Congressional Democrats, President-elect Obama Press for TARP Aid for Auto

The Big Three auto makers continue their death march, burning millions in cash every month while auto sales drop to the lowest in 25 years. Help may be on the way.

Following a meeting of senior executives of the Big Three auto makers, comes an appeal by House Speaker Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) to use the $700 billion Troubled Asset Relief Program to assist the auto industry.

Speaker Pelosi and Majority Leader Reid have already fired off a letter to the Secretary of Treasury Paulson urging the government assistance. The top Democratic leaders are expected to follow with a similar letter to the White House ahead of President-elect Obama's meeting with President Bush on Monday.

The Administration has been resistant to broadening the mandate of the $700 billion TARP program, designed to buy "troubled assets" and improve credit flows.

Bush spokesperson Tony Fratto reinforced that sentiment stating, "it wasn't set up for anything else," pointing to the only government assistance authorized by Congress for the auto industry is the $25 billion to aid the industry in retooling for energy efficiency.

However, the White House has been willing to discuss expanding the use of TARP funds to buy equity stakes in a broader range of financial companies, including GE Capital, CIT Group, or similiar commercial financing and leasing firms.

President-elect Obama is wasting little time making his agenda known for the auto industry. On This Week with George Stepanopolous, incoming Obama Chief of Staff Rahm Emanuel (D-IL) outlined the incoming administration's plan, highlighting three principles:

• "The auto industry is an essential part of our economy and an essential part of our industrial base"
• "They should look at accelerating the $25 billion that was offered for re-tooling for the industry going forward"
• "There are other authorities within the administration that they should use at this time"

Obama's emerging economic team seems to be signaling support for using the TARP and other government assistance to prop up the ailing auto industry.

The auto industry is certainly going to be on the agenda of the lame-duck session Democratic congressional leaders are considering convening. The session is sure to enact a short-term stimulus package or address auto maker assistance.