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Automakers need to make case for government aid

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[November 21, 2008]  WASHINGTON (AP) -- Detroit's embattled automakers have two weeks to show a skeptical Congress how a multibillion-dollar lifeline will help them keep the industry from imploding.

A bailout-shy Congress punted a $25 billion auto industry rescue on Thursday, as Democratic leaders said they wouldn't help the beleaguered Big Three until the companies presented them with a plan showing how the federal funding would stabilize their faltering industry.

"The executives of the auto companies have not been able to convince Congress or the American people that this government bailout will be its last," said Senate Majority Leader Harry Reid, D-Nev. He said General Motors Corp., Ford Motor Co., and Chrysler LLC will need to submit their plan to Congress by Dec. 2.

Hearings are expected and lawmakers could consider legislation during the week of Dec. 8, but only if the industry shows that taxpayers and auto workers would be protected, congressional leaders said.

U.S. automakers are struggling to stay afloat heading into 2009 amid an economic meltdown, precipitous drop in sales and a tight credit market. The three companies burned through nearly $18 billion in cash reserves during the last quarter and GM and Chrysler have said they could collapse in weeks.

Detroit's car makers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.

Congress, meanwhile, is weighing a tricky political question: Should it spend billions more on government bailouts or run the risk of bearing the blame of a U.S. auto industry meltdown?

The outgoing Bush administration criticized the congressional delay, saying lawmakers should consider a plan to let the automakers tap a separate $25 billion loan program for fuel-efficient cars for their short-term cash needs.

"Why are they going to kick the can down the road?" said Dana Perino, the White House press secretary.

Supporters of a bipartisan agreement to temporarily divert the fuel-efficiency funds to cover the auto companies' operations said they were hopeful to win support in December. "We need speed. This is a very, very important moment," said Sen. Carl Levin, D-Mich.

Reid and House Speaker Nancy Pelosi, D-Calif., said a $25 billion bailout proposal that would have tapped loan money from the $700 billion bailout plan lacked enough support in Congress -- and the auto industry didn't help matters with high-profile appearances on Capitol Hill.

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The chief executives of the Big Three urged lawmakers to sign off on the loans this week, saying the economic meltdown had staggered their industry after they had taken steps to restructure and produce more fuel-efficient cars.

But they were roundly criticized for traveling aboard corporate jets to seek billions in government aid and failing to assure lawmakers they wouldn't need more money.

"What happened here in Washington this week has not been good for the auto industry," Reid said. "These guys flying in their big corporate jets doesn't send a good message to people in Searchlight, Nev., or Las Vegas or Reno or anyplace in this country. We want them to get their act together."

Automakers quickly issued statements Thursday promising to submit the blueprint Democrats have demanded. But even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans, including a chance to share in future profits by the auto companies and limits on executives' pay packages.

[Associated Press; By KEN THOMAS]

Associated Press writers Julie Hirschfeld Davis, David Espo, Andrew Taylor and Jennifer Loven contributed to this report.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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