Auto Rescue Deal Faces Murky Future

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WASHINGTON - Congress and the White House have put the auto bailout plan on the fast track. But even after clearing the first hurdle in the House, the plan could hit some pot holes in the Senate.

Trickle Down Auto Economics

Call it trickle down auto economics - where trouble for the Big Three bleeds all the way down to Main Street.

Dried up credit and General Motor's money problems forced a well-known Kalamazoo car dealership out of business, leaving employees and customers in the cold.

"One of the stipulations when I bought the vehicle was that they'd give me tires for life. They told me that I was completely out of luck, sorry go down the road," said car owner Ramon Cummings,

To prevent more closings, Washington has been working feverishly toward a plan to keep the automakers going.

Overnight, the House approved an emergency bridge loan for GM and Chrysler.

GOP Cries Foul

But the bill will face roadblocks in the Senate, where Republicans say the auto makers should provide a detailed restructuring plan before they receive any loans.

"$15 billion, and then later after that's out the door, we'll see a detailed restructuring plan?" said an incredulous Sen. David Vitter.

Supporters of the bill say the loans will help to avoid an industry collapse by providing an immediate $14 billion in low-interest loans.

The bill would also call for President George W. Bush to appoint a so-called "car czar" to force major industry changes and negotiate restructuring plans to keep Detroit from failing - which would only make matters worse for the overall economy.

The price tag for the auto bill is much less than what the car companies asked for and comes with major strings attached. That's because Washington doesn't want a repeat fallout from angry constituents upset about the $700 billion rescue package for the financial system - the subject of heated hearing on Capitol Hill Wednesday.

Treasury Grilled on $700B Bailout

Lawmakers called the program a "dismal failure" and prodded Interim Assistant Treasury Secretary Neel Kashkari for not doing more to help struggling homeowners with their mortgages.

"This is an issue I have studied for 18 months and probably the most difficult policy issue that I've come across is how you find a program that helps the borrowers who need help without rewarding everybody who doesn't," Kashkari said.

Defaulting on mortgages is a problem that could worsen.

Federal Reserve Chairman Ben Bernanke predicted foreclosures this year will reach about 2.25 million. It's just another sign of problems that Washington wants to help fix, although it isn't proving to be easy.

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CBN News
John Jessup

John Jessup

CBN News Washington Correspondent

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