WASHINGTON - With Congress gridlocked and the economy floundering, the Bush administration declared Friday it would step in and prevent the "precipitous collapse" of the U.S. auto industry and the disastrous national economic impact of the hundreds of thousands of job losses sure to follow.
The day after the sudden demise of emergency legislation in Congress, administration officials said no decisions had been made on the size or duration of the new rescue plan, or what type of concessions, if any, would be demanded from the struggling automakers, their workers, stockholders or others.
In a reversal, the most likely option under consideration involved billions of dollars originally ticketed for the bailout of the financial industry. President George W. Bush had long declared that money off-limits to the beleaguered automakers.
General Motors Corp. and Chrysler LLC have warned they are running out of cash and face bankruptcy without some form of assistance. Ford Motor Co., which is in somewhat better shape financially, has been seeking access to a line of credit.
"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," White House press secretary Dana Perino said after the failure of a $14 billion bailout bill in Congress. The legislation died when Senate Republicans demanded upfront pay and benefit concessions from the United Auto Workers that union officials rejected.
Perino added, "Given the current weakened state of the U.S. economy, we will consider other options if necessary including use of the TARP program to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."