Democratic leaders in Congress sidetracked legislation to bail out the auto industry Thursday and demanded the Big Three develop a plan assuring the money would make them economically viable.
“Until they show us the plan, we cannot show them the money,” Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.
She and Senate Majority Leader Harry Reid, D-Nev., said Congress would return to work in early December to vote on legislation if the General Motors Corp., Ford Motor Co. and Chrysler LLC produce an acceptable plan.
The decision averted a likely defeat of legislation providing $25 billion loans for the industry. Reid and Pelosi both said there was no plan in circulation that could pass both houses of Congress and win President George W. Bush’s approval.
While the decision headed off the defeat of one bill, it did not necessarily translate into passage of a different one.
As a result, the fate of hundreds of thousands of auto workers and even of an iconic American industry hangs in the balance.
The chief executives of the Big Three automakers appealed personally to lawmakers for the loans this week, and warned that their industry might collapse without them. In testimony, they said their problem was that credit was unavailable, and not that they were manufacturing products that consumers had turned their backs on.
But whatever support they found sagged when it became known that each of them had flown into Washington aboard multi-million dollar corporate jets. Reid observed that was “difficult to explain” to taxpayers in his home town of Searchlight, Nev.
The automakers are on a tight timeline. Reid and Pelosi said their plan must be turned over to key lawmakers by Dec. 2 They said hearings were possible the first week of December, and Congress may return to session the following week to consider legislation.
Pelosi stressed that whatever the Big Three provided to Congress, it must show they had a plan for “viability and accountability,” meaning that the were transforming theoir industry in a way that it would become competitive, and that they were clear about how the federal loan money was used.
Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans. One possibility is to seek a partial ownership of the companies. Another is to limit salaries of top executives. A third is to prohibit use of the funds for any lobbying.