Senators, Valley reps back $25B Big 3 bailout

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U.S. Senator Sherrod Brown (D-Avon)

By David Skolnick

The U.S. Senate will begin debate Monday on the emergency loan program.

U.S. Sen. George V. Voinovich is working to convince fellow Senate Republicans that it’s best to loan $25 billion to the struggling auto industry now than wait, or, even worse, do nothing, his senior adviser said.

The Senate will begin debate Monday on the emergency loan proposal to the Big Three automakers — General Motors, Ford and Chrysler — with a vote expected Wednesday.

Voinovich, of Cleveland, is the first Republican to support Democrats’ plans to include $25 billion in low-interest loans to the automakers as part of the $700 billion Wall Street bailout approved by Congress last month.

“This is simply a loan that has to be paid back and not a handout,” said Chris Paulitz, Voinovich’s senior adviser. “It’s not new money. Why can’t the automotive industry use some of that money? There’s no better way to help Main Street.”

But Paulitz acknowledges it’s going to be a uphill battle getting the needed 60 votes in the Senate to break an expected filibuster of the bill.

The bill’s passing may have to wait until after President-elect Barack Obama’s term starts Jan. 20, he said.

“It’s a coin toss to see if GM and the others can make it to January,” Paulitz said. “Those companies could go under.”

If that happens, he said, it would cost taxpayers significantly more than $25 billion.

“We’re mandated by law to pick up their pensions and move them to Medicaid and Medicare,” Paulitz said. “That amount of money is astronomical. With this loan, there is hope. But the likelihood of it passing [this week] is uncertain.”

The federal government’s refusal to provide financial assistance to the auto industry would have a devastating impact on the nation in general and the Mahoning Valley specifically, said U.S. Rep. Tim Ryan of Niles, D-17th.

The General Motors plant in Lordstown employs about 4,600 and announced last week that it was cutting 1,060 local workers, effective Jan. 20, after reporting a net loss of $2.54 billion in the third quarter.

“Millions of American families depend on the survival of our automakers, and while there is certainly bailout fatigue in Washington, we must not fail to act,” Ryan said. “The ripple effect of a bankruptcy or merger would have dire consequences to the national economy, consequences from which the Mahoning Valley and Ohio will not be immune.”

The automotive industry’s presence in Ohio is large, with more than 100,000 assembly and supplier jobs in the state, said U.S. Sen. Sherrod Brown, a Democrat from Avon.

“The collapse of the domestic auto industry is not a viable option for our nation’s economic security,” Brown said.

Without government intervention, GM won’t have enough money to “keep the company going through next year. The collapse of GM or other major automakers would result in a devastating economic and competitive scenario for the nation,” Ryan wrote in a letter to House Speaker Nancy Pelosi of California and Majority Leader Steny Hoyer of Maryland.

The emergency loan proposal would give $25 billion to the Big Three with the government holding some kind of ownership stake in the companies for the duration of the loan to ensure taxpayers shared in any financial gain as well as be reimbursed, according to The Associated Press.

Some Republicans suggest the automakers use a $25 billion federal loan package, approved in September to help develop fuel-efficient cars, to keep them operating.

The Democratic plan would have little problem passing in the House, but Pelosi wants to wait to convene a formal session until she’s sure it will pass the Senate, according to the AP.

U.S. Rep. Charlie Wilson of St. Clairsville, D-6th, said he supports the low-interest loan proposal. The details are still being worked out, he said.

“We can’t let the auto industry fail,” Wilson said. “Our district is intricately tied with that industry.”

Brown agrees that the loan proposal is the best option.

“The senator is hopeful that [Congress] will assist the auto industry next week,” said Meghan Dubyak, a Brown spokeswoman. “Among his top priorities are providing assistance to the auto industry to stop the hemorrhaging of Ohio jobs and to also work to extend unemployment insurance. He will not be giving up on this. If it’s not done next week, it will be done” after Obama’s Jan. 20 inauguration.

The concern of some is that it may be too late.

skolnick@vindy.com