House Passes Auto Rescue Plan

 

Senators Richard C. Shelby, left, David Vitter, and Jim DeMint, right, joined other Republican senators who object to a proposed government rescue of the American automobile industry at a news conference on Wednesday.

 

WASHINGTON — The House voted 237 to 170 Wednesday night in favor of a $15 billion rescue for the automobile industry, but the fate of the measure was uncertain because of shaky support among Republicans in the Senate.

The House approval of the Democratic-backed program was not a surprise, given the Democrats’ 236-to-198 advantage in the chamber. The bigger test will come in the Senate, where the Democrats’ edge is only 50 to 49 and where 60 votes are needed to advance the legislation because of procedural rules.

Debate in the House focused on the whether the bailout was good for the country or simply a waste of money. While supporters of the bill emphasized the economic fallout if the carmakers failed, critics said there were no guarantees that the companies could restructure without bankruptcy.

“Invest in America,” Representative John D. Dingell, Democrat of Michigan, urged his colleagues during the debate. Saying the bill represented salvation for the country, Mr. Dingell said its rejection would be a calamity.

Also speaking in support was Representative Joe Barton, Republican of Texas. “It would be an absolute shame to force those companies into bankruptcy,” he said. “If we can give the A.I.G.’s and the Wells Fargos and the JPMorgans of the world — each of those individual companies — between $40 and $45 billion,” then certainly the carmakers deserve a $15 billion bridge loan.

But Representative Tom Feeney, Republican of Florida, said the bailout would only prop up carmakers using “failed and antiquated” structures.

And Representative Jeb Hensarling, Republican of Texas, questioned why lawmakers were aiding the carmakers while ignoring many of the small businesses that are also struggling amid the economic slowdown.

“It would be one thing if we knew for a fact that this money would solve the problem, but we don’t,” Mr. Hensarling said. The question, he added, is whether carmakers will reorganize with investors or taxpayers bearing the risk.

“The taxpayer can take no more,” he said.

Earlier in the day, the Bush administration failed to generate enough support for the measure among Senate Republicans, dimming the prospects for the bailout plan.

The White House chief of staff, Joshua B. Bolten, attended a weekly lunch of Republican senators in an effort to persuade them to support the rescue plan. But he encountered stiff resistance. Some senators said the automakers should be allowed to go into bankruptcy while others said the White House plan for a car czar was weak.

Senator George V. Voinovich, an Ohio Republican who is one of his party’s few outspoken supporters of a government rescue for the industry, emerged from the lunch and suggested there was little hope of the bill’s approval. He said that even substantial changes to the bill might not sway many colleagues.

Efforts by the Bush administration and Congressional Democrats to fashion a government rescue of the foundering American auto industry hit other snags on Wednesday, including a dispute over the precise wording of the bill. That led the House and Senate to put forward competing versions of the legislation.

The last-minute disagreement centered on a single word — with the Senate bill requiring the automakers “to comply with all applicable federal fuel efficiency and emissions requirements” and the House bill referring to “all applicable fuel efficiency requirements,” which would include state emissions rules that the automakers oppose.

As the House voted Wednesday night, Democratic Senate aides warned that the House version of the bill was doomed in the Senate because it would be rejected by Republicans and would never be signed by President Bush. Earlier in the day, a group of Republican senators held a news conference to say that they would oppose an auto bailout in any form and that they stood ready to filibuster the bill. It was not immediately clear if the opposition would be sufficient to block the measure.

Senator Richard C. Shelby, Republican of Alabama, said he remained opposed to a bailout. “I intend to talk to the American people about it from the Senate floor,” he said.

In the broadest sense, the competing bills provide an identical government rescue of the two most imperiled automakers, General Motors and Chrysler, in the form of $15 billion in emergency loans. In exchange for the loans, the auto manufacturers would have to submit to strict government oversight and carry out sweeping reorganization plans. Ford is not seeking short-term loans because it is not as bad off as the other two big automakers.

The auto bailout plan would be supervised by a so-called car czar within the executive branch, to be appointed by President Bush.

The bill also provides for extensive taxpayer protections that would give the government warrants to take an equity stake in the automakers. It would limit executive pay, bar “golden parachute” severance packages and prohibit the paying of shareholder dividends while the emergency government loans are outstanding.

The measure would require the companies and their stakeholders, including creditors, labor unions, and dealers to agree on sweeping reorganization plans that would lead to long-term financial viability. If they fail to agree, the auto czar would be able to impose a plan, and could also force the companies into bankruptcy if they fail to meet requirements.

Senator Shelby was joined by three other Republican senators, John Ensign of Nevada, Tom Coburn of Oklahoma and David Vitter of Louisiana, in speaking against a bailout.

“How does anybody expect some ‘car czar’ to make the decisions that are right?” Mr. Ensign asked rhetorically as he and his colleagues alluded to the decades-long, systemic problems of the domestic auto industry.

Some Republicans, notably Mr. Shelby, have said the carmakers’ problems were of their own making and they should be forced into bankruptcy, if necessary. Others, like Mitch McConnell of Kentucky, the minority leader, have said they would like to find a way to save the companies without putting taxpayers’ money at risk.

The Senate majority leader, Harry Reid of Nevada, said that lawmakers might need to work through the weekend to get the rescue plan approved. But he expressed resolve.

“There will be no stalling us from doing this,” Mr. Reid said on the Senate floor on Tuesday afternoon. “We are going to complete this legislation.”

Republican support is vital in the Senate, where the Democrats’ narrow advantage was further reduced by the resignation of President-elect Barack Obama. In addition, Senators John Kerry of Massachusetts and Amy Klobuchar of Minnesota, both Democrats, are scheduled to leave for a trip overseas.

There were 10 Democrats who voted against the $700 billion financial system bailout in October, some of whom could similarly oppose a taxpayer rescue of the auto companies.

Mr. Reid said he would urge lawmakers in both parties to be available to vote on the auto-rescue package. “I would suggest it’s not a very good vote to miss,” he said. “Maybe multiple votes.”

 

Because of an editing error, earlier versions of this article misstated the position of Senator Richard C. Shelby, Republican of Alabama. While Mr. Shelby has opposed a rescue plan and said that the automakers’ problems are of their own making, he has not said they deserve to go out of business. He has said he wants the automakers to survive.

By DAVID M. HERSZENHORN and DAVID E. SANGER

David Stout contributed reporting.