Dec. 5, 2008 -- After two days of congressional hearings on a proposal to rescue the ailing auto industry, lawmakers today said something must be done but did not yet have a clear strategy for action.
Senators will return to Capitol Hill on Monday afternoon to consider an auto bailout, though it remains unclear what will be in the bill. The House will reconvene Tuesday.
Disheartening data on job losses from the Labor Department added urgency to the situation as automotive industry leaders ventured to the other side of Capitol Hill today, appearing before a House panel to ask for a massive loan to revive their companies.
The same players made their case to a Senate panel Thursday, where they hashed out the details of a proposed $34 billion aid package for the auto industry.
"There's still a lot of disagreement about how to do this, but there is much less disagreement on whether or not to do it," said Rep. Barney Frank, D-Mass., chairman of the House Committee on Financial Services. "I think that was probably affected by the awful jobs numbers we got this morning."
"We're not at a point of agreement, but with very few exceptions, today members were saying, 'Yes, we should do something," Frank added. "We should not allow the collapse of these companies. Now we're going to have some conversations to see if we can get agreement on how to do it."
But the battle for the money is also taking place off Capitol Hill. On Thursday night, Democrats demanded that the Bush administration take action instead of Congress.
They're asking that some of the $700 billion signed into law this fall to bolster the financial services industry be allocated to the auto companies.
Lawmakers said they wanted an answer by today.
"We look forward to hearing from you on an expedited basis, since we will be notifying colleagues tomorrow of next week's session," Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi wrote in their letter.
Still, Friday morning, President Bush put the onus on Congress.
"It is important that Congress act next week on this plan," Bush said. "And it's important to make sure that taxpayers' money be paid back if any is given to the companies."
"I am concerned about the viability of the automobile companies," Bush also stated. "And likewise, I am concerned about taxpayer money being provided to those companies that may not survive."
Thursday evening White House deputy spokesman Tony Fratto explained further why the White House would resist calls to use the money from the Troubled Asset Relief Program, or TARP, to bail out the automakers.
"We have said we want to help the auto industry if it can show a viability plan that passes the test to get taxpayer money," Fratto said. "The TARP was not intended for that purpose. The Energy Department program at least was designed to help the auto industry -- and it could get bipartisan support if the Democrats would just lift a finger to try it. Instead, they can't get congressional support for their idea to use the TARP money, so they want us to do it instead."
"It now goes to the actual stability of the financial sector itself," Michigan Sen. Carl Levin, D-Mich., said Thursday after the Senate hearing, imploring the Bush administration to use TARP funds for the auto industry. "The banks and financial sector would be threatened if the Big Three go under."
"The administration understands the importance of this problem and has the tools at its disposal," he said.
New Job Loss Numbers Add Urgency to Hearings
Today's hearing came at the same time that General Motors announced it would lay off 2,000 additional workers in the new year. New numbers today from the Labor Department revealed 533,000 job losses in November.
"If I were to characterize this jobs report I would say it's very dismal," Bureau of Labor Statistics commissioner Keith Hall said today.
November was the worst monthly report for job losses since December 1974 and the sixth worst month since 1929, when record keeping first started.
"Context is especially important this morning," Frank said. "A failure to some extent of three of our major domestic manufacturing entities would be a very serious problem in any case. In the midst of the worst economic situation since the Great Depression, it would be an unmitigated disaster."
On Thursday, James Fleming, president of the Connecticut Automotive Retailers Association, told senators that failures at the Big Three automakers would be devastating for small businesses because it's exceedingly difficult for a dealer to get people financed for cars when banks are hesitant to give them money.
"To our people, to these small-business people, it is a tsunami, it is not a ripple," Fleming said.
GM CEO Rick Wagoner told lawmakers this week that GM will go bankrupt and have to be liquidated without an infusion of $4 billion in taxpayer loans before the end of the year. Chrysler CEO Bob Nardelli said his company is requesting a $7 billion loan, and Ford CEO Alan Mulally told senators that his company wants access to $9 billion in bridge financing.
Mulally said that while his company can make it through the current financial crisis, failure of the other two U.S. automakers will put parts suppliers out of business. And when Ford can no longer buy parts from suppliers it shares with other automakers, it, too, will be in trouble.
On Friday afternoon, Texas Democrat Al Green said auto industry leaders are willing to go to great lengths to work out a solution.
"I suspect that if we had said would you be willing to roll over and play dead, somebody would have literally rolled over and played dead," Green said.
"I think they're willing to make whatever concessions we can concoct," Green continued. "And we ought to have strings attached. We ought to do everything that we can to make sure that the American taxpayer is protected. But the truth of the matter is we must act."
Will Congress Take Action?
If the executive branch decided against using money from the TARP fund for the auto industry, an auto bailout could take shape in several other ways.
Congress could decide to take action and pass a bailout bill before the end of the year. The leading bailout proposal in the Senate would use $25 billion in loans that Congress has already approved for the development of fuel-efficient vehicles.
Even if the Senate had the votes to pass that measure, which is still unclear, it could run into trouble if and when it was subsequently considered by the House. Pelosi has said she is opposed to using that money for anything but fuel-efficient, environmentally- friendly technology.
Congress could also help craft a pre-arranged bankruptcy package that would reorganize the companies without taxpayer funding, although many wonder if such a package could be crafted in time before one of the companies would have to be liquidated.
"Bankruptcy is not a viable option because it will seal the death of the auto companies," Sen. Charles Schumer, D-N.Y., said Thursday. "No one is going to buy a car from a bankrupt company. No one is [going] to make a loan to someone buying a car for a bankrupt company."
If the administration will not allocate TARP money, Levin said Congress would proceed with legislation next week but said he wasn't sure whether lawmakers had enough votes to pass a measure.
"We don't know," he said. "We just simply do not know. And we won't be able to know that for sure, I believe, until we're forced to walk down that road, which is complicated and cumbersome."
Meantime, economist Mark Zandi of Moody's Economy.com told the Senate Banking Committee that while bankruptcy will be more expensive than bailing out the car companies, he does not believe $34 billion will be the final price tag.
He said that "$34 billion and a plan may not be enough for them to become viable again and Congress should prepare for this eventuality." Zandi predicted that by next fall automakers would be back asking for more loans. The final tab: $75 billion to $125 billion.
A recent CNN poll found that about 60 percent of Americans oppose a bailout for the automakers.
ABC News' Rachel Martin and Dean Norland contributed to this report.