Obama stays out of car wars on the Hill

By David R. Sands (Contact) | Thursday, November 20, 2008

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President-elect Barack Obama is staying out of the congressional fight over bailing out the U.S. auto industry, despite his previous statements urging help for Detroit's struggling Big Three, a leading Senate Democrat said Wednesday.

"I can tell you flat out there will be no endorsement [by Mr. Obama] prior to January 20," said Senate Banking Committee Chariman Christopher J. Dodd of Connecticut a day after his committee heard a combined appeal for billions of dollars in taxpayer help from the heads of General Motors Corp., Ford Motor Co, and Chrysler LLC.

Leading Democrats want to tap the recently approved $700 billion Wall Street bailout fund for a $25 billion "bridge loan" to help the beleaguered carmakers. But Republicans and even some Democrats have expressed opposition to the idea, and say the car companies should use a $25 billion Department of Energy loan program that Congress has already approved.

The White House and Treasury Secretary Henry M. Paulson Jr. adamantly have resisted calls to use the Wall Street bailout funds to help the U.S. auto industry. They say the money is needed to deal with the global credit crunch and to bolster the still-shaky banking sector.

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The GM, Ford and Chrysler executives were making their pitch again before the House Financial Services Committee, amid growing signs that Congress will not approve an ambitious rescue bill for the industry before the lame-duck session adjourns in the next few days.

But the companies' case was hurt when all three executives - Rick Wagoner of General Motors, Robert Nardelli of Chrysler and Alan Mulally of Ford - acknowledged during the hearing that they had flown to Washington in private jets for their lobbying mission.

Mr. Dodd said a number of senators were proving reluctant to support an emergency package for Detroit, with questions still to be addressed about how the deal would be structured, what conditions would be attached to the funds and whether a restructuring through the bankruptcy courts would be a better way to go.

Senate Majority Leader Harry Reid, Nevada Democrat, appeared to signal that he lacked the votes to force through new auto industry aid in the coming days.

"If we can't do it here legislatively, I would hope that the [Bush administration] would listen loud and clear because they could take this in their own hands and do what I think is appropriate," he said in a statement on the Senate floor.

Senate Minority Leader Mitch McConnell, Kentucky Republican, said the White House-backed plan for a modified Energy Department loan to the car companies was "the only proposal being considered" that has any chance of passing the Senate.

Sen. John Thune, South Dakota Republican, said in an interview there was "not much appetite" among Senate Republicans to support a major bailout of the auto industry.

"It doesn't look like things are coming together," Mr. Thune said.

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