THE FATE of the US car sector remained in the balance yesterday as US president George W Bush faced growing resistance within the ranks of his own Republican party to a White House deal with congressional Democrats to provide $15 billion (€11.5 billion) in emergency loans to Detroit carmakers.
Although legislation to authorise the Bill was set to pass the House of Representatives, it faces stiff opposition in the Senate, where an increasing number of Republicans - including the party's leadership in the chamber - indicated their reservations about the measure.
"Republicans will not allow taxpayers to subsidise failure," said Mitch McConnell, Senate majority leader, making clear that he would oppose an immediate vote.
"We will not let taxpayers spend their hard-earned money on ailing carmakers unless these companies are forced to reform their bad habits - either inside or outside of bankruptcy."
Other Republican senators spelt out their hostility in tougher terms, making clear their willingness to filibuster the legislation to hold up or prevent its passage.
Richard Shelby of Alabama, one of the Senate's staunchest opponents of bailouts, called the legislation a "travesty".
Calling for the groups to declare a "prestructured bankruptcy", he added: "We need to know where we can get rid of most of the management and probably downsize a lot of the workers to save these companies."
Although Republicans in the House of Representatives, where the Democrats hold a comfortable majority, also oppose a bailout, the Senate represents by far the biggest hurdle to a loan.
Because Barack Obama, president-elect, has resigned as a senator and vice-president-elect Joe Biden is unlikely to return, the Democrats have 49 votes in the Senate, compared with the 60 they need to push legislation through.
Yesterday, the White House said Mr Bush would try to win over Senate Republicans, in a move that will test his authority. "I expect you'll see the president talk to various members as he thinks it's necessary," said Joel Kaplan, the top White House aide working on the Detroit rescue package.
The depth of Republican anger at continuing government bail-outs, and the president's unpopularity and lame duck status are set to make convincing Republican senators a tough task.
Mr Bush has surprised observers with his negotiating power with Democrats, whose eagerness to agree emergency aid to keep General Motors and Chrysler functioning redoubled last week amid fears that a failure would bolster already record unemployment.
At White House insistence, Democrats have increased the level of transactions that would need to be authorised by a "car tsar" overseeing the industry, while they have made clear any demands for carmakers to drop lawsuits against state carbon emissions rules would not have their support.
Mr Kaplan hinted Mr Bush might consult Mr Obama over appointing the "car tsar": "We expect to work closely with the president-elect's team in figuring out . . . what the most effective means possible is of implementing this legislation."
Nancy Pelosi, House of Representatives speaker, and Harry Reid, Senate majority leader, both Democrats, dropped their insistence that the loan be funded by the $700 billion troubled assets relief programme. - ( Financial Timesservice)
