DETROIT - A federal loan package for the auto industry, signaled by President Bush after a bailout effort collapsed in the Senate last week, could be worked out by midweek, a key Democratic senator said yesterday.
"The president knows the economy is fragile and that a collapse of the auto industry is not an option," Michigan Sen. Carl Levin said.
Levin told reporters he expected Bush to follow through with a deal he made with House Speaker Nancy Pelosi and tap the $700 billion Troubled Assets Relief Program - the bank bailout fund - to aid the auto industry.
Levin said he expected General Motors Corp. to get $8 billion and Chrysler L.L.C. $7 billion under the Bush administration plan. He said the Treasury secretary likely would be tapped as a "car czar" to oversee restructuring of the companies.
Vice President Cheney, in an interview with talk-show host Rush Limbaugh, said auto-industry woes came at an "especially bad time" because of the slowdown of the financial markets, the Associated Press reported.
"We're on the downside of a recession that may be the worst since World War II," Cheney said. "And if the automobile industry goes belly up now, there's a deep concern that that would be a major shock to the system."
Not everyone agreed. Gov. Mark Sanford (R., S.C.) said in a letter to Bush that using the financial bailout fund to help automakers could "open the floodgates to federal moneys for every distressed industry across this country."
The Treasury said yesterday it was still studying a possible rescue plan for GM and Chrysler a day after Bush said the evaluation won't take long because of the automakers' "fragility."
"We continue to assess and review the information that we receive from the automakers and we are providing regular briefings to the White House," Treasury spokeswoman Brookly McLaughlin said.
"I do believe people are starting to see the automobile is different than the financial sector," said Michigan Gov. Jennifer Granholm, a Democrat. "That it does impact small towns and large towns and every state in the country."
Without an infusion of cash, GM, the largest U.S. automaker, and No. 3 Chrysler may be weeks from insolvency, the companies said last week.
GM is reeling from $73 billion in losses since 2004 and a 22 percent slump in U.S. sales this year, while Chrysler's sales drop is 28 percent.
Job losses from an automaker failure in 2009 would total 2.5 million to 3.5 million in 2009, according to a Nov. 4 report from the Center for Automotive Research in Ann Arbor, Mich.