Bush: Open to 'all options' on auto rescue
U.S. President tells CNN that failing to assist the nation's auto industry will exacerbate the economic crisis. Republicans urge Bush not to act.
WASHINGTON (CNN) -- The Bush administration said Tuesday it is "considering all options" when it comes to aiding the U.S. auto industry. But a growing chorus of Republican lawmakers urged the president not to use Wall Street bailout money for an automaker bailout.
"A disorganized bankruptcy could create enormous economic difficulties, further economic difficulties," President Bush said in an interview with CNN Senior Political Correspondent Candy Crowley. "I feel a sense of obligation to my successor to make sure there is a not a huge economic crisis. Look, we're in a crisis now. We're in a huge recession, but I don't want to make it even worse."
A legislative plan to provide $14 billion in stopgap loans died in the Senate late Thursday night. The very next day, the Bush administration -- shifting its long-held view -- said it might use its authority to give automakers their bailout from funding set aside for the $700 billion Troubled Asset Relief Program.
In an interview on CNBC Tuesday, Treasury Secretary Henry Paulson said the administration plans to get automakers the money quickly, but it will work to ensure automakers will put the funds to good use.
"The autos will get the money as quickly as we can prudently do it," Paulson said. "Failure by these companies at this time is not something any of us want to deal with ... but it needs to protect the taxpayer and it needs to have a path to viability."
Democrats had long advocated an auto bailout using TARP funds, but reached a compromise deal with the White House to take money out of a different pool of funds aimed at helping automakers produce fuel efficient vehicles. After the bill failed in the Senate, Rep. Barney Frank, D-Mass., House Financial Services Committee chairman, again urged the president to use TARP.
But Republican lawmakers, including seven senators and 26 representatives pled with the President not to act.
"No one wants the "Big Three" to fail, and we are not proposing it," said a letter to Bush from the GOP representatives. "A federal bailout of the automobile industry ... would put taxpayer money at risk, shield the companies from making the reforms necessary to restore competitiveness again, and set a costly precedent that the federal government will bailout other failing companies and industries."
Instead, the group suggested the automakers seek Chapter 11 bankruptcy protection to reorganize and return to profitability.
A letter from the Senators said using TARP to bail out U.S. automakers would ultimately fail because it would not force the United Auto Workers union and the automakers to make sufficient reforms to become viable.
"Absent such restructuring, we do not believe any amount of money will succeed in saving these companies," the letter said.
But Bush said doing nothing could lead to further economic decline.
"On the other hand, I'm mindful of not putting good money after bad, so we're working through some options," he added. "What you don't want to do is spend a lot of taxpayers' money and then have the same old stuff happen again, and again and again."
Bush said there is no one person or event to blame for the recent woes in the U.S. economy. "The whole system became inebriated," he said.
"I'm not really happy about the fact there have been excesses in the financial markets which are affecting hard-working people and affecting their retirement accounts. Having said that, I'm very confident that, with time, the economy will come out and grow and people's wealth will return."
-- CNNMoney.com staff writer David Goldman contributed to this report 
