By Stephen Collinson

Democrats in Congress Monday launched a new multi-billion dollar drive to save the US auto industry, but the WhiteHouse warned against draining funds from a huge finance industry bailout.

Less than two weeks after Barack Obama's presidential election victory,Democrats and Republicans on Capitol Hill clashed in a new showdown over the reeling US economy, at the start of a "lame duck" session of Congress.

Democrats unveiled a 25 billion dollar plan to shore up the reeling car industry using funds drawn from the finance bailout, in the final congressional session of President George W. Bush's turbulent presidency.

Senate Majority leader Harry Reid hit out at Treasury Secretary Henry Paulson for refusing to adapt the huge bailout to aid the auto industry, on which millions of jobs depend.

"All it would take is one stroke of a pen and that problem would be solved," Reid said, as he opened the Senate lame duck session. "We are seeing a potential meltdown in the auto industry, with consequences that could directly impact millions of American workers and cause further devastation to our economy."

But the White House got in a preemptive strike before lawmakers reported for work saying the special rescue funds for banks were not the answer, calling on Congress to adapt an existing 25-billion-dollar auto industry loan program.

"The administration does not want US automakers to fail, and in fact we support assistance to automakers," Bush's press secretary Dana Perino said.

But "we believe this assistance should come from the program created by Congress that was specifically designed to assist the automakers "from the 25-billion-dollar Department of Energy loan program," she added. "This is the appropriate funding to use for automakers rather than seeking an additional 25 billion dollars from the TARP program", the Troubled Asset Relief Program, as the bailout is known.

"The TARP program was never intended by Congress to assist automakers or other sectors of the economy - it was solely intended to deal with what is an ongoing credit crisis in our financial sector." Despite the political posturing, it seemed unlikely the Democratic leadership would muster sufficient votes to press the bailout through the Senate.

Until Sunday, Democrats had a 51-49 vote majority in the chamber, but president-elect Obama resigned his seat on Sunday, further paring their numbers. Democratic leaders would need at least Republican 10 votes to pass the bailout in the Senate and overcome the minority's obstruction tactics with a 60-seat filibuster proof majority.

In the new Senate, which takes office in January, Democrats will have at least 57 seats and their numbers could rise further with three races from this month's congressional election still undecided. Democrats also put a new economic stimulus plan on the table on Monday, which includes infrastructure spending, rises in unemployment insurance and food aid for the poor - but prospects for the bill are also considered slim.

The House of Representatives is set to come back into session on Wednesday to debate its version of the auto bailout bill and House speaker Nancy Pelosi was set to meet Paulson and Federal Reserve chief Ben Bernanke on Monday. The Senate Banking Committee meanwhile confirmed that the chairmen and chief executives of the "Big Three" automakers, Ford, Chrysler and General Motors would come cap-in-hand to Capitol Hill on Tuesday for a hearing.

The three top executives are due to address a House panel on Wednesday. Many lawmakers have questioned whether bailing out the automaking sector would simply put off a day of reckoning for an industry which has failed to compete with foreign auto giants.

But others warn that letting the industry fail could have a devastating impact on the already crisis-ridden US economy, and cost tens of thousands of jobs.