Economic Wrap: No Rescue Package For Automakers
JACKI LYDEN, host:
From NPR News, this is All Things Considered. I'm Jacki Lyden. The American car industry is still mired in a rut today. Congress left town last night after failing to agree on a rescue package. And that leaves the Bush administration stuck with the problem and considering other ways to get General Motors, Chrysler, and Ford back on solid ground.
NPR's John Ydstie joins us now to talk about what the options the administration has are. John, first of all, let's focus on what happened in Congress. The White House and Democrats had agreed on a $14 billion rescue package. It passed the House, but it was blocked in the Senate by Republicans. A little more explanation from you, please.
JOHN YDSTIE: Yeah. Well, the White House just couldn't keep Senate Republicans onboard. Many of them continue to feel the best thing for the companies would be to go into bankruptcy and get reorganized. So, Senate Republicans tried to negotiate a deal different from the House deal.
Ultimately, that effort failed. Republicans tried to blame the UAW for the breakdown. Democrats said some Republicans just wanted to blow up the whole rescue deal. If that was their intent, they succeeded.
LYDEN: Is the White House to the rescue?
YDSTIE: The White House has made it clear it would prefer that the auto companies' fate be determined by the market. But the White House said yesterday that, given the weak economy, it would be irresponsible to let them fail now.
And remember, GM and Chrysler say they both need help by the end of the month, or they'll collapse. And we all know a collapse could lead to massive job losses at the companies and their suppliers. I don't think George Bush wants the final chapter of his biography to be titled, the end of the U.S. auto industry - millions lost their jobs.
LYDEN: Not a movie anybody would see in the adaptation.
LYDEN: So what's the White House going to do? Will it dip into the $700 billion rescue package that was designed to prop up financial companies back in the distant days of October?
YDSTIE: Yeah. Well, I think that's the most likely source. But the White House said today no decisions had been made. A spokesman said they're focused on getting the policy right. So far, the White House hasn't said whether that means the terms will be the same as the Congressional bill or whether they'll even provide the full $14 billion that was supposed to keep the companies going through the end of March.
LYDEN: So if the Bush administration provides less than 14 billion, it leaves a real problem for the next Congress and the next president.
YDSTIE: Yeah. And that's something to look forward to, isn't it, if you're a new lawmaker? But, you know, coming up with $14 billion could be dicey for the administration. That's about all that's left in the first half of the financial rescue package, the TARP. To get the second 350 billion, they need to go back to Congress.
As you said earlier, Congress is adjourned. And even if they were called back into session, lawmakers from both parties aren't very happy with the way the TARP money has been used. So whether they'd approve more is a good question. The situation really leaves the administration with very little money for an auto bailout, not to mention some other financial emergency.
LYDEN: Well, we appreciate you coming in. Thanks very much, John.
YDSTIE: You're very welcome, Jacki.
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