Congress failed to pass a proposed $14 billion auto rescue plan this past week after Senate Republicans revolted. President Bush had supported the package, but his failure to get his party to go along in the Senate means a rescue depends on him.
Under normal economic conditions, the Bush administration says it would prefer that the markets determine the fate of General Motors Corp., Ford Motor Co. and Chrysler. But with the failure of a bailout package in Congress, it stands ready to prevent an imminent failure of the companies. The administration feels it has no other choice because, it says, a failure of the industry could have a severe impact on an already weakened economy.
But figuring out exactly how to pay for a rescue poses some challenges for the White House. The administration had been adamantly opposed to using money from the Troubled Asset Relief Program, or TARP — the $700 billion rescue package Congress approved in October to bail out the financial system.
But now, the White House says it's considering using it. There's just a little more than $14 billion left in the first half of the TARP money that's been released to the administration. The White House could use it to keep the car companies in business through the end of March; that was the goal of the congressional plan.
But what if there were another emergency, like the failure of another big financial institution? There'd be nothing left in the till and the Treasury Department would have to go back to Congress and ask for the second half of the TARP. But Congress has adjourned, and even if it reconvened, getting the money might be problematic since lawmakers from both parties are unhappy with how the administration has used the TARP.
Saturday, the White House said it was taking time to try to get the policy right and that no decisions had been made.