President George W. Bush makes a statement on the economy, Friday, Dec. 5, 2008, on the South Lawn of the White House in Washington. (AP Photo/Evan Vucci)
White House (CNSNews.com) – The only real debate between the White House and the Democratic Congress about giving tax dollars to Ford, Chrysler and General Motors has been what pot of money it comes from. On Friday, President George W. Bush told Congress he wants them to pass his version of the bailout this week.
 
The White House is willing to loan the beleaguered American auto industry at least $25 billion, but believes it should come from a Department of Energy program already designed to help car makers. Congressional Democratic leaders on the other hand want the money to come from the $700 billion Troubled Assets Rescue Program (TARP) intended approved last October that was intended for financial firms.
 
With time winding down before the holiday recess, Bush was also firm that Congress should vote on the White House proposal no later than next week.
 
The dueling proposals come amid the Department of Labor’s report of 533,000 American jobs lost--for a 6.7 percent unemployment rate--prompting Democratic leaders to say an auto bailout would help the economy as a whole.
 
Bush’s remarks came one day after auto industry executives came to Capitol Hill asking for $34 billion in loans, contending they need the federal money to survive.
 
In a short speech from the South Lawn of the White House, Bush said he is concerned about the recession, high unemployment rate, the housing industry and the auto industry. 
 
“I am concerned about the viability of the automobile companies, I'm concerned about those who work for the automobile companies and their families and likewise I am concerned about taxpayer money being provided to those companies that may not survive,” Bush said.
 
But he showed no signs of bending from the plan the White House originally asked Congress to pass. He said the money already available in the Department of Energy program could be used “so long as the companies make hard choices on all aspects of their business to prove that they can not only survive but thrive.”
 
“It is important that Congress act next week on this plan and it is important to make sure that taxpayers’ money be paid back if any is given to the companies,” Bush said.
 
Earlier this year, Congress approved the Department of Energy’s Section 136 program to help American car makers build more fuel-efficient vehicles. The program has $25 billion in available funds. The Bush administration believes--in a time of urgency--the program should be amended to use those funds for helping to keep the car companies afloat. The White House said this week it would be open to Congress expanding the program to put more money in if needed.
 
The auto companies submitted their restructuring plans to Congress and the White House this week for how they would spend the money.
 
The Department of Energy has a formula in determining viability that factors in debt, interest coverage, expenses, liquidity and financial projects demonstrating solvency.
 
LINK: http://www.energy.gov/media/Auto_Loan_Program_Final_Rule.pdf
 
But in a letter to the president Thursday, Democratic leaders in the House and Senate insisted that the money come from the $700 billion financial bailout program. The letter was signed by House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.), Senate Banking committee chairman Chris Dodd (D-Conn.) and House Financial Services committee chairman Barney Frank (D-Mass.).
 
“The response from Treasury to date has been that these funds should only be used to protect the U.S. financial sector,” the Democrats said in the letter. “What is becoming clear, however, is that the failure of the Big 3 would indeed have a major direct and negative impact on the financial sector, not just on the economy as a whole.”
 
The letter continued citing a Ford Motors Company report that said the “Detroit 3, plus their suppliers, create $1.1 trillion gross exposure to the U.S. financial system” and that “increasing the financial sector’s negative exposure by up to $1 trillion and reducing the economic activity by up to $800 bill will greatly exacerbate the current negative economic and financial climate.”
 
Some Democrats supportive of an auto bailout want strings attached, such as an oversight board to limit executive pay and govern the fuel efficiency of vehicles. Meanwhile, many congressional Republicans have called for simply allowing the three companies to file bankruptcy--which would allow them to remain in business, but would require restructuring. The White House has never expressed support for bankruptcy.