WASHINGTON, USA - President-elect Barack Obama has supported extension of more than $25 billion(S$37.9 billion) in quick government aid for distressed U.S. automakers while Republicans forcefully questioned a bailout being crafted by Democrats.
The stakes for Washington aid rose on Thursday after Goldman Sachs suspended its rating on General Motors Corp and said the stricken automaker needs at least $22 billion. Goldman also said it would be difficult for Chrysler LLC to survive without a hand from government.
Inserting themselves squarely in the middle of the presidential transition, automakers have raised the threat of industry collapse soon after Obama takes office in January unless the bailout is given now.
Obama and his deputies have advocated help but have carefully crafted their statements, straddling a divide between congressional Democrats and the Bush administration over the matter.
Like the Bush administration, Obama wants to accelerate $25 billion in federal loans already approved for industry to retool factories and make more fuel efficient cars. Like some Democrats in Congress, he suggests government tap its existing authority to provide an unspecified amount of added liquidity, an aide said.
House Democrats, who are spearheading a rescue effort that could be considered next week, have not said whether they will change terms of the advanced technology financing to make it more useful to carmakers now.
They plan to amend the $700 billion financial services bailout law to urgently get $25 billion in fresh cash to Detroit, an idea that has drawn Republican ire.
The fate of the bailout, especially the plan moving forward under House Financial Services Chairman Barney Frank, is uncertain. House lawmakers are not formally scheduled to meet next week and Republicans on Thursday expressed greater skepticism about the rescue approach and Detroit's long-term viability even if it does get assistance.
Chief executives of GM, Chrysler and Ford Motor Co are scheduled to appear at House and Senate hearings next week to defend their bailout appeals.
"I would like to see us do something," said Sen. Christopher Dodd, the chairman of the Senate Banking Committee, which will hold one of the hearings.
Senior Republicans are open to considering changes in the technology loan terms, rather than extracting more money from the Treasury Department's bailout program.
"Spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy," House Republican leader John Boehner said in a statement.
A spokesman for Senate Republican Leader Mitch McConnell said changes may be needed to speed the technology loans, and said other ideas would be reviewed. But McConnell has not endorsed any plan for new capital.
Any opposition in the Senate during the brief post-election session weighs more heavily on chances for passage since the Democrats have the slimmest of majorities.
Senate Majority Leader Harry Reid said a bailout "cannot be done without the support of Senate Republicans." Under Senate rules, one member can hold up any measure for any reason
Democratic Sen. Charles Schumer, chairman of the Joint Economic Committee, expects some Republican support but he did not know if it would be enough to override a veto by Bush.
Explaining the White House opposition, Commerce Secretary Carlos Gutierrez on Thursday said in an interview with Reuters that a number of other industries have also knocked on the Treasury Department's door asking the agency to use its authority to help them with cash.
"Where do you draw the line?" Gutierrez asked.
(Additional reporting by Doug Palmer, Rick Cowan and Kevin Drawbaugh in Washington and Soyoung Kim in Detroit, editing by Jackie Frank)
