Washington
14 December 2008
With two of America's major automobile companies reportedly weeks away from financial collapse, there continues to be little agreement in Washington on how to craft a government rescue package that would stave off bankruptcy. The White House is weighing options days after the Senate defeated a plan to provide emergency aid to carmakers.
In concept, everyone agrees on the basic idea behind federal assistance to the troubled U.S. auto industry. The carmakers, their unions, the Bush administration and leaders of both parties in Congress have endorsed the idea of a government bridge loan in return for significant steps to restructure automobile companies and make them more competitive. It is in the details that potential deals have fallen apart. Just what steps will be taken to put carmakers on a path to financial viability, the sacrifices that will be required of autoworkers and how federal funding will be provided have all proved highly divisive.
Senate Republicans have demanded the largest concessions from the auto industry, labor unions and creditors. Senator Bob Corker of Tennessee says he and other Republicans voted against last week's bill after the United Autoworkers union rejected far-reaching wage and benefits concessions as a condition for the bridge loan. Speaking on the CBS program Face The Nation, Corker rejected any suggestion that Republicans are being obstructionist.
"This has not been about blocking [legislation]. This has been about trying to find a solution that works and really causes these companies to be in a position to go forward in a healthy fashion. But, without all of these shared sacrifices, that will not happen," said Corker.
Corker added that union officials had little incentive to agree to a new round of concessions, since the White House had already signaled its willingness to provide aid to carmakers, and the Bush administration could bypass Congress and tap the existing $700 billion financial rescue package for the funds.
For weeks, the White House expressed reluctance to dip into the rescue package, which Congress approved in October to bail out U.S. financial institutions. But the White House said it was reconsidering the idea after last week's Senate defeat of the automobile aid program, which would have provided $14 billion in bridge loans, while establishing a so-called "car czar" to help guide the industry to profitability.
White House officials say they are reviewing financial data on the automakers, while considering possible courses of action.
For its part, the main autoworkers union has already offered some concessions, but it is not clear whether those would be sufficient to allow car companies to become profitable in the long term.
All three major U.S. carmakers are headquartered in the state of Michigan, where representatives say time is running out to save the industry, which they describe as the backbone of America's diminishing manufacturing sector.
Democratic Senator Carl Levin of Michigan also spoke on Face The Nation.
"No other country that produces automobiles is allowing its industry to collapse. They all have the same problem. They are all providing loans to those industries," said Levin. "This is not unique to the United States."
In Britain, meanwhile, labor officials are quoted as urging the government to inject cash into the country's automobile industry to ensure it survives the current global economic slump.