WASHINGTON (AFP) — Contrite bosses of Big Three automakers beseeched Congress for a 34 billion dollar bailout Thursday and steered into a raging political debate about the wisdom of rescuing the crippled US icons.
The top executives returned to Capitol Hill two weeks after their initial attempt to win a government rescue ended in humiliation and demands by congressional leaders for an overhaul of their restructuring plans.
"It's fair to say that last month's hearings were difficult for us ... but we learned a lot," General Motors Corp Chairman and CEO Rick Wagoner told the Senate Banking Committee in prepared testimony.
"We're here today because we made mistakes, and we're here because forces beyond our control have pushed us to the brink."
The chiefs of Chrysler and Ford were also set to testify on the first of two days of congressional hearings.
Though skepticism of a government bailout runs deep in Washington, supporters say the impact on the already crisis-wracked US economy of the failure of one or more of the auto giants could be disastrous.
Banking committee chairman Senator Chris Dodd said failure to act on behalf of the automakers would amount to playing "Russian roulette" with the US economy.
"We need to act, not for the purpose of protecting a handful of companies. If that were the extent of the issue -- I would let them fail.
"Inaction is no solution."
Democratic leaders gave automakers two weeks to return to Detroit and come up with a revised restructuring plan after their initial request failed and have raised the prospect of recalling Congress for a vote on a plan next week.
But it remained unclear whether there was sufficient support in the Congress to back a rescue plan, as polls show that a majority of the public remains opposed to bailing out the auto firms.
In a belated public relations exercise, the top executives, pilloried at the first hearing for riding to Washington in corporate jets, drove the more than 500 miles from Detroit in fuel-efficient cars.
They rode into a festering political row over the auto crisis. Democrats want the White House to tap an already approved 700 billion dollar finance industry bailout to rescue the auto firms.
But the Bush administration insists that the money should come from an 25 billion dollar stream of loans designed to help the auto firms produce more fuel efficient vehicles.
Wagoner on Thursday gave fresh evidence of the precarious state of his company, requesting a second four billion dollar loan by January in addition to an already requested immediate four billion dollar rescue payment.
The second payment was not mentioned in an initial restructuring plan issued by GM earlier this week.
Both payments would come from GM's request for 12 billion dollars in short-term loans and a six billion dollar line of credit requested by the firm.
A day before the closely-watched hearings, United Auto Workers (UAW) president Ron Gettelfinger said his union was willing to delay billions in dollars of payments to a health care fund and suspending provisions of the union's contract for laid-off workers.
The about-face, after the union earlier ruled out more sacrifices, illustrated the gravity of the crisis for carmakers with an estimated three million jobs at stake.
GM and Chrysler warn that they could run out of cash within a matter of weeks without billions of dollars in low-cost, government-backed loans.
Neither automaker expects they would be able to survive if they were forced into bankruptcy protection and the ripple effects of their failure would be felt across the country as auto supplies and related companies unravel.
Ford said it might pull through on its own and return to profitability by 2011, but asked for a nine billion dollar line of credit in case the economy worsens or one of its competitors fails.
In its restructuring plan, Chrysler said it needed seven billion dollars by December 31 if it was to survive global credit crisis, falling demand for large vehicles and a global economic slump.
The fate of the key auto industry is shaping up to be the first major test of the incoming administration of president-elect Barack Obama, who has warned he is not prepared to write the companies a blank check.
Obama said he wanted to hear what the automakers had to say at congressional hearings on Thursday and Friday before committing himself to any bailout.
"We should maintain a viable auto industry," he said Wednesday.
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