Auto industry leaders arrive in Washington today to plead for help at congressional hearings, but it's seeming less and less likely that they'll find any sympathy—at least, sympathy to the tune of the $25 billion they're hoping for.
Democrats want to siphon money from the $700 billion bailout to grant loans to the carmakers. Their worry draws on analysts' warnings that even the failure of one of the Big Three could destroy the entire industry, create millions of layoffs, and cost taxpayers billions.
General Motors, for example, may have to file for bankruptcy within weeks, and yesterday sold its 3 percent stake in Japanese carmaker Suzuki to try to raise cash. Meanwhile, Ford announced today that it will sell its 20 percent stake in Japanese auto company Mazda.
So far, though, Congress is split on the proposal. President Bush and the GOP have come out against the bailout, calling the industry a "dinosaur" and saying the plan would only postpone inevitable demise. Instead of using more money from the $700 billion, they want to use funds from loans already approved by Congress to help auto companies produce more fuel-efficient cars.
The skeptics point out that bankruptcy isn't always a doomsday scenario. It can encourage a company to restructure, streamline, and ultimately become more competitive. And politicians who initially supported the funding now seem to be softening their stances. Most, including President-elect Barack Obama, are saying that any bailout would have to include a great deal of restructuring.
Those in favor of the proposal have a final shot at persuading politicians of their views today. The executives of General Motors, Ford, and Chrysler, along with the head of the United Auto Workers union, plead their case at hearing before the Senate Banking Committee. But they'll have to be convincing: So far, party aides and lobbyists say that the legislation is far short of the necessary votes.