MercoPress. South Atlantic News Agency

Bush, Obama support emergency aid for US car industry

Elected Pte. Obama and Pte. Bush with the same wishes...

The outgoing George Bush administration said it may be willing to give emergency aid to the ailing US car industry, keeping open the prospects for a bailout the day after Congress failed to approve a deal.

President-elect Barack Obama from Chicago said he hoped the Bush administration and Congress "will still find a way to give the industry the temporary assistance it needs while demanding the long-term restructuring that is absolutely required". Warning of dire consequences for the recession-hit US economy if the once-mighty carmakers collapsed, the White House - in a reversal of policy - said it was ready to consider dipping into the 700 billion USD bailout fund to help keep the companies afloat. "The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry" White House spokeswoman Dana Perino said. Democratic leaders and the main US car workers' union appealed to President Bush to provide emergency funds after a Senate deal to save Detroit's Big Three collapsed in acrimony yesterday. The failure of the 14 billion USD bailout plan in Congress sent markets reeling around the world. Shares in Toyota, the world's biggest carmaker, lost a tenth of their value, and European automakers also closed sharply lower. Analysts say that without quick help, two of the country's major car manufacturers, GM and Chrysler - could face bankruptcy. In response to the company's many struggles, GM said it would cut its first-quarter North American production by 60%. The Senate bill was rejected by the Republicans after the United Auto Workers union refused to agree to wage cuts in line with those of workers for foreign companies in the south of the country. Meantime and responding to uncertainty surrounding the US proposed bailout of the auto industry oil prices fell as much as 7% on Friday. US crude for January delivery slipped 1.70 to settle at 46.28 USD a barrel. Prices had fallen to as low as 43.32 USD earlier in the session after Senate Democrats and Republicans failed to reach a compromise on a 14 billion bill. Investors worry that the failure of one or more of the big automakers could weigh heavily on the economy of the US, the world's largest oil consumer, which has already seen job losses spike to the highest level in decades. The auto industry employs about 2 million workers, according to the Center for Automotive Research. That total includes GM, Ford and Chrysler workers, as well as dealers and workers at parts manufacturers.