The US House of Representatives on Wednesday night approved a 14-billion-dollar auto bailout plan to save the country's struggling auto industry from bankruptcy.
The bill, which signifies the most extensive government intervention in the US industry in years, still needs to go to the Senate on Thursday for approval. However, some Republican Senators have voiced strong opposition, leaving the bill's passing prospects quite uncertain.
The bailout plan includes the extension of taxpayer-funded loans or lines of credit to the so-called Detroit Three, namely General Motors (GM) Corp., Ford Motor Co. and Chrysler LLC, and the appointment of a government "car czar" who will oversee the rescue package and a major auto industry restructuring aimed at innovation and commercial viability.
Among the three auto giants, GM and Chrysler, which are in urgent need of short-term government loans to evade the imminent danger of bankruptcy, are expected to receive the money within days after the bill's passage. Ford, which said it currently has sufficient cash but wants to get a line of credit in case its finances worsen, will also become eligible for federal aid.
The House approved the legislation 237-170, just hours after the Congressional Democrats and the White House reached a deal on the draft package following two days of painstaking negotiations.
According to an earlier agreement reached last week between the Bush administration and the Congress, the rescue fund will be drawn from an existing 25-billion-dollar loan program meant to help the Detroit Three retool to make more fuel-efficient vehicles.
Some analysts believe the bill will lay the groundwork for additional loans to the auto industry, which requested a total of 34 billion dollars in government help at Congressional hearings last week.
However, a deadline of March 31 will be imposed on the carmakers to complete their restructuring plan and convince the government of their survival capabilities in the long run. If they failed to do so, the government "car czar" would have the power to withdraw the federal money and virtually push the companies into bankruptcy.
House Speaker Nancy Pelosi said the legislation represented " tough love" for the American auto makers, and was "giving a chance – this one more chance – to this great industry."
"We want to throw a lifeline for success. We do not intend to afford life support," she said.
House Majority Leader Steny Hoyer said it was critical that the government bailout could proceed.
"If we do nothing, we face the real threat that sometime soon there will be no American auto industry," he noted.
The White House also called on the Republicans to endorse the bill. "We believe the legislation developed in recent days is an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs," White House spokeswoman Dana Perino said in a statement.
Compared with the House vote which only requires a simple majority, the Senate voting will be much tougher, as 60 votes will be needed to ensure the passage and the Democrats are holding the chamber only by 50-49. Analysts say the Democrats may need to get a dozen Republican Senators on board to secure the approval.
"The ball is in the Senate Republicans' court," said Jim Manley, a spokesman for Senate Majority Leader Harry Reid. "There is no word yet whether they will give us consent."
Some Republican Senators have vowed to block the deal. And Senator Mitch McConnell, the Republican leader, said Republicans will not allow taxpayers to subsidize failure.
Republican Senator Richard Shelby on CNBC voiced his dislike for the auto bailout plan, calling it very "un-Republican". He said he would prefer to see the Detroit Three file for bankruptcy.
Senator George V. Voinovich, a Republican from Ohio and a leading supporter of the emergency measure, warned that the deal doesn't have the necessary Republican votes to pass Congress.
On Wednesday, the US stock market opened higher on the positive progress for the auto bailout plan, as overnight media reports said that the White House and the Congressional Democrats already reached a "conceptual agreement" to put the plan to Congress vote.
At the close of the trading, the Dow Jones industrial average rose 70.09, or 0.81 percent, to 8,761.42, and the Standard & Poor' s 500 index rose 10.57, or 1.19 percent, to 899.24.
According to estimates by the auto companies themselves, the rescue plan could help save more than 350,000 industry jobs and employment for millions of others.
(Xinhua News Agency December 11, 2008)
