WASHINGTON -- Two top Republican senators called Sunday for struggling General Motors to seek bankruptcy rather than fresh government aid as the best path to a long-term recovery by America's biggest carmaker.
"I think the best thing that could probably happen to General Motors, in my view, is they go into Chapter 11," John McCain, President Barack Obama's vanquished foe in last year's election, told "Fox News Sunday."
"They reorganize, they renegotiate their union-management contracts and come out of it a stronger, better, leaner and more competitive automotive industry," he said.
GM on Friday denied reports that it is considering a prepackaged reorganization financed by the government under the "Chapter 11" provisions of the US bankruptcy code as a solution to its financial woes.
The reports came a day after GM's auditors voiced "substantial doubt" about the struggling automaker's ability to survive a collapse of global auto sales amid a deepening recession.
GM chief executive Rick Wagoner has repeatedly warned that the largest US automaker would likely be unable to survive a bankruptcy filing because consumers would be unwilling to buy GM's vehicles.
GM is funding its operations with 13.4 billion dollars in emergency loans from the US government and said last month it will need an additional 22.6 billion in government aid if it is to survive.
But Richard Shelby, the top Republican on the Senate's banking committee, said the government should stop propping up the US auto industry as well as giant banks such as Citigroup.
"Subsidization of anything for very long never works," he said on ABC's "This Week."
"The automobile business, those companies, Chrysler, Ford, and General Motors, they're in deep trouble. We know that. I've suggested they go into Chapter 11. That's where they belong.
"And they could reorganize. We could get money in place for them. We could do it if they did it and did it right. Short of that, the UAW (union) will run those companies and run them into the ground."
The Canadian Auto Workers announced a tentative deal with GM on Sunday to freeze wages and pensions, and cut paid vacations, as part of GM's North America restructuring.
In the United States, the United Auto Workers last month reached an outline deal to allow Ford to restructure its 13.2 billion dollar obligation to a trust fund for retirees' health care benefits.
A similar agreement is expected shortly at GM and Chrysler because the UAW union maintains similar contracts at each of the Detroit Three.
One influential Republican, House of Representatives minority leader John Boehner, said bankruptcy was no option for GM.
"I don't think they could survive bankruptcy. Hopefully, they'll be able to come to an agreement with all of their stakeholders before they get to that point," he said on CBS program "Face the Nation."
But Boehner added: "I don't think the government should put any more money there until General Motors shows that they can be a viable company for the long term ... Anything short of that is just throwing good money after bad."
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