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Obama: Ailing automakers need government aid urgently

COMBINED WIRE SERVICES

November 12, 2008

Barack Obama's meeting with President George W. Bush fueled debate in Washington over whether the government should help the ailing U.S. automobile industry.

Obama, speaking with Bush at Monday's White House meeting, talked about the urgency for aid to U.S. automakers such as General Motors Corp. and Ford Motor Co. and the need for a second economic stimulus package to help financially strapped workers, according to aides to the president-elect.

House Speaker Nancy Pelosi called yesterday for congressional action, saying failure by one or more of the big U.S. automakers would have a "devastating impact" on the U.S. economy. Assistance must be conditioned on "rigorous independent oversight" of carmakers and restrictions on executive compensation, she said.

Obama has called for Congress to approve legislation this month mandating the economic relief. He has said if lawmakers fail to do so, a stimulus bill will be his top priority when he takes office Jan. 20.

"The longer we wait, the harder it is to recover," Eugene Ludwig, a former U.S. comptroller of the currency and an Obama campaign adviser said yesterday in an interview. "It's sort of like giving a heart-attack patient a direct shot of adrenaline. We need it and the sooner the better."

Figuring out how to keep the U.S. auto industry afloat if action isn't taken before the end of the year is one of the more pressing economic issues Obama will face.

General Motors Corp., the biggest U.S. automaker, reported a $4.2 billion third-quarter operating loss last week and warned it may run short of operating cash by the end of June. Ford Motor Co. reported a $2.98 billion loss for the quarter.

Pelosi and Senate Majority Leader Harry Reid and members of Michigan's congressional delegation want Treasury Secretary Henry Paulson to use part of the $700 billion financial rescue passed last month to aid automakers.

White House spokeswoman Dana Perino said additional congressional authorization would be needed to help the industry.

"We have gone as far as we can under the authority Congress has given us," Perino said.

Both the Bush and Obama camps dismissed a report in The New York Times that said the president had suggested in Monday's meeting that he might support auto-industry help and the broader economic-stimulus package if Obama and congressional Democrats dropped their opposition to a free-trade agreement with Colombia.

Obama is expected to remain in Chicago, and aides say he doesn't plan to meet with world leaders in the United States this weekend for a summit on the global economic crisis.