White House, Treasury say they won't let automakers fail

The White House and the Treasury gave strong indications Friday that the U.S. government, at least temporarily, would help prop up the American auto industry.

"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," Treasury spokeswoman Brookly McLaughlin said.

And White House spokeswoman Dana Perino said the administration is considering using the Wall Street rescue fund to prevent the USA's strapped carmakers from failing.

Perino, speaking aboard Air Force One as President Bush flew to Texas for a commencement speech, said it would be "irresponsible" to further erode the economy by allowing failure in Detroit.

Bush and his top aides discussed the matter Friday after the Senate Thursday night failed to compromise on a $14 billion bailout for General Motors and Chrysler, after Republicans objected to a House bill passed Wednesday with White House backing.

President-elect Barack Obama said he was disappointed by the failure of a bailout deal and hoped that the Bush administration and Congress "will still find a way" to help the struggling carmakers.

"The revival of our economy as a whole should not be a partisan issue," Obama said in a statement. "My hope is that the administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term restructuring that is absolutely required."

Obama, who takes office on Jan. 20, has said repeatedly that the U.S. auto industry cannot be allowed to collapse but must restructure to remain viable.

In Detroit, United Auto Workers President Ron Gettelfinger says he's happy that the White House appears poised to step in and rescue the auto industry, and he accused GOP senators who blocked emergency loans of trying to "pierce the heart" of organized labor.

Gettelfinger, at a news conference, said he doesn't think the union will have to negotiate wage cuts or other terms with the White House for the industry to get federal loans.

In beleagured communities affected by the industry's collapse, hope was widespread for constructive action.

"For God's sakes, I hope the president acts," Mayor Virg Bernero of Lansing, Mich., said Friday morning.

"This is not the time to be engaged in tough love against any industry," Nariman Behravesh, chief economist at economic consulting firm IHS Global Insight, said in a conference call with clients Thursday. "It will worsen the recession if the automanufacturers do have to declare bankruptcy and shut their doors."

General Motors (GM) and Chrysler have said they don't have enough money to get through the end of the year. Ford (F) has asked for no immediate money but says bankruptcy by the others could pull it down.

If all three were to go under, up to 2.6 million jobs — about 1.9% of the U.S. workforce — could be lost, estimates Moody's Economy.com chief economist Mark Zandi. That includes more than 255,000 people directly tied to the three companies and an additional 2.3 million whose jobs are indirectly dependent, from people who work in the steel, glass, fabric, tire and electronics industries.

Page
  • 1
  • |
  • 2
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...