House OKs Big 3 help but Senate in doubt

by Frank James

As expected, the House approved a $14 billion bailout package for the Detroit Three last night. That's the good news for auto workers, dealers, suppliers, communities, local media and all the others constituencies dependent on them.

But the Senate, of course, is another matter. Republicans there are more than balking. Some are openly hostile to the plan, despite warnings from many that a bankruptcy of one or more of the automakers could spell doom for an already moribund economy.

Jim Puzzanghera and Janet Hook of the Tribune's Washington Bureau captured the flavor of the debate taking place yesterday:

"The consequences of defeating this bill would be disaster for the economy that is already in trouble," House Financial Services Committee Chairman Barney Frank (D-Mass.) told his colleagues during the debate. The vote was 237-170, with 32 Republicans joining 205 Democrats in supporting it.

"People are rightly concerned that the automakers and unions won't follow through. Many simply don't believe that the changes that need to be made will be made," Sen. John Sununu (R-N.H.) said after the meeting.

Senate Republicans held a press conference yesterday to discuss their opposition to the legislative compromise reached by President Bush and congressional Democrats.

Among their criticisms was that the $14 billion bridge loan wouldn't be enough, that the companies would be back for more.

Sen. Richard Shelby, an Alabama Republican, cited testimony by Mark Zandi, an economist who appeared last week before the Senate. Zandi put the help that the Detroit Three would ultimately need to be between $75 billion and $125 billion.

But what Shelby omitted was that Zandi also told senators that he favored a bridge loan because without it one or more of the companies could fail and with the economy in such perilous straits, that could throw the economy into an even worse downward spiral with unintended consequences that are now unknowable.