Auto bailout focus on McConnell

Sen. Mitch McConnell, R-Kentucky
Sen. Mitch McConnell, R-Kentucky

WASHINGTON — Senate Minority Leader Mitch McConnell is bracing for a contentious debate over a government rescue of the nation's struggling automotive industry when the Senate reconvenes for a lame-duck session next week.

Much of the opposition will come from leaders of his own party, as top Republicans such as Alabama Sen. Richard Shelby, the ranking member on the Banking Committee, question whether the Big Three automakers' woes are related to the sharp economic downturn or to problems within the industry.

Meanwhile, Democratic leaders are pressuring McConnell to garner support from his caucus for a package designed as an extension of unemployment insurance and aid to the domestic auto industry.

"Based on our conversation earlier this week, however, I understand that you currently oppose such a package and that Senate Republicans are prepared and able to block such legislation," Senate Majority Leader Harry Reid wrote McConnell on Friday. "This is disappointing, and I hope you will reconsider."

McConnell, whose home state is the third largest producer of autos, brushed the criticism aside.

"Senator Reid has not yet provided us with the text of his proposed spending bill, or the cost to the taxpayer, or its impact on the deficit. So it would be a real challenge to promise any level of support or opposition sight unseen," McConnell said in a written statement. "And while Sen. Reid's public comments referenced our private conversation on the level of support for his yet unwritten bill, we don't yet know if there is even sufficient support from within his own ranks."

McConnell's position is further complicated by strong support for the rescue package within Kentucky, which has two Ford plants, a Toyota factory and a GM plant. The state trails only Michigan and Ohio in the number of autos produced.

McConnell supports giving automakers $25 billion in loans approved earlier this fall, but he has steered clear of discussions on using a portion of the $700 billion rescue package for the country's foundering financial sector to bail out the automotive industry.

"It may be that there are changes that need to be made in order to expedite these low-interest loans," said Don Stewart, a spokesman for McConnell. "Other ideas have been floated, and all will receive a review as we approach the Senate's return next week."

In step with McConnell, the White House on Friday threw its support behind a plan to speed release of $25 billion in existing loans to the Big Three automakers but rejected the Democratic proposal to use money from the financial industry bailout plan.

The previously approved loans were meant to help automakers build more fuel-efficient vehicles and become more competitive companies in the global marketplace. The administration now supports allowing the loans to be released more quickly than the original legislation prescribed and to be used for more urgent purposes as the companies struggle to stay afloat.

"Democrats are choosing a path that would only lead to partisan gridlock," said White House spokeswoman Dana Perino. "We are now actively calling on Congress to amend the loan program."

Democratic congressional leaders acknowledge Republican push-back on the rescue package may be too strong to counter next week. Debate on the measure is expected to begin on Monday in the Senate.

Chrysler LLC, Ford Motor Co. and General Motors Corp. have said the weakened economy has affected their companies, stalled credit and led to weak sales. The three automakers have pushed members of Congress to pass an aid package as quickly as possible.

In the wake of both Ford and General Motors announcing new earnings numbers with billions in losses, Kentucky Gov. Steve Beshear has renewed his call for President Bush and Congress to move quickly on a stimulus package that includes the automotive industry.

According to the governor's office, Kentucky has 461 motor vehicle-related facilities, employing some 85,000 people.

"The automotive industry is critical to Kentucky. It's critical to America," Beshear said in a statement. "Time is not our friend, though, when it comes to preserving these jobs and vital industries. I urge the Congress to move as quickly as possible to preserve these jobs and critically important businesses."

Kentucky, like a number of other southern states, has offered automakers and related companies a number of tax incentives to maintain their plants in the state.

Last year, the state approved $60 million in incentives to keep Ford in Louisville. In exchange for the money, which is supposed to help overhaul its Kentucky Truck Plant, the company is allowed to reduce employment at the plant but the state emphasized it would keep the plant and the few thousand jobs associated with it.