Text size:

Democrats expect fight over aid for carmakers

BY JULIANN VACHON | juliann.vachon@newsday.com

November 14, 2008

WASHINGTON - Top Democrats didn't complain when Treasury Secretary Henry Paulson shifted course on the Wall Street mega-bailout this week - but they're prepping for a fight over his resistance at using the $700-billion plan to throw American automakers a lifeline.

Democratic leaders are pushing hard to send Detroit's Big Three - General Motors, Ford and Chrysler - $25 billion in federal aid, while Paulson and many Republicans aren't sold on another rescue plan.

Sen. Charles Schumer (D-N.Y.) said yesterday he believes there is "some support on the Republican side," for a package Congress is considering bringing forward in a lame-duck session next week.

"The automobile industry is too important to just let the Big Three or any one of the Big Three go under," he said.

Even if Democrats could rally enough Republican support, Schumer said he worries President George W. Bush might veto the package - even though his successor, President-elect Barack Obama, backs it.

On Long Island, Rep. Peter King (R-Seaford) said he's leaning against an auto bailout at this point, worried that investing in the nation's Big Three would nationalize the industry and have other industries lining up for similar support.

Reps. Steve Israel (D-Huntington) and Gary Ackerman (D-Roslyn Heights) said they supported offering automakers aid as long as new regulations force companies to improve efficiency standards. "Detroit shouldn't get a blank check, but instead needs incentives to retool their fleets to be energy-efficient," Israel said.

With Washington focused on a debate over bailing out automakers, Paulson surprised lawmakers by announcing Wednesday that he was changing the focus of the original $700-billion bailout. That money will no longer go toward buying bad mortgages but will focus on investing in troubled financial institutions.

Schumer and Senate Banking chairman Chris Dodd (D-Conn.) backed Paulson's move Wednesday. But some members of Long Island's delegation wished Paulson had clued Congress into the move before making his announcement. "I think he's doing the right thing, but I think he should have notified Congress sooner," King said.

Ackerman said, "The administration seems to be flying a $700-billion plane by the seat of their pants."