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House will vote next week on auto industry aid

WASHINGTON — The White House and congressional leaders took steps Friday to break their weeks-long deadlock over how to help the ailing American auto industry.

Even if they reach agreement, however, members of Congress signaled Friday that significant hurdles remain: Constituents are angry about bailouts, U.S. car companies based in Detroit can't shed a shaky public image and lawmakers are uncertain how much aid to the auto companies will eventually cost.

Bush administration officials and key members of Congress are expected to talk over helping Detroit's Big Three, and House Speaker Nancy Pelosi, D-Calif., said the House will vote next week on legislation.

The car companies are seeking $34 billion, as General Motors and Chrysler are seen as facing bankruptcy shortly if they get no help.

Pelosi was ready to discuss softening her opposition to using money from a $25 billion loan, passed earlier this year, money intended to accelerate Detroit's production of fuel-efficient vehicles. The White House wants to redirect the funds as emergency aid, but Pelosi thinks that would be a setback to environmental goals.

Pelosi and White House Chief of Staff Josh Bolten spoke on Friday, and more talks are expected over the weekend. Pelosi has urged the White House to release funds from the $700 billion financial rescue plan approved in October. Pelosi is expected to seek a timely repayment of the funds.

"Regardless of the source, all funding needs will be tightly targeted with vigorous supervision and guaranteed taxpayer protection," she said.

The potential for a breakthrough comes after hearings Thursday at the Senate Banking Committee and Friday at the House Financial Services Committee showed that most members agree the auto industry is in trouble, but there were wide disagreements about how to proceed.

Among the obstacles:

_ Constituent anger over the $700 billion plan. "Psychologically, it's a big impediment," said Rep. Gary Ackerman, D-N.Y. "We rushed to the (House) floor and tried to bail out the financial sector, and people have not felt any benefits."

Lawmakers frequently cited a CNN/Opinion Research Corp. poll taken Monday and Tuesday that found that 61 percent of Americans opposed helping the auto companies.

_ The car companies' poor public image. GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Robert Nardelli were seen widely as hurting their cause last month when they lacked specifics on what they'd do with any taxpayer bailout money and arrived in Washington on corporate jets.

This time they were far more self-effacing and precise — and drove to Capitol Hill — but some still found their presentations lacking.

"Driving around my district, talking to my folks, the one question they say is, `Why now?'" asked Rep. Gresham Barrett, R-S.C., adding, "You should have seen this coming for years."

Auto executives said they'd been restructuring for years but that the sagging economy and credit crunch had dealt them an unexpected blow.

Rep. Carolyn McCarthy, D-N.Y., had a different beef. "The American people don't understand the words you're using," she told the executives.

Nardelli tried, explaining how 30 million Chrysler owners would see the value of their cars "depreciate significantly" if his company failed. McCarthy wasn't satisfied, reminding him that her constituents are listening and "this is a political situation here."

_ Concern over dealerships. Leaner car companies mean fewer dealerships. Rep. David Scott, D-Ga., said he represents 31 towns and cities in metropolitan Atlanta, and "dealers are an integral part of that economy."

"I've certainly heard from all the dealerships in my district," McCarthy added.

The executives answered that if their companies fail, those dealers will, too, so government help at least would be a way of giving them hope.

_ Uncertainty about the eventual cost. Is it $34 billion — $7 billion for Chrysler, $18 billion for General Motors and $9 billion for Ford _or is that just a down payment?

Mark Zandi, the chief economist at Moody's Economy.com, shook some lawmakers when he explained why he thought the companies would need $75 billion to $125 billion to avoid bankruptcy.

_ Concern about the consumer. Rep. Donald Manzullo, R-Ill., looked at the automakers' detailed plans for how they'll restructure and found no mention of how or why consumers would start buying their cars once more.

"Their plan needs to show how to get Americans buying cars again," he said.

All these reservations make the task more daunting, Dodd said.

"To ask 535 members of Congress in the space of 72 hours to try and craft something here is challenging, to put it mildly," he said.

ON THE WEB

Statement from House Speaker Nancy Pelosi

CNN/Opinion Research Corp. poll on auto bailout

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