To the Rescue: Bush to Give Low-Interest Loans to Carmakers

The UAW said it was "disappointed that he has added unfair conditions singling out workers," according to a statement from union president Ron Gettelfinger.

"These conditions were not included in the bipartisan legislation endorsed by the White House, which passed the House of Representatives and which won support from a majority of senators," Gettelfinger said.

"We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed, as we join in the coming months with all stakeholders to create a viable future for the U.S. auto industry."

Republicans aren't happy with the president's decision.

Sen. John McCain of Arizona called the plan "unacceptable," and Senate Minority Leader Mitch McConnell of Kentucky says he has "strong objections" to the plan.

Sen. Charles Grassley, R-Iowa, said the measure didn't go far enough to force reform of the car companies.

"I'm not sure the administration's plan passes my test for putting billions of taxpayer dollars at risk," he said. Grassley also warned that "this multi-billion dollar plan will likely be just a small down payment for an industry that has extremely high labor costs and very little to show in assets."

Ford Praises Loan Plan

Ford Motor Co. also reacted to the annoucement, even though the company is not part of the deal.

"All of us at Ford appreciate the prudent step the administration has taken to address the near-term liquidity issues of GM and Chrysler," said Ford president and CEO Alan Mulally. "The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened U.S. economy."

Pressure had been building for Bush to act. Chrysler temporarily shut down all of its plants earlier this week to save money, and GM delayed construction on a new plant for the same reason. And House Speaker Nancy Pelosi urged Bush on Thursday to make a decision because the nation's weakened economy could not risk a massive wave of layoffs.

Bush and other administration officials publicly worried in recent days about the need to avoid an uncontrolled bankruptcy by the two car companies, and the ethics of intervening in a free market economy. The president voiced those concerns again today.

"On the one hand, government has the responsibility not to undermine the private enterprise system," Bush said. "On the other hand, government has a responsibility to safeguard the broader health and stability of our economy.

"Addressing the challenges in the auto industry requires us to balance these two responsibilities. If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers," the president said.

Paulson told a business forum in New York Thursday night it was too risky to simply let the automakers fail.

"When you look at the size of this industry and look at all those that it touches in terms of suppliers and dealers… it would seem to be an imprudent risk to take," he said.

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