WASHINGTON The House of Representatives last night approved an emergency plan to prevent the collapse of the nation s domestic auto industry.
But the measure faces serious opposition in the Senate, where many Republicans oppose a White House-brokered deal to speed $14 billion to cash-starved General Motors and Chrysler.
After battling through the weekend to reach a compromise with congressional Democrats, the White House yesterday dispatched Chief of Staff Joshua Bolten to sell the plan to restive Republican senators.
But many GOP lawmakers emerged from talks with Mr. Bolten unconvinced the plan would compel Detroit automakers to make the changes necessary to restore them to profitability.
After mostly partisan debate, the House voted 237-170 to approve the measure.
But with Sen. Richard Shelby (R., Ala.) and other conservatives threatening to block consideration of the measure, even some Republican advocates of the bailout said it is unlikely to attract sufficient GOP support to win approval in the Senate.
I don t think the votes are there on our side of the aisle, said Sen. George Voinovich (R., Ohio), a stalwart champion of the auto industry. Some effort needs to be made to respond to the concerns of my colleagues.
At the heart of the conflict is a debate over how to best help the car companies not only survive the recession but rid themselves of a legacy of debt, high production costs, and plush worker benefits that have left them unable to compete with their more nimble foreign competitors.
GM, Chrysler, and Ford already have moved to streamline costs; along with the UAW, they have offered to make additional concessions. But many Republicans think the automakers problems could be more efficiently resolved by a bankruptcy court with legal power to dissolve existing contracts than by a government car czar whose actions could be swayed by Washington politics.
If we don t have the forced restructuring plans in place, many of us don t believe that American car companies will come out of this in a competitive position and the taxpayers money will be wasted, Sen. John Ensign (R., Nev.) said.
Mr. Ensign fears a car czar would not have the expertise to deal with the auto companies.
When GM, Ford, Chrysler, their management teams have not been able to run their companies, obviously, very well, he said, how does anybody expect some car czar or some politician to be able to make the decisions that are right from a business standpoint?
Democrats have resisted forced restructuring, arguing that, under the Bush Administration it could amount to open season on the UAW. They also sympathize with the automakers argument that bankruptcy proceedings would scare off potential buyers.
People buying cars want to know that they ll continue to have a relationship with an entity that can service the cars, House Financial Services Committee Chairman Barney Frank (D., Mass.), the chief House negotiator on the package, said during House debate.
Mr. Frank added: The greatest illogic is to argue that somehow in the bankruptcy courts ... you have a far greater degree of expertise than either Mr. Bush or President-elect Barack Obama, with their teams of economists, could muster.
Congressman Marcy Kaptur (D., Toledo) voted for the plan.
Hundreds of thousands of jobs hang in the balance, Miss Kaptur said. Moreover, no industrial power has ever survived without a thriving domestic auto industry. Its capabilities directly undergird our nation s defense industrial base.
Congressman Bob Latta (R., Bowling Green) voted against it, saying the legislation left important questions unanswered that put the American taxpayer at serious risk.
He objected to Congress putting one person in charge of such an important segment of the economy. Mr. Latta also objected to the legislation being fast-tracked through normal procedings, bypassing hearings and extensive debate. Members had less than ten hours to review the bill before voting.
White House deputy chief of staff Joel Kaplan defended the measure, saying, We think we ve come up with the right solution. Mr. Kaplan said President Bush would personally lobby senators in the coming days.
Many Republicans and Democrats agree that a disorderly bankruptcy could be fatal to U.S. automakers and have devastating impacts on jobs, families, and our economy, White House Press Secretary Dana Perino said.
GM issued a statement thanking the House for its support.
We encourage the Senate to act soon so that we can continue at full speed on the restructuring and advanced technologies plans that will form a stronger, more viable GM.
The measure would speed up to $14 billion in emergency loans to the Detroit automakers, enough to keep GM and Chrysler in business through the end of March. Ford has requested access to a federal line of credit but has said it does not expect to need money immediately.
In exchange for the cash, the automakers would be required to give the government warrants for stock worth 20 percent of the value of the loans.
Mr. Bush would have to appoint the czar within days.
Mr. Kaplan said administration officials have been in talks with Mr. Obama about that appointment, raising the possibility a compromise candidate might be named.