Bush Could Bail Out Automakers, After All

President Bush signaled today he may throw GM and Chrysler a lifeline after all, following the defeat in the U.S. Senate of a proposed auto bailout bill.

The House on Dec. 10 approved $14 billion in emergency loans to GM and Chrysler, based on a compromise worked out between the House of Representatives and the White House.

Republican senators balked at the bailout on Dec. 11. It only took a few Republicans to defeat the bailout. Democrats have a one-vote majority in the Senate, which meant the bailout needed 60 votes to pass, to prevent opponents from filibustering it to death.

Following the defeat in the Senate, White House Press Secretary Dana Perino said the Administration would consider using funds from the U.S. Treasury Department’s $700 billion financial-services industry bailout, to help the automakers.

“Under normal economic conditions, we would prefer that markets determine the ultimate fate of private firms,” she said, in a press conference on Dec. 12.

“However, 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,” she said. TARP is the Trouble Asset Relief Program. The Administration earlier had opposed redirecting money to the auto industry from the financial bailout.

“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,” Perino said.