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White House reassures automakers

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WASHINGTON — The White House gave troubled Detroit automakers public reassurances Monday that short-term government help was in the works as a key senator suggested the aid package could reach $15 billion for two companies.

President George W. Bush said the bankruptcy of a domestic car company would undermine the nation's economy as it grapples with a financial meltdown. General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without support from the government.

"An abrupt bankruptcy for autos could be devastating for the economy," Bush told reporters aboard Air Force One during a surprise trip to Iraq and Afghanistan. "We're now in the process of working with the stakeholders on a way forward. We're not quite ready to announce that yet."

In Detroit, Sen. Carl Levin, D-Mich., said he expects GM to get $8 billion and Chrysler $7 billion under the Bush administration's plan. He said the Treasury secretary likely would be tapped as a "car czar" to oversee restructuring of the companies.

Bush wouldn't give a precise timetable but said, "This will not be a long process because of the economic fragility of the autos."

Vice President Dick Cheney, in an interview with conservative talk show host Rush Limbaugh, said the auto industry's woes came at an "especially bad time" because of the slowdown of the financial markets.

"We're on the downside of a recession that may be the worst since World War II. And if the automobile industry goes belly up now, there's a deep concern that that would be a major shock to the system," Cheney said.

The Treasury Department, which has been in discussions with GM and Chrysler officials and reviewing financial data from the car makers, said Monday that no decisions had been made on what type of support it may provide to the companies.

Automakers said they could not predict the timing or details of any help.

"The nature and the length of the discussions are proportionate to the complexity of our company and our financial structure," said GM spokesman Greg Martin.

The administration, following the defeat of a $14 billion bailout package in the Senate last week, is considering several options. They include using money from the $700 billion financial bailout fund to provide loans to the carmakers or using money from the fund as collateral for emergency loans the automakers could get from the Federal Reserve. Bush reiterated Monday that tapping the financial bailout fund remains an option.

House Speaker Nancy Pelosi, D-Calif., said the bailout funds were "the only recourse that they have" because of the failure to pass legislation in Congress. She said "something will have to happen imminently" but said requirements for restructuring should be attached to the funds.

"Otherwise, we're just giving life support, rather than a lifeline for viability into the future," Pelosi said.

White House spokesman Tony Fratto said the administration was reviewing the automakers' financial information and would not specify when a decision will be made.

"We're considering our policy options, and when we have something to announce, we'll announce it," he said. "We'll take the time we have available to get the policy right."

The White House is keeping President-elect Barack Obama and his advisers informed of the discussions. If administration officials choose not to provide the money now, the Obama team could wait for the new Congress, which will have stronger Democratic majorities. But the delay could risk bankruptcy filings by GM and Chrysler.

The White House previously had insisted on limiting use of the Wall Street rescue plan to helping financial institutions. It changed course after the auto bailout bill failed in Congress, citing the consequences to the overall economy if U.S. carmakers failed.

Not everyone agreed. Gov. Mark Sanford, R-S.C., said in a letter Monday to Bush that using the financial bailout fund to help automakers could "be a very great mistake."

"It would open the floodgates to federal monies for every distressed industry across this country — and there will be many in this economic slowdown," said Sanford, whose state hosts a large, nonunion BMW plant that has about 5,400 workers.

Michigan Gov. Jennifer Granholm, a Democrat, countered that prompt financial aid was critical because the Detroit-based U.S. auto companies are uniquely connected to other industries, including textiles, glass, plastics and steel.

The auto industry "would take down a huge array of businesses and jobs across the nation if it were allowed to fail. I believe the Bush administration understands that," Granholm said in Lansing, Mich.

Levin said he expects Bush's solution to help the Detroit automakers will be similar to the previous deal the White House reached with congressional leaders.

That plan providing loans for GM and Chrysler to help them survive until March 31 was passed by the House last week but blocked by the Senate, mainly by Republican senators, after the United Auto Workers union balked at making upfront wage concessions to take effect sometime next year. Ford Motor Co. has said it has enough cash to survive 2009.