CITING danger to the national economy, the Bush administration came to the rescue of the US auto industry yesterday, offering US$17.4 billion in emergency loans in exchange for concessions from the deeply troubled car makers and their workers.

At the same time, Treasury Secretary Henry Paulson said Congress should authorize the use of the second US$350 billion from the financial rescue fund that it approved in October to rescue huge financial institutions. Tapping the fund for the auto industry exhausts the first half of the US$700 billion total, he said.

President George W. Bush said, 'Allowing the auto companies to collapse is not a responsible course of action.'

Bankruptcy, he said, would deal 'an unacceptably painful blow to hard-working Americans' across the economy.

One official said US$13.4 billion of the money would be available this month and next, US$9.4 billion for General Motors Corp and US$4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co has said it does not need immediate help.

Bush said the rescue package demanded concessions similar to those outlined in a bailout plan that was approved by the House of Representatives but rejected by the Senate a week ago. It would give the auto makers three months to come up with restructuring plans to become viable companies.

If they should fail to produce a plan by March 31, the auto makers will be required to repay the loans, which would be very difficult.

'The time to make hard decisions to become viable is now, or the only option will be bankruptcy,' Bush said. 'The auto makers and unions must understand what is at stake and make hard decisions necessary to reform.'

He said the companies' workers should agree to wage and work rules that are competitive with foreign auto makers by the end of next year.

He also wants an end to a 'jobs bank' program, negotiated by the United Auto Workers union and the companies, under which laid-off workers receive unemployment benefits and supplemental pay from their companies for 48 weeks.

If they remain laid off beyond that, they move to a jobs bank in which the company provides about 95 percent of their pay and benefits. Until the most recent contract, people could remain in the jobs bank for years. Early this month, the UAW agreed to suspend the program.

Bush's plan is designed to keep the auto industry running in the short term, passing the longer-range problem on to the incoming administration of President-elect Barack Obama.

Paulson said that with the help for the car makers, the government will have allocated the first half of the largest government bailout program in history. The White House package is the lifeline desperately sought by US auto makers, who warned they were running out of money as the economy fell deeper into recession, car loans became scarce and consumers stopped shopping for cars.