Auto Bailout: Wednesday Afternoon Edition

It looks very likely that the bailout plan being put together to save GM and Chrysler might fail. There is stiff resistance among the ranks of Republican Senators for any kind of bailout, and even those who do support helping the car makers are looking for stronger guarantees to protect taxpayer money. Another bone of contention seems to be the exact wording of the text of the bill. As written currently it would force the car makers to comply with ‘all’ fuel efficiency standards, not just Federal ones. this would mean forcing GM and Chrysler to comply with California’s standards which both companies have vehemently opposed. It was the auto industry lobby who put immense pressure on the Bush administration to try to head off the California legislation. It would be a bitter pill for them to swallow to have to buckle and comply now that they need cash.

The Republicans can stall and prevent any bailout passing because the Democrats have only a 50 – 49 advantage in the Senate now that Obama has resigned his seat. Without a significant change of heart it is hard to see how the legislation gets approved. Even the White House is in on the act: they sent an emissary, Josh Bolten, to the Republican Senate caucus today to try to lobby in favor of action. He came away empty handed.

It is important to note in all this drama that Ford has quietly said it needs no immediate aid and that it can survive on its own. Hence the focus now on GM and Chrysler, both of whom have said they are in dire trouble. GM might not make it through January at this rate.

Obviously the saga continues …