Democratic Leaders Push Auto Bailout to December

Democratic congressional leaders rejected a compromise plan to help battered US auto makers, saying the industry needs to come up with a business plan before it receives any money

"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.

AP

She and Senate Majority Leader Harry Reid said Congress would return to work in early December to vote on legislation if the General Motors , Ford Motor and Chrysler produce an acceptable plan.

"We're prepared to come back into session the week of Dec. 8 to help the auto industry," Reid said. "But only if they present a viable plan."

The compromise proposal by four auto-state senators, which has been favored by Republicans and the White House, called for using $25 billion set aside by Congress in September for retooling auto plants and lending it to auto makers immediately.

But Democrats opposed that idea, favoring instead using $25 billion from the $700 billion Wall Street bailout fund. That plan has been rejected by Republicans and the White House.

(See the accompanying video for footage of Rep. Bradley Sherman [D.-Calif.] questioning the automaker CEOs about their private jets.)

The auto-state lawmakers involved in the Senate compromise are Michigan Democrats Carl Levin and Debbie Stabenow, as well as Ohio Republican George Voinovich and Missouri Republican Christopher Bond.

US auto makers have been pleading for $25 billion in emergency government aid to weather a steep business downturn. The CEOs of all three companies testified before two congressional committees this week, but came away empty-handed.

Hanging in the balance could be the future of the U.S.-based auto makers whose losses have mounted during the severe economic downturn and credit crisis that stopped Americans from buying new cars.

Their woes added to the chaotic U.S. economic picture, as stocks tumbled on fears that the absence of a bailout would lead to thousands more layoffs and deepen what many economists believe are recession conditions.

The automakers are on a tight timeline.

Reid and Pelosi said their plan must be turned over to key lawmakers by Dec. 2 They said hearings were possible the first week of December, and Congress may return to session the following week to consider legislation.

Pelosi stressed that whatever the Big Three provided to Congress, it must show they had a plan for "viability and accountability," meaning that the were transforming their industry in a way that it would become competitive, and that they were clear about how the federal loan money was used.

Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans.

One possibility is to seek a partial ownership of the companies. Another is to limit salaries of top executives. A third is to prohibit use of the funds for any lobbying.

—AP and Reuters contributed to this report.

© 2008 CNBC