Stiff Republican Resistance Could Force Democrats to Wait for Obama and Their Party’s Enlarged Majority to Take Office

WASHINGTON — Congressional Democrats are scaling back plans for an economic-stimulus package as partisan deadlock clouds chances for passage of either that measure or a proposed bailout of Detroit’s auto makers until the party’s enlarged majority convenes in January.

Former auto worker Willie Daniel leaves a United Auto Workers hall in Brook Park, Ohio, on Wednesday. Like many UAW members, he took a buyout amid fears that jobs could disappear as car sales continue their steep decline.

Former auto worker Willie Daniel leaves a United Auto Workers hall in Brook Park, Ohio, on Wednesday. Like many UAW members, he took a buyout amid fears that jobs could disappear as car sales continue their steep decline.

Democratic leaders want to move legislation that would give a jobs-producing jolt to the economy. They also support proposals to toss a $25 billion financial lifeline to Detroit. But it isn’t clear either of those steps can pass before January, when President-elect Barack Obama and a new, more heavily Democratic Congress take office.

The biggest problem is in the Senate, where Democrats have only a 51-49 edge until year’s end. The Bush administration is balking at the Democratic agenda, and Republicans in the House and Senate are growing more vocal about their concerns, especially concerning the auto package.

“The financial situation facing the Big Three [auto makers] is not a national problem, but their problem,” said Alabama Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee.

In the House, Minority Leader John Boehner, the Ohio Republican, assailed the proposed aid to Detroit as “neither fair to taxpayers nor sound fiscal policy.”

Senate Banking Committee Chairman Christopher Dodd said Thursday that he knew of no Republicans who would support the $25 billion proposal by Democrats, and said he is disinclined to move a bill without bipartisan support.

“I’d want to be careful about bringing up a proposition that might fail,” given that a rescue plan would be more likely to pass under an Obama administration, the Connecticut Democrat told reporters on Capitol Hill. “There’s some political considerations that need to be made over the next few days.”

Senate Majority Leader Harry Reid of Nevada still plans to move forward next week. “Senator Reid still believes it is important to address this crisis plaguing our auto industry,” said Reid spokesman Jim Manley, adding that bipartisan cooperation will be needed. “We cannot do it without the support of Senate Republicans, who I hope will join us to pass a bill that saves the jobs and protects the livelihoods of millions of hard-working Americans.”

Mr. Dodd, meanwhile, wants to add foreclosure relief to an economic-stimulus package. He expressed frustration Thursday with efforts to help distressed homeowners by the private sector and the Bush administration, which was supposed to make foreclosure relief a top priority in the $700 billion rescue packaged enacted earlier this fall to stabilize financial markets.

“We want to see more progress,” Mr. Dodd said, adding he is prepared to legislate — “now, if possible” — to address the problem.

Democratic leaders are discussing action on a stimulus package that would be less ambitious than the $61 billion proposal that failed in the Senate earlier this fall. The new measure would extend jobless benefits, but propose more-modest investments than previously sought for things such as road and bridge construction, aid to states and food assistance for low-income families.

On the auto measure, House Financial Services Chairman Barney Frank is leading efforts to ready a consensus bill. In an interview, Mr. Frank said the legislation would extend $25 billion in aid, on top of $25 billion in taxpayer-backed loans already approved for the industry. Mr. Frank, a Massachusetts Democrat who was a key author of the financial-market rescue, said a top priority is providing “maximum protections for taxpayers.”

A fresh sign of the auto industry’s troubles came Thursday as Standard & Poor’s Ratings Service lowered the credit ratings of two big auto suppliers, and put 13 others on watch for possible reductions, because of their ties to car makers. General Motors Corp., Ford Motor Co. and Chrysler LLC have argued that a collapse by any one of them could spark a chain reaction among parts suppliers and dealers that would hurt a wide swath of the U.S. economy.

Even if the car companies get financial help, they are unlikely to avoid restructuring and downsizing, which would also affect suppliers.

Some Republicans, mostly from the industrial Midwest, have backed the auto industry’s appeal for aid. Among them is Sen. George Voinovich of Ohio. “The senator believes helping the auto makers remain viable is truly putting Main Street over Wall Street,” said a Voinovich spokesman. But for the most part, supporters of the industry have remained in the shadows on Capitol Hill.

Source: WSJ