WASHINGTON — The $25 billion rescue plan for the auto industry, desperately sought by Detroit's beleaguered Big Three, collapsed Thursday as Congress drew the line at one more bailout. Democrats said they wouldn't even consider it until the companies produced a convincing plan for rebuilding their once-mighty industry.
The demise of the rescue – at least for now – left the fate of General Motors Corp., Ford Motor Co. and Chrysler LLC uncertain, and sent Wall Street spiraling to its lowest level in years. The Dow Jones industrials dropped 445 points, the second straight plunge of more than 400, and hit the lowest point in nearly six years.
The carmakers have been clobbered by lackluster sales and choked credit and are battling to stay afloat through year's end. Failure of one or more of the Big Three would be a severe further blow to the floundering economy – and to many Americans' view of the nation's industrial strength – and throw a million or more additional workers off the job.
Just Thursday, the government reported that laid-off workers' new claims for jobless benefits had reached a 16-year high, and the number of Americans searching for work had soared past 10 million.
Democratic leaders scrapped votes on the auto rescue, postponing until next month a politically tricky decision on whether to approve yet another unpopular bailout at a time of economic peril, or risk being blamed for the implosion of an industry that employs millions and has broad reach into all aspects of the U.S. economy.
"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.
GM, Ford and Chrysler quickly issued statements promising to submit the blueprint the Democrats demanded.
Members of Maine's congressional delegation expressed reservations about a bailout unless the industry commits to producing more fuel-efficient vehicles.
"I continue to have grave reservations about simply providing a blank check to the auto industry that would merely delay the day of reckoning," Sen. Susan Collins, R-Maine, said in an e-mail. "Congress has already provided $25 billion in loans to help the automobile industry retool to meet the federal mandate for more fuel-efficient vehicles. I will reserve judgment until I have reviewed the specific legislative proposals."
Rep. Tom Allen, D-Maine, noted that although the auto industry is responsible for millions of jobs, "it is imperative that before Congress acts to provide funding to the Big Three automakers, they must provide us with a clear commitment that shields American taxpayers from exposure, assures repayment, does not enrich executives whose poor decisions created this problem and demonstrates the viability and competitiveness of the industry."
Sen. Olympia Snowe said she met in 2000 with auto company executives, urging them to alter their market strategy. "Unfortunately, they fought us every inch of the way and continued to design and construct cars better suited to the 1970s than to 2008," Snowe said.
She said her decision on whether to support a bailout will be based on accountability to ensure that bad business decisions are not repeated.
Snowe said she believes automakers need to produce energy-efficient technologies to survive, adding, "Clearly, the bottom line is that the American automotive industry must be overhauled and reconfigured if it is to turn the corner and succeed."
Rep. Mike Michaud, D-Maine, was skeptical of a bailout. He believes an economic stimulus package aimed at helping families and individuals would be more effective.
"Detroit may need help, but industries of all sorts are hurting, like Maine's paper and lobster industries," Michaud said. "I believe any economic recovery package must stimulate the whole economy."
Pelosi and Senate Majority Leader Harry Reid, D-Nev.,...
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