This statement went out this morning:

NAM ENCOURAGES WHITE HOUSE TO USE TARP FUNDS FOR AUTO COMPANIES
Engler Urges Bush Administration to Act Quickly

WASHINGTON, D.C., December 12, 2008 – In response to the Senate’s failure last night to approve financial assistance for domestic automakers, and the White House statement this morning that it is considering using funds from the Troubled Asset Relief Program (TARP) for this purpose, the National Association of Manufacturers President and Chief Executive Officer John Engler issued the following statement:

Manufacturers are greatly disappointed by the Senate’s failure last night to approve funding for the domestic automakers that has already been approved by the House. The nation is in recession. Our economy is in dire condition and vulnerable to more dramatic shocks if we allow one or more of the Detroit-based auto companies to fail. In fact, according to some estimates, the collapse of just one of the domestic automakers could lead to a rise in unemployment by 3.0 to 8.9 percent in the nine hardest hit states. Every state would be affected and the supply chain that serves all automakers – domestic and foreign-based – would be damaged. Increased government payments and tax losses could exceed $150 billion in the first three years. We simply cannot permit this to happen.

This morning the White House indicated it may be willing to transfer emergency funds to the auto companies from the TARP. We fully support this action, applaud the White House for considering this necessary step, and encourage the Administration to move quickly.

From Dana Perino, White House Press Secretary:

It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future.

Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. 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. 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.

While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.

UDPATE (12:05 p.m.): From Treasury:

Treasury spokeswoman Brookly McLaughlin said, “Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry.”

The motion to invoke cloture on the $14 billion financial aid package for the domestic auto industry failed in the Senate late Thursday on a 52-35 vote. (Roll Call No. 215.)

Detroit News coverage:

• Rescue collapses as Senate rejects aid for auto industry
• Senators to UAW: It’s payback time
• Options narrow for GM, Chrysler

We’ll highlight the Detroit News editorial, expressing sharp criticism all the way around and calling for the Treasury now to provide the aid to keep the domestic auto manufacturers operating. Now, not all disagreement is partisan squabbling; some of it may well be philosophically grounded. But otherwise, a sharply argued opinion piece:

Loan deal’s failure a loss for everyone

The collapse of the automotive bailout loan legislation is indeed, as Senate Majority Leader Harry Reid said Thursday night, a loss for the country. What should have been a simple package to lend existing funds to Detroit’s automakers turned into a political nightmare.

The task before Congress was to move $14 billion in emergency loans to keep the automakers operating for the next few months until their turnaround strategies could kick in, and to provide reasonable protections for taxpayers.

Instead, Congress chose partisan squabbling and political agendas over good public policy.
In the House, Democrats saw the loan package as an opportunity to saddle the automakers with strict fuel economy and emissions standards, limits on executive compensation and strict guidelines for how they run their businesses.
In the Senate, Republicans from southern states that host foreign auto manufacturers saw an opportunity to do a little union busting, insisting that the United Auto Workers negotiate concessions directly with senators.

And politicians from both sides of the aisle through this entire grueling process continued to spout the nonsense that Detroit’s automakers had “their heads in the sand,” in the words of President-elect Barack Obama.

(continue reading…)

From CQ Politics, “Reid Seeking To Set Up Series of Senate Auto Bailout Votes“:

Senate Majority Leader Harry Reid was working Thursday to set up Senate votes on alternative approaches to an auto industry bailout. But he wasn’t making much headway.

Reid, D-Nev., huddled with Minority Leader Mitch McConnell , R-Ky., attempting to work out a unanimous consent agreement on a limited number of full alternatives.

If that effort fails, Reid warned, he will make one effort Friday to proceed to a shell bill (HR 7005) that would be the vehicle for action, and toss in the towel if he is blocked in that attempt.

Senate Republican Leader Mitch McConnell made his opposition clear in a floor statement this morning, listing his specific objections. He argued for an amendment sponsored by Sen. Bob Corker (R-TN).

Text of the Corker amendment is here. Corker made the case in a Detroit News op-ed today, “Loan conditions must fix automakers’ problems.”

The NAM sent a Key Vote letter to the House and Senate yesterday supporting H.R. 7321, the Auto Industry Financing and Restructuring Act. The gist:

As the country’s largest manufacturing sector, the automotive industry accounts for approximately 20 percent of our manufacturing GDP and close to one million jobs in America. We simply cannot afford to let the auto industry fail.

Financial and market instability, an ongoing credit squeeze, and closed capital markets have drained the liquidity from automakers’ operations. Auto sales have plummeted along with consumer demand and confidence, cutting back significantly on automakers’ revenue. The auto industry in America cannot be sustained under these extraordinary economic conditions without additional support.

The serious economic troubles affect far more than just major auto companies. The automotive industry is highly integrated and all of the automakers in America share many of the same suppliers. Auto parts suppliers employ 600,000 people concentrated in seven states. A failure of one automaker could have a crippling impact on the entire supply chain and reverberate throughout the U.S. economy, affecting both people in the industry and many more who provide services – such as insurance, advertising and food – to people in the auto industry.

