Republicans threaten revolt over car industry rescue

A $14 billion (£9bn) rescue package for the US car industry was in danger today from Republicans who threaten a Senate revolt.

The emergency bail-out plan was passed by the House of Representatives last night and Democrats and the Bush White House hoped for a Senate vote as early as today and enactment by the end of the week.

They argued that the loans authorised by the measure were needed to stave off disaster for the car industry - and a crushing further blow to the reeling national economy.

The plan, approved 237-170 by the House, would provide money within days to cash-starved General Motors and Chrysler. Ford, which has said it has enough to stay afloat, would also be eligible for government aid.

But Republicans were preparing a strong fight against the aid plan in the Senate, not only taking on the Democrats but standing in open revolt against their party's lame-duck president on the measure.

The Republicans want to force the companies into bankruptcy or mandate hefty concessions from car workers and creditors as a condition of any aid. They also oppose an environmental mandate that House Democrats insisted on including in the measure.

House Speaker Nancy Pelosi, a Democrat, said the House-passed Bill represented "tough love" for US auto companies and "giving a chance - this one more chance - to this great industry".

The White House, struggling to sell the package to congressional Republicans, said earlier that a car-maker bankruptcy could be fatal to the industry and have a devastating impact on workers, families and the economy.

"We believe the legislation developed in recent days is an effective and responsible approach to deal with troubled automakers and ensure the necessary restructuring occurs," said Dana Perino, the White House press secretary.

But the measure needs 60 Senate votes to advance.

Rank-and-file Senate Republicans skewered the Bill during a closed-door lunch with White House chief of staff Josh Bolten, who was dispatched to Capitol Hill to make a case for the rescue package.

Besides providing cash for the auto companies, it would create a government "car tsar", to be named by President George Bush to dole out the loans, with the power to take back the money and force the car makers into bankruptcy next spring if they did not cut quick deals with unions, creditors and others to restructure their businesses and become viable.

Behind the scenes, Senate Democratic and Republican leaders scrambled for a deal that would allow votes on the Bill today. Some Republican senators were demanding votes on an alternative that would order the car makers to take specific actions to restructure - including steep wage cuts and debt restructuring - in return for any government money.

Opposition from Republicans reflected the tricky task of pushing yet another federal rescue through a bail-out-weary Congress, with Mr Bush's influence on the wane.

"People realise that this Bill is an incredibly weak Bill (and) is the product of an administration that wants to kick the can down the road and let somebody else deal with it," said Republican senator Bob Corker.