Auto import boost would stir backlash

May 21, 2009

Auto import boost would stir backlash

Senators warn Geithner about GM aid use

BY JUSTIN HYDE
FREE PRESS WASHINGTON STAFF

WASHINGTON — Key senators warned Treasury Secretary Tim Geithner on Wednesday of a political firestorm if General Motors Corp. was allowed to boost imports from foreign countries while receiving billions of dollars in government aid.

Geithner, speaking to the Senate Banking Committee, said the Obama administration was "trying very carefully" not to get involved in decisions by GM and Chrysler LLC to close plants or cut dealerships as part of their government-funded turnarounds.

The UAW has attacked GM’s plans to boost imports from China, Mexico and South Korea through 2014 while closing 16 plants in the United States and shedding 21,000 U.S. manufacturing jobs.

"If it was a firestorm in this country when we give billions to banks and they pay huge bonuses, you haven’t seen anything yet for what’s going to happen if we put billions in auto companies, and they open plants in China," said Sen. Sherrod Brown, D-Ohio.

Geithner defended the administration’s work, saying it was making extraordinary efforts to save the domestic auto industry, and the plans for GM would become clearer in the coming weeks.

"Our job is to make sure that the overall plan leaves these companies in a position where, over the longer term, they emerge viable," he said.

In testimony prepared for the Senate Banking Committee, Geithner did not indicate any decision on whether to push GM into bankruptcy around a June 1 deadline. Sen. Chris Dodd, the Connecticut Democrat who heads the committee, said he would hold a hearing shortly after the deadline on the administration’s plans for the industry.

Geithner oversees the administration’s auto task force, which has called for steep cuts in debt at both automakers as a condition of additional government aid, with bankruptcy as a tool to enforce a chosen plan. The Treasury has pledged $8 billion toward Chrysler’s restructuring, and GM has said it would need an additional $11 billion.

The Obama administration has come under growing questions from members of Congress over Chrysler and GM’s decision to cut nearly 1,900 dealerships and protests spurred by the UAW over GM’s production shifts. GM contends imports as a share of its sales in the United States won’t change under its plan; it will make up for the increase in imports from Asia with cuts in imports from Canada and elsewhere.

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