>> ASIAONE / MOTORING / NEWS / STORY
Fri, Nov 21, 2008
AFP
US Senate Republicans reluctant to bail out auto sector

WASHINGTON - US Senate Republicans on Tuesday expressed reluctance to authorize a new round of 25 billion dollars (S$38.3 billion) for the troubled US auto sector as carmakers pleaded for emergency aid.

Republicans told reporters about their reservations as the heads of the big three carmakers took their appeal to the Senate Banking, Housing and Urban Affairs Committee.

Carmakers say millions of jobs are threatened as the industry's crippling losses are exacerbated by the economic crisis.

Republican Senator John Thune of the midwestern state of South Dakota said he was doubtful that "pouring a whole lot of new money is something that is going to find support on our side."

The 700-billion-dollar financial bailout passed earlier this year includes a 25-billion-dollar loan program to help carmakers develop more fuel efficient models, but the auto industry says it needs more help to avoid bankruptcy and sweeping job losses.

The chairmen and CEOs of General Motors, Ford and Chrysler are to testify this week before committees in both the Senate and House of Representatives in a long-shot bid to get more government aid.

"I'm worried about us providing a bailout for one industry and the next industry will show up," said Republican Senator John Cornyn of Texas.

At the White House, spokeswoman Dana Perino said the administration of President George W. Bush is opposed to writing a blank check for the auto industry.

"We just don't think that we should provide the 25 billion that was already on the table plus an additional 25 billion unless companies can show us that they have a long-term path for viability," she told reporters.

Treasury Secretary Henry Paulson has also expressed his opposition to the package, telling lawmakers that the US financial bailout program "is not a panacea for all our economic difficulties."

In an interview with CNBC television, the senior Republican on the Senate Banking Committee, Richard Shelby, said the auto sector's woes could not be fixed by another government cash injection. "These companies, General Motors, basically Ford and Chrysler, they're failed models. They have hemorrhaged billions and billions and billions of dollars in the last five years," Shelby said.

"And besides the government, the taxpayers are choosing which businesses will survive even temporarily and which ones will fail. That's against everything that we're taught in economics."

House Majority leader Steny Hoyer, a Democrat, said he remained hopeful that the Senate would "come to an agreement."

"Our country needs a loyal opposition to work constructively on legislation, to challenge Democratic arguments and hold us to account," Hoyer told reporters.

Democrats already hold a majority in the House of Representatives and Senate, and Democrats made more gains in both after November's election.

The "lame-duck" session of Congress which convenes this week is likely to be the last legislative session of the year before the new House and Senate begin work in 2009.

 

 
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