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As Support for Auto Aid Stalls, Efforts Shift to GOP Loan Plan

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By Lori Montgomery and Kendra Marr
Washington Post Staff Writers
Thursday, November 20, 2008

Congressional allies of the auto industry were rushing late yesterday to put together a bipartisan aid package for faltering Detroit car companies, but lawmakers said they may leave town today without taking action.

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Senate Democrats abandoned plans to take $25 billion from the $700 billion financial rescue program enacted last month, acknowledging that they did not have enough votes. Detroit's advocates quickly turned their attention to a Republican proposal to keep the car companies afloat.

That proposal, which was endorsed by the White House, calls for modifying a loan program created to help the automakers develop advanced technologies and retool factories to produce more fuel-efficient vehicles. Sen. George V. Voinovich (R-Ohio) said the money would be given to the automakers temporarily to fund day-to-day operations. But when the money was repaid, he said, the loan program would be used for its original purpose.

Voinovich said he was working with Sens. Christopher S. Bond (R-Mo.) and Carl M. Levin (D-Mich.) in hopes of persuading senators from both parties to back the idea. If a deal is cut, Senate leaders said they would vote on it today.

"I think there is a genuine concern here of getting something done during this period of time so that we don't lose General Motors," Voinovich said. "I think most people realize that this country's in a deep recession. If we lose GM . . . it could put us over the cliff."

But a deal in the Senate would have to be ratified by the House, where the Republican plan would be dead on arrival, Democratic aides said. House Speaker Nancy Pelosi (D-Calif.) has ruled out changes to the existing loan program. Several companies have already applied for the funds, and Democrats fear the car companies might back away from their commitment to build cleaner cars if the program's terms are changed.

Modifying the loan program "would be sending exactly the wrong signal," said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee and a key architect of the Democratic plan to bail out the car companies. He added that "there's a very strong likelihood for bankruptcy if nothing happens."

With the impasse unbroken, Congress is on the verge of leaving the possible collapse of the domestic auto industry in the hands of the departing Bush administration. Senate Majority Leader Harry M. Reid (D-Nev.) yesterday urged Treasury Secretary Henry M. Paulson Jr. to use his vast authority over the rescue money to help the car companies on his own initiative.

"Paulson knows he has authority to take the money," Reid said. "He just doesn't want to do it."

White House officials retorted that congressional inaction would be to blame for any disruption of the auto industry over the holidays.

"If Congress leaves for a two-month vacation without having addressed this important issue, and especially if the Senate leaves without Senator Reid even allowing a vote on this [Republican] amendment, then the Congress will bear responsibility for anything that happens in the next couple of months during their long vacation," White House press secretary Dana Perino said yesterday.

The maneuvering came as the chief executives of the Big Three automakers trooped for a second day to Capitol Hill to face lawmakers aggravated by the prospect of approving yet another industry bailout.


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