LANSING – The survival of the Michigan-based domestic auto industry, hammered again with $2.6 billion in quarterly losses, is getting top attention by President-elect Barack Obama, who on Friday called the industry the “backbone” of American manufacturing.

Michigan Governor Jennifer Granholm, who was part of a meeting in Chicago with Obama on the economy, said the consensus was that a $25 billion aid package is urgently needed, but questioned whether it could happen before the new administration takes office in January.

In addition to the operating losses posted by the two largest auto manufacturers, the day brought further signals of the faltering economy: the highest unemployment rate in 14 years at 6.5 percent and the loss of 240,000 jobs nationwide and newly-planned auto layoffs. General Motors said it was halting discussions of a merger with Chrysler, which had been described by many as a best-case scenario to stave off the collapse of one of the manufacturers.

Granholm, a member of Obama’s economic transition team, said in a conference call with reporters about the meeting Friday: “There was great and grave recognition in this room that we face a grave and serious crisis of our lifetime. The president-elect was serious and very probing despite the seriousness of the situation, and he expressed great confidence in our ability to resolve the crisis with the right people and the right moves.”

At an earlier press conference, Obama pledged to push for a second economic stimulus package, perhaps in the remaining months of the administration of President George W. Bush or one of his first acts as president.

“The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil,” Obama said. “The news coming out of the auto industry reminds us of the hardship it is facing.”

The meeting was the first for Mr. Obama’s newly-named economic advisory board, a mixture of business and government experts, and the governor said the consensus is that something has to be done quickly to stimulate the economy and help ailing sectors.

“While we may not now what and when that will happen, there is a consensus that this industry must survive,” Granholm said. “It is clear that the auto industry needs a bridge to ensure its survival.”

But she said the Bush administration does not believe it has as much flexibility at the Department of Treasury to extend that help as does Obama and his advisors.

The Bush administration this week did issue rules allowing the automakers to apply for $25 billion that was set aside in the $700 billion financial rescue package, though officials say it is unlikely the money would be distributed prior to 2009.

The governor said she was able to bring a perspective of a state that has been “battered for the past eight years” and has been required to make substantial cuts in government. She also said of interest is Michigan’s focus on replacing lost manufacturing jobs with energy-related jobs.

Granholm said discussion also centered on existing tools that can be used to provide bridge loans to the industry, but that the Bush administration does not see current provisions as giving the Treasury flexibility to provide additional bridge loans.

Granholm said discussion among the economic experts assembled at the meeting centered on the prospects for immediate help for the middle class and small businesses and fiscal relief for states facing their own revenue problems.

The governor said the relief proposals could mean the potential cuts the state is facing because of the economic reversal would not have to be as deep, though again the determination of the parameters of the problem will be better assessed following the University of Michigan’s economic conference on November 20-21.

Granholm said the package of assistance to states covers such things as extended unemployment benefits, funding for infrastructure projects that are “ready to go,” job training and health care, including more coverage for children in low-income households and more Medicaid dollars.

Granholm said she was glad to see the news that GM had suspended Chrysler merger discussions. “I’m hopeful there is another way to have a robust auto industry,” she said.

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