The US House of Representatives has approved a $14bn (€10bn) government bailout for the teetering auto industry, but the proposal now faces stiff Republican opposition in the Senate.
The plan passed 237 to 170 late last night following several hours of intense debate, and after senior Democrats in Congress and the White House reached a bridge loan deal to rescue the Big Three automakers: GM, Chrysler and Ford.
The bill now moves to the Senate where strong Republican opposition in a chamber with a thin Democratic majority threatens to derail the legislation.
The rescue funds for the bailout are to be drawn from a loan program set up previously to bankroll the development of fuel-efficient cars.
The initial plan called for up to $15bn, but in the end lawmakers chose to leave some funds remaining in the loan program for use by smaller companies.
At the end of floor debate, House Speaker Nancy Pelosi said the legislation would serve as a 'jumpstart for an industry and our country's economic health'.
She said: 'We want to throw a lifeline for success. We do not intend to afford life support.'
She warned that auto industry bankruptcy would send US manufacturing down into a deep pit.
In the most far-reaching intervention in US industry in years, The Auto Industry Financing and Restructuring Act calls for emergency government loans to the car companies within days to be overseen by a 'car czar' appointed by outgoing President George W Bush.
In return, automakers by 31 March would have to cut costs, settle debts and make other changes to show a path to profitability or face possible bankruptcy.
The government could choose to revoke the loans if the companies fail to make progress, or could refuse further assistance after 31 March if the Big Three have no promising survival plan.
The Big Three carmmakers are saddled with pension obligations for its mostly unionised workforce and rising health care costs.
General Motors is the largest private purchaser of health care in the US.
While universal health care would greatly reduce their average $72-per-hour labour cost, it was never part of the negotiations.
Today President-elect Barack Obama announced his new Health Secretary Tom Daschle and together they reinforced their committment to enacting a near-universal health care plan.
