US Congress braces for showdown on bill to bail out Detroit auto giants

13 November 2008

The US Congress is bracing for a likely showdown with the Bush administration when it meets next Wednesday to push emergency legislation for a $25 billion bailout from the $700 billion `Troubled Assets Relief Program' to prevent the big three Detroit automakers from collapsing which could potentially trigger a 2.5 million job loss overall and take the US jobless rate to a high of 9.5 per cent, up from October's 14-year high of 6.5 per cent.

The big three cannot wait until January next year when President elect Barrack Obama who wants the automakers to be bailed out by the US government and have met US house of representatives speaker Nancy Pelosi and senate majority leader Harry Reid. These senators are working on a detailed aid package of $50 billion for the auto industry. Out of this, $25 billion would be used as emergency capital and the other $25 billion will go to the retiree healthcare trust fund. This will free up cash for other uses.ancy Pelosi has urged lawmakers to approve the bill and has sought immediate action to bail out the three auto giants, saying that failure of one or more of the three giants would lead to loss of millions of jobs, which will have a devastating impact on the economy.

Barney Frank, chairman of the House Financial Services Committee and congressional Democrat said that if the bill is passed then the loan of $25 billion to Detroit's automakers should come from the $700 billion 'Troubled Assets Relief Program.'

The chief executives of GM, Ford and Chrysler will have the opportunity to present their case before the US congress when they testify at the hearing before Barney Frank's committee.

Media reports quoting an unnamed Democratic congressman said Nancy Pelosi has virtually thrown a challenge to Bush to veto the bill and take blame for the big three collapsing thereby putting millions of Americans out of work at a time when the country is facing its worst financial crisis and economic slowdown.

During his meeting with President Bush on Monday, President-elect Barack Obama also had urged the Bush administration to bail out the automakers.