Big Three Beg for Aid as Bailout Stalls

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WASHINGTON - America's top auto makers say they need a lifeline from the government, and if they don't get it they could run out of money.

The auto industry is just one sector of the souring economy impacted by frozen credit. Now a growing number of economists predict the country is in recession.

Click play for analysis from Frank Micciche of the New America Foundation following CBN News Correspondent John Jessup's report.

Grim Outlook

Detroit came to Washington today, as the heads of the big-three auto makers make their case for a bailout to keep the auto industry from falling apart.

Ford announced today it will sell off shares of Japanese carmaker Mazda in order to raise much needed cash. General Motors said it will make a similar move with Suzuki Monday.

The auto forecast is so grim that Congress is holding a special session to debate how to act.

"Lame duck? We should not be lame nor should we duck the biggest issue facing America," Sen. Barbara Mikulski said.

The auto makers want a $25 billion bailout from the federal government, much like the one for Wall Street.

But there's resistance from Republicans and other critics who say the companies should file for bankruptcy, restructure and come out stronger.

"It doesn't mean close the doors, lock it up, sell it off. It means reorganize, financially," NYU Law Professor Michael E. Levine said.

The auto industry employs more than 300,000 people and its impact is far-reaching. One in 10 American jobs is tied to the business.

"The crisis in the auto industry and our mortgage foreclosure markets still reigns, is at the epicenter of the financial crisis," House Speaker Nancy Pelosi said.

Recession Fears Realized

And the financial picture isn't getting any better.

According to the Philadelphia Federal Reserve's latest forecast, the U.S. economy is in the middle of a recession in which the economy will lose an average of 200,000 jobs per month in this quarter alone.

Adding to the dismal prediction, this week Citigroup announced it will cut a whopping 53,000 jobs by mid-2009.

"The vast majority of the people getting laid off themselves are not bad characters, you know they were just doing their jobs. Then of course, when you their pay goes down, they spend less, and it affects all Americans indirectly," said banking analyst David Trone.

But there appears to be growing fatigue at Washington's habit of throwing money at struggling sectors of the economy and with good reason: the cost.

CNBC, which has been keeping a running tab on spending to deal with the financial crisis, calculates the federal government has already spent more than $4 trillion.

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CBN News
John Jessup

John Jessup

CBN News Washington Correspondent

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