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Obama seeks $50B in aid to automakers

COMBINED WIRE SERVICES

November 14, 2008

President-elect Barack Obama is pushing Congress to approve as much as $50 billion in automaker aid this year, a move that would require President George W. Bush's support, people familiar with the matter said.

Obama's economic advisers are convinced that if General Motors Corp. doesn't get a financial lifeline soon, it will file for bankruptcy by the end of January. And if GM and other cash-starved U.S. automakers don't get almost $50 billion, Obama will be dealing with the issue again by next summer.

Advisers such as former Federal Reserve Chairman Paul Volcker and former Treasury chief Lawrence Summers are said to be telling Obama that the cash is needed now. Obama also wants Congress to appoint a czar or board to oversee the companies, the people said.

Congressional Democrats pushed yesterday for a rescue package to pump $25 billion in emergency loans into automakers, but a top senator said the plan lacked support to pass.

Senior Democrats want to carve out part of the $700-billion Wall Street bailout for loans to the three major auto companies in exchange for a government ownership stake. They hope to push the measure through next week. "Right now, I don't think there are the votes. I don't know of a single Republican who's willing to support" the auto bailout, said Sen. Chris Dodd (D-Conn.), chairman of the Senate Banking Committee.

House Republican leader John Boehner of Ohio said he would oppose any such measure. "Spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy," Boehner said.

Meanwhile, Treasury Secretary Henry Paulson urged Congress to come up with money to rescue the automakers, saying his $700-billion plan isn't intended for manufacturers.

"The intent of the TARP was to deal with financial institutions and major systemic issues and getting lending going in capital institutions," he said of the Troubled Asset Relief Program.