WASHINGTON — Congressional leaders agreed Thursday to give Detroit automakers more time to make their case for a $25-billion emergency bailout, but they demanded that General Motors Corp., Ford Motor Co. and Chrysler provide detailed plans for using the money to assure their long-term viability without more handouts.
House Speaker Nancy Pelosi (D-San Francisco) and Senate Majority Leader Harry Reid (D-Nev.) agreed to call Congress back into session next month to revisit the bailout issue.
"The sad reality is that no one has come up with a plan that can pass the House and the Senate and get signed by President Bush," Reid conceded. "The executives of the auto companies have not been able to convince the Congress or the American people that this government bailout will be its last."
The Senate, meanwhile, sent Bush what may be the only economic relief measure to get through the lame-duck congressional session: an extension of unemployment benefits.
Approval of the $6-billion measure, which had already passed the House, came as the government said new jobless claims rose to their highest level in 16 years. The bill would extend unemployment checks by seven weeks in all states and an additional 13 weeks in high-unemployment states, including California, Illinois, Florida and others with an unemployment rate of 6% or more. Bush supports the extension.
But the auto industry's troubles continued to darken the economic outlook. The stock market, which rallied on midday news that a bipartisan group of senators had struck a deal on a bailout, tanked after the Reid-Pelosi announcement made it clear no money would begin flowing to industry coffers any time soon. The Dow ended the day down 444 points, or 5.6%.
In another sign of the financial pressure on Detroit, GMAC Financial Services -- the arm of GM that finances car purchases -- said Thursday that it had applied to become a bank holding company so that it would be eligible for aid under the government's $700-billion bank rescue plan.
During two days of testimony this week, the chief executives of GM, Ford and Chrysler, along with the head of the United Auto Workers union, failed to convince lawmakers that the companies were becoming more cost-efficient and competitive.
They also did not allay fears that the proposed $25 billion in emergency loans would be just the first of many government payments needed to keep the Big Three afloat.
