Although it’s not getting much attention in New York, the talk on Capitol Hill is all about how leaders of the Republican caucus in the Senate may have turned decisively against the bailout of General Motors and Chrysler. Democrats and the Bush administration are now so desperate there is talk that Treasury Secretary Hank Paulson might be forced to use TARP funds to rescue the automakers, a move Paulson has been fiercely resisting.
Politico supplies the latest news from Capitol Hill:
Senate Minority Leader Mitch McConnell broke with the White House Thursday over a proposed $14 billion loan package for ailing automakers, all but assuring its defeat this week and forcing the administration to consider other emergency steps to avert bankruptcies among Detroit’s Big Three this winter.
The Kentucky Republican, with a large auto presence in his state, had been seen as a potential ally for the industry, and he provided crucial support for the Treasury Department’s financial markets rescue fund this fall. But he has since endured a punishing reelection fight. And faced with strong resistance in his caucus, he said that the bill “isn’t nearly tough enough” and that he could not ask taxpayers to “subsidise failure.”
McConnell’s floor speech follows Wednesday night’s House vote approving the bill 237-170, with 32 Republicans supporting the administration. House Financial Services Committee Chairman Barney Frank (D-Mass.) had hoped the better-than-expected margin could help tip the scale in the Senate, but Speaker Nancy Pelosi didn’t hide her unhappiness with the lack of Republican support — a harbinger of the Senate situation…
And the California Democrat said this could mean that Treasury Secretary Henry Paulson will have to do what he hasn’t wanted: tap financial rescue funds to keep General Motors Corp from falling into bankruptcy in President Bush’s last weeks in office.