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Pelosi to Sacrifice Big 3 to Help Silicon Valley?

4:39 PM, Dec 5, 2008 • By BRIAN FAUGHNAN
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ABC News reports that congressional Democrats are giving President Bush an "ultimatum": extend billions in taxpayer-funded loans to Detroit, or else:

"Your decision to utilize the TARP funds, or to work with the Federal Reserve to make available assistance through its existing lending programs, or both, are essential to the Congress' ability to address this critical economic situation in a timely manner, and would also eliminate the uncertainties inherent in the legislative process, " say Senate Makority Leader Harry Reid, House Speaker Nancy Pelosi and Democratic committee chairmen in the letter.

They go on: "We are very hopeful that we can work cooperatively with the Administration and the Federal Reserve to provide urgent assistance and support our domestic auto industry, just as other nations are doing, during this extraordinarily difficult global economic collapse. We look forward to hearing from you on an expedited basis, since we will be notifying colleagues tomorrow of next week's session.

But what exactly is the threat behind the ultimatum? Congressional Democrats offer no stick -- and no carrot either. As Rick Klein points out, they're forced to try to push the president to act because they are unable to get congressional Democrats in line behind one approach.

Dicey indeed. The clearest sign that the votes are still not there for a Detroit bailout came shortly after the end of the hearing when Democratic leaders sent President Bush a missive saying, basically, you do it.

You would think that with Republicans still stinging from the recent election, this would be the ideal time for Democrats to pull together and act boldly to save the UAW America's automakers. Instead Congressional leaders seem unable to build consensus behind a plan. The surprising part of this however, is that the problem isn't in building a bipartisan consensus; it's that they cannot get an agreement within the Democratic majority. And Nancy Pelosi seems to be part of the problem -- at least according to Henry Payne:

Once synonymous with Detroit, the "American auto industry" now depends on your geographical perspective. To Southerners, it's foreign transplants like BMW and Hyundai. To Midwesterners, it's General Motors, Ford and Chrysler but also Honda and Toyota. And to the West Coast, it's alternate-fuel startups like Tesla Motors and Fisker Automotive.

That is why Feinstein wrote Senate Majority Leader Harry Reid: "I do not support disadvantaging the next generation of American automobile companies in an effort to save the first generation."

Feinstein's letter comes in response to a Senate plan crafted by Michigan Democrat Carl Levin -- backed by the Bush administration and a bipartisan group of senators -- to use existing funds to help Detroit's automakers almost exclusively. In speeding his plan, the Senate veteran added a provision stipulating that the federal government "shall make loans (to carmakers) that have operated a manufacturing facility throughout the 20-year period ending on the date of enactment of this act." In other words, only Detroit automakers (and Honda's Marysville, Ohio facility) need apply.

Powerful Democrats like House Speaker Nancy Pelosi and Feinstein beg to differ. Their state's political and business class speaks contemptuously of Detroit's "dinosaurs." They believe Silicon Valley-produced alternatives are the answer, and they demand equal access to federal money to prove it.

Is Speaker Pelosi willing to let the Big 3 go bankrupt just to give a homestate upstart a leg up? She certainly isn't spending any political capital to push the bailout through -- preferring to focus attention on a White House that seems very unlikely to act. Further, most think that Henry Waxman had her blessing when he deposed Detroit's John Dingell from the chairmanship of the powerful Energy and Commerce Committee. The move was an implicit shot at the Big 3, who saw Dingell as their most forceful advocate in Congress.

The fight over the bailout offers a foreshadowing of how things may go for Democrats next year. Herding cats might not be as easy as it seems. And after January 20, Democrats won't have anyone to blame for themselves for what happens.