Back in Capitol Hill, auto execs confront politics of recession

“I don’t want to raise expectations that that is going to be easy at all given the climate in the country,” Senator Christopher J Dodd said after Thursday’s hearing before the banking committee, which he chairs.

In a sign of the growing pessimism among the Democratic leadership, Dodd, Pelosi, Rep Barney Frank of Massachusetts, the chairman of the House Financial Services Committee, and the Senate majority leader, Harry Reid of Nevada, wrote to President Bush after Thursday’s hearing urging him to rescue the auto industry.

Dodd supports a taxpayer rescue but called on the Bush administration or the Federal Reserve to save the automakers because Congress may not do so. And Dodd said that he would persist in trying to reach a legislative deal, even as it was clear that congressional Democrats, furious over the administration’s handling of the $700 billion bailout of the financial system, are reluctant to put more taxpayer money on the line.

Confirming the fears that taxpayers could lose out, the economist, Mark Zandi, of Moody’s Economy.com, said that automakers probably needed much more than their requested $34 billion and perhaps as much as $125 billion. He predicted that the automakers would ask for more money by next fall.

Even among lawmakers who have supported Government interventions in the past, bailout fatigue is now gripping much of Capitol Hill. Dodd and Senator Charles E Schumer said they favoured helping the automakers but only with strict oversight by a board or special trustee, perhaps a Cabinet secretary, to be sure the companies use the money as intended.

But that proposal would require writing and passing complicated new legislation that could be difficult to achieve, given the tight calendar.