Big 3 bailout in neutral

Congressional leaders appear no closer to finding an auto bailout deal with the White House, even as executives for the Big Three submitted plans (Chrysler, Ford and GM ) suggesting they need as much as $34 billion to stay afloat.

House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) on Tuesday said they are committed to helping rescue the beleaguered auto industry, but they have yet to remove the stumbling blocks that kept them from moving forward in November.

{mosads}The Bush administration and Democratic leaders are at a stalemate over where the money would come from, and some Republicans still believe letting the automakers file for bankruptcy is a better option than sending taxpayer dollars their way in a troubled economy.

Pelosi said bankruptcy should not be an option and sent lawmakers a letter Tuesday saying she would decide by Friday if another lame-duck session would be necessary next week.

“I believe that an intervention will happen either legislatively or by the administration,” said Pelosi. “I think it’s pretty clear that bankruptcy is not an option.”

Reid said Tuesday that he hoped to introduce at least a placeholder bill on Monday to give the Senate an opportunity to debate a package should lawmakers reach a compromise. “The 2.5 million workers involved in this deserve a vote,” Reid said. “I hope we can do something.”

The Big Three submitted their plans to Congress on Tuesday, with General Motors Corp., in the most precarious financial position, saying the company needed a combined $18 billion, including $12 billion in loans and a $6 billion line of credit. Chrysler LLC said in its plan that it needed $7 billion in loans by the end of the year.

Ford Motor Co., in the best financial position of the three, intends to carry out its business model of building a fleet of smaller and more fuel-efficient cars without federal assistance, but is seeking a $9 billion line of credit should economic conditions deteriorate.

Sen. Carl Levin (D-Mich.) said he believes that a package will come together, but he urged stronger support from President Bush and President-elect Obama.

“If this thing is going to happen next week, it’s going to happen with the support and assistance of the current president and the president-elect,” Levin said. “That’s critically important, and hopefully forthcoming and not just in the background.”

The Senate and House are set for hearings on Thursday and Friday, with lawmakers set to review the plans and consider whether to hold a session next week. The United Auto Workers union and leaders from the Big Three are reportedly set to meet on Wednesday in Detroit.

The companies submitted their plans the same day they reported dismal sales numbers for November, underscoring their tenuous financial state. GM reported that sales plummeted 41 percent, while Ford posted a 31 percent decline. Chrysler is expected to report similar numbers.

Foreign carmakers didn’t fare much better, with Honda Motor Co. and Toyota Motor Corp. both posting losses of more than 30 percent for the same month.

A variety of congressional proposals have been floated to extend aid to the industry, but it is unclear which path Democratic leadership will choose to take in the coming days. “I think there are a lot of votes for supporting the industry,” said one auto industry source, “but I don’t think there are as many for any one plan.”

{mospagebreak}Democratic leaders since last month have pushed the Bush administration to use money from the government’s $700 billion financial rescue package to help the automotive industry, but the White House opposes that approach.

A group of Democratic and Republican senators from auto-heavy states have crafted a bill, with support from the White House, that would allow the automakers to borrow against $25 billion in Energy Department loans, originally intended to help the car companies meet tougher fuel-efficiency standards, instead for their immediate financial needs. There would also be taxpayer protections and an oversight board, and the money would be returned to its original purpose as it is repaid. Supporters of that proposal say they believe they have enough votes to move the bill in the Senate.

{mosads}White House press secretary Dana Perino said Tuesday that the administration is “sticking to our guns” that companies have to prove they can survive before they can obtain taxpayer support. Pelosi and other Democrats have been opposed to loosening the environmental restrictions on the Energy Department money.

Congress could also choose to send a smaller amount of money to the industry as a stopgap before Obama takes office. “We just hope they realize that the cost of inaction is substantially more severe than the cost of providing assistance,” said Bailey Wood, a lobbyist for the National Automobiles Dealers Association, one of several industry groups outside of the Big Three that are ramping up pressure on lawmakers this week.

Whatever plan Democratic leadership settles on will likely face stiff opposition from Senate Republicans, many of whom have suggested that bankruptcy is a much preferable solution.

“There is a pretty big threshold of changes,” said Sen. Bob Corker (R-Tenn.), who supports a pre-arranged bankruptcy proceeding. “I’m skeptical of their ability to achieve those draconian steps outside of bankruptcy, but I go to the hearing wishing to listen.”

Corker said he spent Monday and Tuesday in New York meeting with industry analysts, and he believes that maintaining the Big Three may be unsustainable. “We may need two,” he said.

And Ford’s CEO warned that the industry could take a further turn for the worse.

“Our liquidity through 2009 could come under increasing pressure if a significant industry event, such as a bankruptcy of one of our competitors, causes a disruption to our supply base, dealers and creditors,” Allan Mulally said on Tuesday. The car company expects to break even in 2011.

The heads of GM and Ford also agreed to take $1 in salary instead of the tens of millions of dollars they made last year. They also have plans to sell their corporate jets, after the companies were upbraided at October’s hearings for traveling by private plane as they sought federal money.

Jim Snyder and Sam Youngman contributed to this article.