After a week of intense debate and wrangling, the US House approved the $14-billion rescue plan to save the three struggling auto makers and sent the bill for its final vote to the Senate, while Republican senators pledged to veto it, calling it "a bailout to nowhere."
Voting not only against the Democrats, but going against their own outgoing president, the majority of Republican representatives voted against the bill where the final tally was 237 for and 170 against, with 32 Republicans joining the 205 Democrats in supporting the bailout.
As the fate of the automakers linger on till next week's vote at the Senate, passing the bill is still shrouded in uncertainty as there is widespread revolt among the Republicans at the White House-brokered deal, who have repeatedly objected risking tax payer's money on a bailout, which according to them, leads to 'nowhere.'
Some hardline Republicans say that many senators were swayed after the release of US data for job losses for the month of November, which was 533,000 and did want to be blamed for further huge job losses especially when the country is in recession. (See: Over half a million Americans lose jobs in November)
As supporters of the Big 3, including Democrat leaders and many independent economists, warned of the impending huge job losses not to mention the hundred of allied business closing down, the heated debate dwelt on insufficient government oversight and role of the 'car czar' whom Republican Senator, Bob Corker wanted the title to be changed to 'President's Puppet.'
The bailout amount was reduced from $15 billion in previous drafts to $14 billion and the money will comes from the existing $25-billion loan fund created to help the automakers retool their factories to make more green cars.
The bill also authorises Congress to reload the fund, which House Speaker, Nancy Pelosi has promised to do early next year.
Corker, the most vocal of all the Republicans said that it would be better to force bondholders in the big three to accept equity as partial payment, force the UAW to reduce worker pay packets and bring it with line of workers of Nissan, Toyota and Honda and put a stop to all compensation packages to idled workers, among others.
"The consequences of defeating this bill would be disaster for the economy that is already in trouble," House Financial Services Committee Chairman, Barney Frank told the House during the debate.
Even with the White House making last ditch attempts by sending its trouble shooter, Chief of Staff, Joshua Bolten to sway a large number of its party senators, majority of them remained unconvinced that the automakers would become viable in the long run even with a $14 billion government temporary handout, which according to them, the automakers will eventually require as much as $150 billion to become viable.
The Republicans are convinced that the automakers will not make the necessary painful changes as presented by them to the US Congress last week and would prefer them opting for a filing a pre arranged bankruptcy, as it would be a better way for the automakers to realign themselves which would compel its dealers, unions and creditors to do away with the past unviable contracts. (See: US automakers await bailout verdict today)
"If we don't have the forced restructuring plans in place, many of us don't believe that American car companies will come out of this in a competitive position and the taxpayers' money will be wasted," said Republican Senator, John Ensign.
Ensign also said that the government appointed 'car czar' to oversee the implementation of the restructuring plan, will not have the know how or the expertise on how auto companies work, "When GM, Ford, Chrysler, their management teams have not been able to run their companies, obviously, very well, how does anybody expect some car czar or some politician to be able to make the decisions that are right from a business standpoint?"
Many lawmakers agree that by bailing out the auto industry will invite other struggling industries to seek aid and are convinced that Henry Paulson should have attached more strings to the $700-billion Wall Street bailout.
The congressional Democrats removed a controversial provision, which required the automakers to stop funding lawsuits against many states over new limits on greenhouse gas emissions. The White House was confident that the bill would not pass if that provision remained.
Automakers have till 31 March to cut costs, settle its debt and make other changes to achieve financial viability or be barred from receiving additional government assistance and face possible bankruptcy.