The warnings from Chrysler LLC and General Motors about impending collapse were not a bluff. Now that a minority of the U.S. Senate has blocked any aid to the auto industry, all Americans must rely on the administration to lend the automakers money so they can help fix a damaged economy, rather than drive it down to awful depths.
As White House spokeswoman Dana Perino correctly said this morning, "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."
The White House reversed itself this morning. It said it is now considering using some of the $700 billion in financial rescue money for the auto industry. This could be one of Bush's finest hours.
The sudden failure of the industry, superimposed over a global credit meltdown and a terrifyingly deep recession, would be catastrophic. Look beyond the automakers to their suppliers and dealers, and the communities in which domestic auto plants drive the local economy. Millions of people would be thrown out of work, would lose health insurance and would lose the ability to pay taxes.
The loans would be the best, cheapest and most efficient stimulus package the government can provide.
Last night's shocking failure of the Senate to approve $14 billion in loans to Chrysler and GM came as enough Republicans tried to micromanage the automakers' future. Sen. Bob Corker, the Tennessee Republican, actually proposed some useful ideas about how various requirements attached to government aid could help the automakers restructure debt and make labor costs more competitive.
But the Republicans' ultimate support never came, and they refused to cut off debate and allow a vote.
Corker's ideas still could be a basis for a viable industry. But not if the industry dies. In its precarious state, the industry could be permanently undone by precipitous plant closings, lending defaults and refusal of suppliers to ship parts for fear of lack of payment.
The next Congress and the Obama administration will have plenty of opportunity to attach as many requirements as are prudent to additional government loans. They can paint villains and assign blame. For now, President Bush must step in, or push the entire economy into a downward spiral.
We encourage him to act in the interest of all Americans and keep this industry alive.