WASHINGTON – Show us the plan and we’ll show you the money.
That’s the message the Democratic-led Congress gave Detroit’s Big Three automakers Thursday.
With that, bailout-fatigued lawmakers closed up shop for Thanksgiving, leaving the nation’s once-mighty and now foundering car companies scrambling like scolded schoolchildren to finish an overdue assignment in time to salvage their grade.
Only this time it’s their very industry – and the millions of jobs that depend on it – that’s at stake.
“We want them to get their act together. We want them to come up with something,” said Senate Majority Leader Harry Reid, D-Nev.
The deadline is Dec. 2.
That’s when General Motors Corp., Ford Motor Co. and Chrysler LLC have to give Congress a plan for rebuilding and modernizing their industry that’s convincing enough to persuade skeptical lawmakers that they should get a federal lifeline. If they do, Congress might return the following week to vote on a multimillion-dollar loan package.
Then again, it might not.
“Think of us as a venture capital firm,” suggested Sen. Chris Dodd, D-Conn., the Senate Banking Committee chairman. “And we’re asking them, ‘What are you going to do if you get this investment from us?’ ”
So far, the companies – clobbered by lackluster sales and choked credit – have painted a grim picture of what would happen if they don’t get the aid. GM has said it could go under before year’s end, and Chrysler might not be far behind. Ford has said it can survive through 2009, but it’s unclear how much longer – and if even one company were to collapse, it could cause a cascade and devastate the rest.
The demise of the rescue – at least for now – left the automakers’ fate uncertain, and sent Wall Street spiraling to its lowest level in years. The Dow Jones industrials dropped 445 points, the second straight plunge of more than 400, and hit the lowest point in nearly six years.
Democratic leaders scrapped votes on the auto rescue, postponing until next month a politically tricky decision on whether to approve yet another unpopular bailout at a time of economic peril, or risk being blamed for the implosion of an industry that employs millions and has broad reach into all aspects of the U.S. economy.
GM, Ford and Chrysler quickly issued statements promising to submit the blueprint the Democrats demanded.
For now, however, the Democrats said the aid plan lacked the support to pass Congress and be signed by Bush.
Bush and congressional Republicans had balked at Democrats’ suggestion to draw emergency auto industry loans from the $700 billion Wall Street rescue fund. Most Democrats were unwilling to go along with a separate, bipartisan effort backed by the White House to temporarily divert an existing program to help carmakers produce vehicles that burn less gasoline to cover the companies’ immediate financial needs.
Still, Democratic leaders were unwilling to close up shop for the year and appear to be turning a deaf ear to the industry. So they assigned the carmakers homework and said they might yet get their help.
“We’re saying, ‘OK, we know you must be working on this,’ ” House Speaker Nancy Pelosi, D-Calif., said. “Have it for us in the next week and a half.”
The White House criticized the delay, saying the plan to let the automakers tap the fuel-efficiency loans for their short-term cash needs should be considered.
The chief executives of the Big Three automakers appealed personally to lawmakers for the loans this week, saying their problem was the economic meltdown that has walloped their industry – not that they were manufacturing unappealing cars.
But whatever support they found sagged when it became known that each of them had flown into Washington aboard multimillion-dollar corporate jets. Reid observed that was “difficult to explain” to taxpayers in his hometown of Searchlight, Nev.
Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans. Democrats and Republicans alike want the government to get a chance to share in future profits by the auto companies, require them to limit executives’ pay packages and prohibit use of the funds for lobbying or paying shareholders dividends.