Multibillion-dollar Detroit automaker rescue plan stuck in neutral in Senate

A plan to give troubled U.S. automakers billions of dollars in government-backed loans is on life support, leaving the fate of hundreds of thousands of workers and Detroit’s once-venerable car companies hanging in the balance.

Senate Majority Leader Harry Reid, D-Nev., canceled plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund. The Bush administration and congressional Republicans have rejected Democrats’ plan to dip into that pot of money.

Warning of economic disaster, a bipartisan group of senators from auto industry states are trying to reach a deal on an alternative package. If an agreement can be reached, Reid said, the Senate still could vote on it as part of a measure to extend jobless benefits.

But Reid acknowledged that was “not going to be easy.”