McConnell opposes auto bailout

Senate Minority Leader Mitch McConnell (R-Ky.) announced Thursday morning he would oppose a $15 billion bailout of the U.S. auto industry, dealing the package a substantial blow.

McConnell argued on the Senate floor that the package, which the House passed Wednesday evening, would not ensure the long-term viability of the Big Three automakers: General Motors, Ford and Chrysler.

{mosads}“Its greatest single flaw is that it promises taxpayer money today for reforms that may or may not come tomorrow,” McConnell said. “We would not be serving the American taxpayer well if we spent their hard-earned money without knowing with certainty their investment would result in stronger, leaner automobile companies that would not need additional taxpayer help just a few months or weeks down the road.”

McConnell said the Democratic-crafted package would be improved significantly if the Senate adopted an amendment sponsored by Sen. Bob Corker (R-Tenn.).

The Republican leader made his remarks shortly after President-elect Obama said he hopes Congress will pass the short-term measure aimed at
helping the ailing domestic auto industry.

“We cannot simply
stand by and watch this industry collapse,” Obama said at a news conference. If
the automakers were to fail, it would have devastating effects on the economy,
he added.

Obama said he understands “people’s anger and frustration” with the industry, adding
that he unsuccessfully had urged Detroit to change the way it does business.

However, despite
people’s views on the Big Three, Obama stressed that Congress should pass the
short-term fix that would buy the automakers some time to right their
businesses and keep workers on the job.

But GOP senators are more likely to get behind Corker’s proposal, which would require automakers who accepted federal aid to reduce two-thirds of their outstanding debt through an equity swap with bondholders.

The amendment would also require that labor costs at participating companies be brought on par with foreign competitors such as Nissan, Toyota and Honda, and that a portion of payments automakers make to labor unions consist of company stock.

Corker’s proposal would require companies to file for Chapter 11 bankruptcy if its conditions were not met by a fixed date.

“We simply cannot ask the American taxpayer to subsidize failure,” said McConnell.

The package passed the House 237-170 with the support of only 32 Republicans.

McConnell’s opposition sets back proponents of the package who hoped that the support of President Bush and Republican leaders would help convince wavering Republican senators to sign on.

An auto industry source told The Hill that Democrats would need between 14 and 16 Senate Republicans to pass the package. Lobbyists were counting on the support of GOP leaders to persuade lawmakers such as Utah Sens. Orrin Hatch (R) and Bob Bennett (R).

J. Taylor Rushing and Klaus Marre contributed to this article. 

This article was updated at 1:01 p.m.