Auto Bailout Clears House But Faces Hurdles In Senate

The U.S. House last night approved (237-170) an emergency plan for nation's automobile industry. However, the measure faces serious opposition in the U.S. Senate, where Republicans are revolting against a White House-brokered deal to speed $14 billion to cash-starved General Motors and Chrysler.

"I don't think the votes are there on our side of the aisle," said Sen. George V. Voinovich (R-Ohio), a stalwart champion of the auto industry. "Some effort needs to be made to respond the concerns of my colleagues."

In a floor speech today, Senate Majority Leader Harry M. Reid (D-Nev.) invited Republicans who oppose the plan to "offer an alternative," which he said would be put to a vote, rather than bring proceedings to a halt with a filibuster. He suggested that voting could begin on the bills tomorrow.

Sen. Bob Corker (R-Tenn.) outlined what he said was a simpler alternative to the White House-brokered bill, which he called "a very poor product." He proposed giving General Motors and Chrysler the loans in return for three covenants, the first of which would require the companies by March 15 to either reduce their debt by two-thirds or file for bankruptcy. The other two covenants would require concessions from the United Auto Workers union and the companies' bondholders. Rep. Corker said he hoped the Senate could hold votes "in the next few days."

At the White House, press secretary Dana Perino said President George W. Bush and other administration officials would try hard today to persuade skeptical Senators to support the plan passed by the House.

Booker Rising response: The auto industry should get no bailout. Any "changes" from the House bill ignores the key issue: this bill rewards corporations, at taxpayer expense, for their bad business decisions because of their political pull. This legislation incentivizes mediocrity, thus preventing reform. As we've seen for decades, bailouts beget more bailouts and delay sound economic fundamentals and innovations that would make the industry competitive.