The auto industry is in dire need of relief today, and such relief should be seen as a critical component in our overall effort to restore confidence to consumers and investors, and stabilize the economy. A stable auto industry is critical to our nation’s economic recovery.

 The text of the NAM’s letter to the House is available here. The text of the legislation is here.

Where have we seen that headline before?

Detroit News:

Inaction on automakers would cost taxpayers billions

WASHINGTON — The U.S. auto industry’s problems will cost taxpayers plenty whether or not the government helps Detroit. – 10:22 am

Dems, White House agree to $15B auto bailout
GMAC extends deadline for tender offers
Stocks rise on optimism about Detroit bailout
Ford execs say company differs from U.S. competition
Car czar more likely a banker than gearhead
GM to offer lower loan rates
Lopez: Haircut politics bad for Big Three
Iacocca shows support for Big 3 leaders

PDF: Draft of auto bill
PDF: Summary of the auto rescue bill

Within the last hour…

• New York Times, “Democratic Leaders Push to Complete Auto Rescue Plan“
• Reuters, “Sen. Reid awaits word on bank bailout fund“
• Bloomberg, “Automaker Bailout Plan May Be Completed By Tonight, Reid Says“
• Detroit News, “Reid says auto deal could come in hours“ 

Following is the discussion draft of legislation to provide federal financial aid to the domestic auto industry. The bill is being called the “Auto Industry Financing and Restructuring Act.”

Posted at the Senate Conservatives Fund, who described it as the text that “Congressional Democrats shared with the White House today.” Linked to by Michelle Malkin, a firm opponent of any aid.

UPDATE (4:50 p.m.): Here are the headlines within the last hour or so:

• Los Angeles Times, “White House, automakers close to reaching bailout deal“
• ABC News, “Government Closes In On Deal For Automakers“
• Reuters, “Auto bailout takes shape“

These same headlines, more or less, have run regularly since Friday.

Bloomberg, “Democrats, White House Said to Agree on Automaker Aid.”

The breakthrough came when House Speaker Nancy Pelosi said $25 billion in Energy Department funds for the development of fuel-efficient vehicles could be used to keep the automakers operating if there is a “guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative.”

• Detroit News, “Congress, White House zero in on auto aid plan.”
• Detroit Free Press, “Pelosi drops opposition to tapping plant aid“

Wall Street Journal, “Detroit Bailout Nears a Reprieve:”

White House press secretary Dana Perino termed the discussions “constructive” on Saturday but stopped short of declaring a final deal had been reached.

“We have had constructive discussions with members of Congress from both houses, and both sides of the aisle,” she said in a statement. “We hope to continue to make progress toward assistance for the automakers based on important principles,” including use of the existing auto loan program and “very strong taxpayer protections.”

UPDATE (Noon): An editorial in today’s Wall Street Journal takes a jaundiced tone, “Bridge Loan to Nowhere“:

All three CEOs also drove to Washington in hybrid vehicles as penance for their private-jet flights back in November. This bit of political obeisance was supposed to show that they’d gotten religion both on their perks and their carbon footprint. But it may not have been enough. One Congresswoman wanted to know why they couldn’t hit a 50-mpg fuel-economy target by 2015. Another asked whether, maybe, they weren’t selling enough cars because everyone in America was waiting with baited breath for the coming revolution in fuel economy.

After Barney Frank was done roughing up the CEOs, he hustled them out to hear from David Friedman of Union of Concerned Scientists and Jeffrey Sachs of the Earth Institute. Mr. Friedman warned the Members not to give one inch on fuel-economy standards and not to relax the environmental strings attached to the $25 billion Congress has already made available to the car companies.

You get the picture. If there was ever any question whether Congress actually wants to “save” Detroit, this week dispelled it. This is not a bailout that Congress is debating. It is a federal takeover. We don’t mean that in the sense that the feds will own the companies on paper, although that can’t be ruled out. What Congress wants to own is their business plan, and Detroit seems prepared to oblige.

It is a weird dynamic, to be sure. Congress imposes anti-market regulations and environmentally inspired mandates that make it difficult to turn a profit, and when Detroit cries uncle, provides just enough money to keep things going until another round of anti-market regulations and environmentally inspired mandates can be imposed. Is that what they mean by sustainable growth?

New York Times, “Democrats Plan Short-Term Rescue for Automakers“:

WASHINGTON — Faced with staggering new unemployment figures, Democratic Congressional leaders said on Friday that they were ready to provide a short-term rescue plan for American automakers, and that they expected to hold a vote on the legislation in a special session next week.

Seeking to end a weeks-long stalemate between the Bush administration and House Speaker Nancy Pelosi, senior Congressional aides said that the money would most likely come from $25 billion in federally subsidized loans intended for developing fuel-efficient cars.