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Murky future for US auto rescue amid opposition

JULIE HIRSCHFELD DAVIS and KEN THOMAS (Associated Press Writer)

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WASHINGTON - A bill to speed $14 billion in loans to U.S. automakers stands on shaky ground in a bailout-weary Congress, undermined by Republican opposition that could derail the emergency aid in the Senate.

Republicans are challenging President George W. Bush on the proposal, arguing that any support for the auto industry should carry significant concessions from autoworkers and creditors and reject tougher environmental rules imposed by Democrats in the House of Representatives.

The House approved the plan late Wednesday on a vote of 237-170. It would infuse money within days into cash-starved General Motors Corp. and Chrysler LLC. Ford Motor Co., which has said it has enough cash to make it through 2009, would also be eligible for federal aid.

Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks, and concerns that a carmaker collapse would erase tens of thousands of jobs and jolt an already bleak economy.

Democrats and the Bush White House hoped the Senate would vote on the legislation as early as Thursday. But based on concerns raised by Republican senators - and a still-uncertain level of support even among Democrats - they had a lot of work to do.

A leading Senate Republican opponent said Thursday that he cannot back spending $14 billion of taxpayer money on a plan that would call for a restructuring of the industry, but which fails to detail just how that would be accomplished.

"I think that is putting the cart before the horse and isn't reponsible in terms of tax dollars," Sen. David Vitter said on CBS television's "The Early Show."

White House spokesman Tony Fratto acknowledged that "there's some explaining to be done."

"A lot of members of the Senate have questions, on both sides of the aisle, about the strength of the so-called auto czar," he said on CNN television Thursday. "We think this auto czar will have very strong, sweeping powers, and we think that's reflected in the legislation. So we're going to keep talking to them (senators). The president and other members of the administration will be reaching out to Republican senators this morning."

The measure's murky outlook reflected the difficulty of approving another federal financial rescue on the heels of the deeply unpopular, $700 billion Wall Street bailout, as the clock ticks down on the current Congress and Bush's influence is at a low ebb.

"People realize that this bill is an incredibly weak bill (and) is the product of an administration that wants to kick the can down the road and let somebody else deal with it," said Sen. Bob Corker, a Republican.

Even Republicans representing states with automobile plants said the proposal was far from ideal. Sen. Kit Bond, a Republican whose state is home to five auto plants, said he wanted to see changes. Sen. George Voinovich said the bill lacked the necessary Republicans to pass the Senate.

The measure would create a government "car czar," to be named by Bush to issue the loans, empowered with the ability to yank back the loans and force the carmakers into bankruptcy early in 2009 if they fail to cut quick deals with labor unions, creditors and others to restructure their businesses and become viable.

Opposition was not limited to Republicans.

Democratic Sen. Max Baucus is opposing the measure because of a provision to bail out transit agencies that were involved in transactions now considered unlawful tax shelters.

Under the House-passed bill, the carmakers would have to submit blueprints on March 31 to the industry overseer showing how they would restructure to ensure their survival, although they could be given until the end of May to negotiate with the government on a final agreement.

The automakers initially asked Congress for $25 billion, then returned two weeks later to plead for as much as $34 billion. But with the White House refusing to dole out new spending for the automakers, congressional Democrats agreed to use an existing program that was to help carmakers retool their factories to make more fuel-efficient cars.

That fund yielded only $15 billion in emergency loans, and when negotiators agreed to leave some money in the environmental program, the amount fell to $14 billion.

Democrats agreed to scrap language - which the White House had declared a deal-breaker - that would have forced the carmakers to drop lawsuits challenging tough emissions limits in California and other states. But they kept a provision to force the automakers to abide by those states' limits - a kind of consolation prize for environmentalists, who already were livid at the raid of the fuel-efficiency program.

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