Bush talks about automaker aid

George W. Bush asked Congress to help domestic automakers without providing additional loans today, again suggesting his “compromise plan,” which would scrap previous Congressional legislation authorizing $25 billion in loans for high-efficiency vehicles.

Bush’s Energy Secretary originally refused to dole out any of the $25 billion in loans until 2010, though the legislation called for disbursements within 90 days. All applications so far for the loans have been rejected by the Energy Department. 

Bush reportedly said, “I am concerned about the viability of the automobile companies.” However, he has flatly opposed any effort to tap the $350 billion authorized by Congress to help banks and other financial institutions. 

The government has spent around $2 trillion in attempts to loosen credit, without visible success. 

Senate Majority Leader Harry Reid noted that with 533,000 jobs lost in November alone, the economy would be ill-served by the collapse of the domestic automakers. Numerous people, including executives from Japanese automakers, have pointed out that the failure of a single automaker would cause the failure of key suppliers, leading to the failure of other automakers and factory shutdowns at domestic and foreign manufacturers alike.

The top Republican on the House panel, Spencer Bachus, said he could support bridge loans. Likewise, a Michigan Republican, Thaddeus McCotter, proposed taking half the funding from the Energy Department loan package and half from the $700 billion Wall Street bailout (of which $350 billion has been authorized by Congress). 

Republicans on the Senate Banking Committee, however, appeared to be unwavering in their opposition to any loans, with two insisting on bankruptcy as the only solution and one demanding that GM absorb Chrysler, while still insisting that no loans were appropriate. 

Bankruptcy could cost the government many billions of dollars as banks and other creditors applied for aid from Wall Street bailout funds. 

George W. Bush could order to set aside some money from the Wall Street package to automakers, but has to date refused to move from his idea of revoking the $25 billion in efficient-vehicle loans and applying them to bridge loans. This idea would require new legislation.