McConnell supports tweak to existing loan program

U.S. Sen. Mitch McConnell said Tuesday he supports a Bush administration plan to make $25 billion in previously authorized loans to the auto industry as part of a bailout package that might come before Congress sometime this week.

McConnell's stance puts him at odds with the Big Three automakers and Senate Democrats, who want to carve out $25 billion for the auto industry from the $700 billion financial bailout package Congress approved last month.

The Kentucky senator, who was re-elected as Senate Republican leader Tuesday, said he supported using the $25 billion loan fund — created to improve fuel efficiency of Detroit automakers — for the bailout.

"A number of our members, which includes myself, think the proposal that the administration had made ... to basically change the qualifications of the money that we have already appropriated is a sound way to go forward," McConnell said Tuesday in a news conference.

Meanwhile, U.S. Sen. Jim Bunning, R-Ky., told the Senate Banking Committee Tuesday that he has reservations about the auto bailout, but he stopped short of opposing the proposal.

Bunning, who was one of the most outspoken critics of the $700 billion bailout of the financial sector but faces re-election in 2010 in a state heavily dependent on the auto industry, said his concerns are with the auto workers, not the industry.

Bunning's comments came as the Senate Banking Committee heard testimony from the top three U.S. auto manufacturers Tuesday.

According to some estimates, more than 85,000 Kentucky jobs are tied to the auto industry. Bunning, in his statements, noted that 600 steelworkers were laid off at a plant in Ashland just last week.

"The proposal coming before the Senate tomorrow is not a serious one," Bunning said of the Democratic-backed measure. "Much like the other bailouts we have passed, it is virtually a blank check that does not require serious concessions. ... More importantly, it does not address the long-term viability of the domestic manufacturers."

Gov. Steve Beshear, in a statement, said he hopes Congress will pass an aid package soon.

"Our hope is that Sen McConnell will work with Sen. Reid and others in the Congress to protect this vitally important industry," Beshear said.