House passes $25-billion loan package for auto industry

The aid package enjoyed support from both parties because of its election-year importance to battleground states such as Michigan and Ohio, where many cars are manufactured.

Supporters portrayed the bill as small change compared with the $700-billion Wall Street bailout proposed by the Bush administration, and Michigan lawmakers said they were preparing to seek another $25 billion over the next three years.

"In the midst of all the economic dark clouds that are in the sky, it's nice to report a bright spot this morning," Sen. Carl Levin (D-Mich.) said at a Capitol news conference.

But critics denounced the loan program as a boondoggle.

"This would set a horrible precedent for companies in other sectors of America's economy," the National Taxpayers Union said in a statement. "If troubled firms seek revitalization, they should restructure their businesses the way millions of families have had to restructure their budgets, rather than bellying up to Congress' trough."

General Motors Corp., Ford Motor Co. and Chrysler, whose executives lobbied hard on Capitol Hill to fund the low-interest federal loans, said the aid would help an important U.S. industry that is struggling in a difficult economy as the companies work to meet stricter miles-per-gallon rules mandated by Congress last year.

The measure doesn't explicitly exclude foreign automakers. But as the original guidelines were written, the loans were intended to help manufacturers transform older factories to produce a new generation of vehicles, and most foreign automakers don't have U.S. facilities old enough to qualify for the aid. Loans would also be available to suppliers in the auto industry.

The loan program was included in a massive spending bill that Congress must pass before adjourning for the fall campaign. It was approved by the House 370 to 58 and now goes to the Senate for expected approval.

The stopgap spending measure was needed to keep the government running into early next year, when a new president will take office, after the Democratic majority in Congress was unable to agree with President Bush on spending levels for the new fiscal year that begins Wednesday.