thing as a three-way agreement on legislation to save General Motors Corp., Ford Motor Co., and Chrysler LLC, an accord that presumably could clear the House and Senate with relative ease and be signed into law.

Instead, maneuvering in a sort of political twilight zone, two administrations and the Democratic leaders of Congress all give rhetorical support to the survival of the industry while trying to reassure recession-weary taxpayers there will be no blank check from the federal treasury.

"Nothing concentrates the mind like a death sentence," Sen. Christopher Dodd, D-Conn., said Thursday at the end of a daylong Senate Banking Committee hearing. "And we’re looking at a death sentence here if we don’t respond intelligently and prudently."

In the ways of Washington, there are several competing options afloat, each with its own set of supporters.

The White House likes one; Speaker Nancy Pelosi, D-Calif., another. Some Republicans prefer bankruptcy — let the marketplace decide. There’s also a prepackaged bankruptcy option, drawing interest among some Democrats despite opposition from the United Autoworkers Union. Its intent is to permit all three companies to survive.

Detroit’s Big Three, nominally seeking $34 billion in aid, say they would accept a government-run restructuring.

Then there is the hope-the-Federal Reserve-steps-in option, the one that allows the politicians to avoid compromise.

As for the CEOs of the Big Three, they are now on a bizarre sort of government no-fly list, for fear that boarding their corporate jets would invite more ridicule for their role in presiding over the collapse of an entire industry. This time, they drove to the Capitol from Detroit, bearing blueprints for using bailout billions to remake their industry economically viable.

The early reaction was underwhelming.

At the White House, spokeswoman Dana Perino said it’s "too early to say" whether their assessment was correct.

Obama, pointing out that there is only one president at a time, said earlier in the week that the Big Three had "a more serious set of plans" than they did the last time their chiefs testified in front of Congress.

That drew a double-barreled barb from Rep. Barney Frank, D-Mass. chairman of the House Financial Services Committee.

"He’s going to have to be more assertive than he’s been," Frank said of the president-elect. "At a time of great crisis with mortgage foreclosures and autos, he says we only have one president at a time. I’m afraid that overstates the number of presidents we have. He’s got to remedy that situation."

The leading Democrats in Congress, Pelosi and Senate Majority Leader Harry Reid put it this way several days ago in a letter to the Detroit carmakers. "The auto companies’ shareholders, business partners and prospective benefactors — the American people — deserve to see a plan that is accountable to taxpayers and that is viable for the long-term."

The new plans in hand, Sen. Bob Bennett, R-Utah, observed: "to come up with the answer to those complicated questions (in) 72 hours, is something that Congress is frankly not equipped to do."

Whatever the financial and economic issues, the political knot is a complicated one.

The administration says federal law does not permit the use of any of the $700 billion financial bailout fund to help the auto industry. Instead, aides say President George W. Bush would sign legislation that makes use of $25 billion originally slotted for loans to help the carmakers retool their factories to make environmentally friendlier products.

Pelosi and Reid counter that the Treasury has clear authority to tap the bailout funds if the president chose.

Additionally, Pelosi, allied with environmentalists, opposes the use of the money the administration favors, saying it is already spoken for.

Reid agrees that the administration can and should tap the bailout money, and seems more amenable than the speaker to making use of the funds that Bush has proposed tapping.

Senate Republicans currently control 49 seats and generally support Bush’s point of view, it also appears at present to be the only way for a bailout to pass.

Republicans and Democrats alike, speaking on condition of anonymity, agree that in refusing thus far to compromise, all sides are betting that General Motors and Chrysler, in particular, will survive into the new year.

On Jan. 20, the Bush administration will pass into history, and Democrats will have larger majorities in both houses of Congress than is now the case — and complete responsibility for the fate of auto industry legislation.

Especially, consider Reid’s perspective.

Nearly half of the $700 billion bailout fund has been committed, and helping Detroit almost certainly would require tapping into the second half of the fund — a step that requires a vote in Congress.

Inconveniently, perhaps, Reid will be looking out at five new Democratic senators who opposed the bailout when it cleared Congress last fall.


David Espo is AP’s chief congressional correspondent.