The House of Representatives on Wednesday approved a $15-billion government lifeline to the teetering United States auto industry, but the legislation now faces stiff Republican opposition in the Senate.
The Auto Industry Financing and Restructuring Act passed 237 to 170 following several hours of intense debate, and hours after Congressional leaders and the White House hammered out a deal to help salvage the Big Three 9General Motors, Ford and Chrysler) car makers.
It now moves to the Senate, where it faces stiffer Republican opposition in a chamber with a razor-thin Democratic majority.
At the conclusion of floor debate, House Speaker Nancy Pelosi said the legislation would serve as “a jumpstart for an industry and our country’s economic health”.
The Bill “sets us on a new path to viability. It is a test. And we will soon see in a matter of weeks if the executive suites in Detroit are willing to make the choices” laid out in the legislation.
“We want to throw a lifeline for success. We do not intend to afford life support.”
In the most far-reaching intervention in US industry in years, the legislation calls for emergency government loans to the car companies within days to be overseen by a “car czar” appointed by outgoing President George Bush.
In return, car makers by March 31 would have to cut costs, settle debts and make other changes to show a path to economic viability or face possible bankruptcy.
The government could choose to revoke the loans if the companies fail to make progress, or could refuse further assistance after March 31 if the Big Three have no promising survival plan, officials said.
House Majority Leader Steny Hoyer said it was critical that the government bailout proceed.
“There is a great reluctance to directly assist car makers,” he said during House debate over the Bill, stressing that “the impact on the economy would be very severe” if the industry collapsed.
“If we do nothing, we face the real threat that sometime soon there will be no American auto industry,” he said.
“That will not be good for our national security. It will not be good for our economic security. It will not be good for the psychology of our country.”
But the potential bailout immediately collided with serious Republican doubts that the jumpstart is anything more than a quick fix, and that the gap the companies face can be bridged.
Republican Congressman Tom Feeney nixed the bailout as a “short-term solution” that would merely drain federal coffers and strain taxpayers.
“Micro-managing a business from Washington is the supreme act of hubris. It will never work,” he said on the House floor.
Influential House Financial Services Committee chairperson Barney Frank, one of the Bill’s architects, acknowledged the opposition in the outgoing Senate, where Democrats currently have 49 seats, plus two Independents who usually vote with the Democrats.
To overcome opposition Democrats will need at least 60 votes to pass the auto Bill.
“We’re about to see the great majority of Republicans deliver both orally and then by their votes a stunning vote of no confidence,” Frank said.
“But not in the automobile industry, but in the Bush administration,” he added, noting that the Bill was “brought forward in consultation with President Bush and his chief aides”. — AFP