White House lists new reasons for rejecting auto industry aid

McClatchy NewspapersNovember 17, 2008 

The White House Monday came out swinging against a Democratic plan to aid America's ailing auto industry, as the Senate prepared to debate a $25 billion package.

"We believe that this assistance should come from the program created by Congress that was specifically designed to assist the automakers -- from the $25 billion Department of Energy loan program," said White House spokeswoman Dana Perino in a lengthy statement.

Senate Democrats want to use a different $25 billion from the financial rescue package passed last month. The White House wants to use the same amount from a loan, passed in September, to help carmakers improve fuel efficiency.

"We should not seek ADDITIONAL funding while $25 billion sits available in a program that was designed for automakers. Congress should instead amend the Department of Energy's loan program to ease the availability of those funds and relax restrictions on their use -- as long as qualifying firms make the difficult decisions to demonstrate their viability going forward," she said in a statement.

Democrats contend the fuel efficiency money was meant to help carmakers for that purpose, not to help them survive financially.

But, Perino said, there's also a philosophical argument for not allocating $25 billion from last month's program.

"Taxpayers should not be asked to subsidize private companies that are unwilling to show that they can be viable. It is clear that U.S. automakers must restructure in order to be viable," she said.

She also made these points:

--The 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.

--Opening the program to firms outside the financial sector is a slippery slope. If automakers receive assistance from the program, other industries will follow.

--Every dollar taken from the program for other industries is one dollar less available to deal with the ongoing financial crisis. While progress has been made in improving credit markets, these markets remain fragile and are not yet functioning as efficiently as needed to have a healthy market. Diverting funds from this effort is dangerous and will limit the effectiveness of the TARP program.

The easier step for Democrats would be to wait two months until Barack Obama is inaugurated and the 111th Congress convenes with much larger party majorities. But economic indicators are growing more dismal by the day, concerns about last month's $700 billion financial rescue plan keep surfacing and automakers warn they're in desperate need of cash.

Those familiar with leadership strategy say that after all this week's speechmaking and negotiating, lawmakers will push especially hard to see that no one goes home without helping the unemployed and the auto industry.

Senate Majority Leader Harry Reid, D-Nev., who called the administration's plan "unacceptable," was unequivocal. "Senate Democrats are committed to doing all we can to help the auto industry."

Pelosi was equally adamant, urging "immediate action."

Reid said there'd be a vote in the Senate on Wednesday.

The auto and unemployment issues hit too close to home for many members, especially with Thanksgiving and Christmas just ahead. The October unemployment rate hit 6.5 percent, the worst monthly showing in 14 { years, and on Thursday, the Labor Department reported the number of jobless claims hit its highest level in eight years.

"Americans losing their jobs every day cannot wait for the next administration to take action," said House Majority Leader Steny Hoyer, D-Md. The House passed $6 billion in extra benefits in September; the Senate did not act.

Even diehard opponents of the big stimulus plans last week offered sympathy for unemployment aid.

"If another stimulus package is passed, that kind of provision is more valuable. At least it would be more helpful," said Sen. Michael Crapo, R-Idaho.

Rep. Spencer Bachus of Alabama, the top Financial Services Committee Republican, said that he has trouble explaining the package to constituents.

"That sawmill worker in my district who's making $15 an hour, he's working hard every day and he gets very dirty every day," he said, "and we're taking his money and we're paying it to a company that's paying $75 an hour?"

Such attitudes make it even more unlikely that a more ambitious stimulus plan will succeed, as Republicans try to show they're serious about curbing spending. The GOP lost an estimated 20 House and seven Senate seats earlier this month, and the most vocal survivors are the hardliners, who are poised to quickly take control of the House party leadership.

Boehner will be challenged by Rep. Dan Lungren of California, who said Friday that "it is undeniable that the American people are tired of the way Congress has conducted its business on their behalf."

Already gone will be the more accommodating Minority Whip Roy Blunt of Missouri and conference chairman Adam Putnam of Florida, who are expected to be replaced this week by Virginia's Eric Cantor and Indiana's Mike Pence. Pence, in a letter to colleagues announcing his intention to seek the conference chairmanship, pledged to "expose, dismantle and defeat the liberal Democratic agenda."

Democrats are likely to maintain much of their current team. Caucus Chairman Rahm Emanuel of Illinois will head to the Obama White House as chief of staff, and affable John Larson of Connecticut, considered a strong Pelosi ally, is in line to replace him. Rep. Xavier Bacerra of California is expected to become vice chairman.

The biggest struggle will involve chairmanship of the House Energy and Commerce Committee, where longtime gadfly Henry Waxman of California is challenging Michigan's John Dingell for stewardship of a powerful panel that is likely to consider President-elect Obama's initiatives on health care, global warming and regulatory reform.

On Monday, much of the Senate internal drama is expected to involve how Democrats deal with independent Joe Lieberman of Connecticut.

Lieberman, the party's 2000 vice presidential candidate, infuriated party members by supporting Republican John McCain for president and speaking at the GOP convention.

Now chairman of the Homeland Security and Governmental Affairs Committee, he is expected to be stripped of that post but allowed to stay in the caucus — but some Democrats are said to be opposing even allowing him to do that.

Lieberman has stayed mum about his intentions.

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