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November 24, 2008 Monday
Updated
Nov 24, 2008
Concessions from automakers
General Motors, Ford Motor, and Chrysler went through nearly US$18 billion in cash reserves during the last quarter, and GM and Chrysler have said they could collapse in weeks. -- PHOTOS: ASSOCIATED PRESS, REUTERS

WASHINGTON - LEADING Democrats expect US automakers will show Congress next month they are worth rescuing and are capable of returning to global pre-eminence.

Skeptical Republicans said on Sunday that Detroit's Big Three needed to convince taxpayers that they deserve an emergency US$25 billion (S$38 billion) lifeline.

With the survival of a major manufacturing industry at stake, a top adviser to President-elect Barack Obama warned the companies that there is little the government can do without a viable plan to retool and restructure. One leading Democrat urged Mr Obama to become more involved.

Executives from Detroit's Big Three returned home after a pair of disastrous hearings on Capitol Hill last week, under orders from Democratic leaders to provide Congress with a detailed accounting by Dec 2 of their financial condition and short-term cash needs, as well as a plan for viability over the long term.

Hearings are expected the week of Dec 1. Lawmakers could consider legislation the following week if they are satisfied by the companies' responses.

'My expectation is that we are going to see something, that the auto companies are going to respond in a way that I think will give confidence to the Congress and to the American public that we need to assist these companies,' said the House's second-ranking Democrat, Representative Steny Hoyer of Maryland.

Asked in a broadcast interview about passing a bailout in December, Hoyer replied: 'I'm hopeful that we will come up with the information that will justify doing so.'

Added House Speaker Nancy Pelosi, a California Democrat: 'We want to be their partners to go forward. ... and if we're going forward, to be pre-eminent in the world, and we think that that opportunity is there.'

Senator Charles Schumer, a Democrat from New York, said Congress cannot provide money without a plan for the future.

'There can be. There will be. And then Congress will step up to the plate.'

But the House Republican leader, Representative John Boehner of Ohio, was less certain the automakers would change enough minds by next month.

'I'm not sure that they will have a plan by early December, a real plan. And on behalf of the American taxpayers, they're not interested in investing money that - it's going to be really thrown away,' Mr Boehner said.

'At the end of the day, it's not about convincing me. It's about convincing the American taxpayer that they're making an investment in a viable corporation,' he said.

The top Republican on the Senate Banking, Housing and Urban Affairs Committee questioned whether US$25 billion would be enough.

'I don't believe US$50 billion will be. I believe it will take several hundred billion, and still, they might not make it,' said Senator Richard Shelby, a Republican from Alabama, who favors bankruptcy reorganisation if necessary.

Mr Obama has advocated accelerating a US$25 billion loan that Congress had authorised for automakers to retool and manufacture more energy-efficient cars, but congressional Democrats say that would undercut a major environmental effort and instead favour tapping the US$700 billion Congress approved last month to rescue financial institutions.

While Mr Obama and top aides regularly pressed lawmakers last week to resolve the impasse, he did not advocate a specific solution, according to lawmakers.

On Sunday, Senator Carl Levin, a Michigan Democrat who has been working to help his state's main industry, called on Mr Obama to become more engaged in the negotiations.

'It would be very helpful if the President-elect would become more involved in resolving the issue over the source of the funds,' he said.

On Sunday, Obama senior adviser David Axelrod warned the automakers that they will have to 'retool and rationalise their industry for the future. And if they don't do that, then there's very little that taxpayers can do to help them.'

US automakers are struggling to stay afloat heading into 2009 amid an economic meltdown, a precipitous drop in sales and a tight credit market.

General Motors, Ford Motor, and Chrysler went through nearly US$18 billion in cash reserves during the last quarter, and GM and Chrysler have said they could collapse in weeks.

Detroit's car makers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars.

If just one of the automakers declared bankruptcy, some estimates put related US job losses next year as high as 2.5 million.

Mr Axelrod, Mr Schumer and Mr Shelby were on ABC television's This Week, while Mr Hoyer and Mr Boehner appeared on Fox News Sunday. Ms Pelosi was interview on Face the Nation on CBS. Mr Levin appeared on CNN. -- AP

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