The leaders of Detroit's Big Three automakers — Ford, GM and Chrysler — have met with House Speaker Nancy Pelosi to ask for $25 billion in emergency loans. That figure is in addition to the $25 billion Congress approved in September.
Faced with the worst sales numbers in years, General Motors and Chrysler are seeking money to stay afloat.
"They're really in bad shape. Sales were bad when gas pieces were high, but now with the credit crunch and certainly what looks like a recession, consumer demand has really collapsed," NPR's Frank Langfitt tells Robert Siegel. "GM, right now, is burning through about $1 billion a month, and analysts say it needs a new infusion of cash or it could run out sometime next year."
Some of the auto executives have been making the rounds in Washington for weeks, asking for money from different agencies. They are now turning to Pelosi, because they are not having much luck elsewhere.
"They were looking at the $700 billion bailout money, but Treasury wasn't really receptive," Langfitt says. "At the time, GM was talking about using that money to merge with Chrysler, but it was going to cost tens of thousands of jobs, and Treasury, understandably, didn't like the idea of giving taxpayer money to pay for a merger that was going to put so many people out on the streets."
The automakers also have access to $25 billion in funds from the Energy Department, approved by Congress in the fall. That cash can only be used for research and development — not operating expenses. The companies can apply early next week for the money.
The automakers' best hope for funds from Congress is the potential lame-duck session later in the month, when there might be a fiscal stimulus bill. The House hopes that by pumping more money into the economy, a deeper recession can be avoided.
"What the auto companies are hoping for is to get money in that package for themselves," Langfitt says. "In theory, this would be the quickest way for them to get it, and they could tie it closer to the idea of a recession, which might create a little more political cover for them."
Many people, however, blame the auto companies for their own problems. U.S. automakers built high-profit sport utility vehicles, but the market for SUVs declined when gas prices spiked. Voters in Tuesday's election made clear they did not like the $700 billion financial bailout of Wall Street, so a bailout for automakers may be unpopular, too.
Despite angry opposition to a potential bailout, auto companies contend that if they go bankrupt, there will be huge job losses, not only on factory floors, but also in dealerships and parts suppliers.
It is unclear, however, whether a bailout would solve auto companies' problems. The carmakers say they need the money to get to the year 2010, when they are due to see big savings from health care cuts and new car models.
"Of course, a lot of Americans feel they have heard this before," Langfitt says. "In the meantime, we have too many workers making too many cars for people who aren't buying them. It looks like there could be a need for more layoffs."