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Skeptical Congress not inclined to bail out carmakers

BY JULIANN VACHON | juliann.vachon@newsday

November 20, 2008

WASHINGTON

The $25-billion bailout for the struggling Big Three automakers crashed into a wall of skepticism on Capitol Hill yesterday, with Rep. Gary Ackerman (D-Roslyn Heights) pointedly skewering the industry's executives for their political tin ears.

After hearing that the chief executives of General Motors, Ford and Chrysler flew here in their costly private jets, Ackerman questioned whether they would use the billions of dollars they are seeking to fix underlying management problems that landed them in a financial mess in the first place.

"There's a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," said Ackerman at a Financial Services Committee hearing yesterday.

"Couldn't you have downgraded to first class or something, or jet-pooled...to get here?" Ackerman asked. "It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo."

Still, Ackerman and other Long Island Democrats insist that the federal government has to throw a lifeline to the ailing industry, because its failure would hurt too many and its economic impact would spread too wide.

"The auto industry needs to know what level of federal help, if any, they are going to get now," said Rep. Tim Bishop (D-Southampton). "I don't want to be a prophet of doom, but I think it would be to our advantage to move on these issues sooner than later."

But by the end of the day, leaders in Congress signaled they would punt, scheduling no vote on the deal and leaving the automakers' fate to the White House for now.

It is very likely the bailout will have to wait until January, when Barack Obama becomes president and Congress reconvenes with a bigger Democratic majority in the House and Senate, several members of the Long Island delegation said.

Democrats support the bailout, but President George W. Bush has vowed to veto it and Republican leaders reject dipping into the $700-billion set aside for financial industries to help automakers.

Rep. Peter King (R-Seaford) said he opposes the bailout as it's designed now. He said his constituents are twice as likely to be against it as for it, he said.

Democrats are leery about handing the companies $25 billion without strings attached. "I'm not interested in giving Detroit one red cent to make bigger SUVs," said Rep. Steve Israel (D-Huntington). "I just want them to change their technologies and their management."

A supporter of the bailout, Sen. Charles Schumer (D-N.Y.), said if Congress doesn't insist that America's Big Three start changing the way they do business, they could be back on Capitol Hill looking for help "in a matter of months."

"We must be assured that whatever aid we provide is accompanied by a real plan that recognizes the direction this industry must take in order to thrive," he said yesterday.

THE LATEST

BIG THREE S.O.S.

U.S. auto executives went to Capitol Hill again yesterday, this time pleading their case for $25 billion in government aid before the House Financial Services Committee.

JET-SETTERS.

Members of New York and Long Island's congressional delegation have harsh words for the Big Three's chief executives, who arrived in big style on their private jets to ask for big money from the government.

MARKET TUMBLES. Stock prices plummeted to new five-year lows as problems stretching from Wall Street to Detroit stoked fears that the economy is sliding into a long-lasting tailspin.

TOUGH SELL.

Most Americans either are expressing opposition to the $25 billion in loans sought by GM, Chrysler and Ford or grudging support with big strings attached.

BATTERED ECONOMY.

The Federal Reserve forecast rising unemployment and "significant weakness" in the economy this year and next, adding to the economic gloom revealed in new data from the Labor Department.

Consumer prices and housing starts plunge to new all-time lows. Builders slashed construction of new homes and apartments to a seasonally adjusted annual rate of 791,000 units in October; consumer prices plunged by the largest amount in 61 years in October, helped by record price drops at the pump.

Many economists predict the Fed will lower rates again next month to help brace the sinking economy.

WHAT'S NEXT.

Senate Democrats canceled a showdown vote to help struggling automakers that was expected today. President George W. Bush has "no appetite" to act on his own to extend aid to the Big Three and Congress has at most two days left in its postelection session. Without a deal, automakers will likely have to wait until the new Congress and the Obama administration arrive in January.