Lawmakers are all set to debate the bailout plan for Detroit based "Big Three" as Congress returns to post election lame duck session on Monday. Ailing automakers General Motors Corp (NYSE: GM), Ford Motor Co. (NYSE: F) and Chrysler LLC are lobbying for a $25 billion from the financial industry bailout for emergency loans as their sales slumped due to high fuel prices and the ongoing credit crisis.

Senate Democrats plan to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment benefits. A vote is expected as early as Wednesday, when House of  Representative  reconvenes.

Democrats led by Obama, Pelosi and Reid are pushing hard to give automakers the access to the $700 billion Troubled Asset Relief Program that was originally set up by the government in October to help troubled banks and other financial institutions.

On Friday, Obama said that the collapse of the U.S. auto industry "would be a disaster in this kind of environment." He said he supported extending a temporary bridge loan, but he said "it can't be a blank check."  "My hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan - what does a sustainable U.S. auto industry look like?" Obama said.

Supporters of the bailout point out that automakers' bankruptcy will have dire consequences for the US auto industry in specific and economy in general. Thousands of jobs will be lost, which in turn will further make things difficult for an economy hit by a crisis in financial markets.

However, majority of Republicans are opposed to automakers' bailout. White House is not very keen to let automakers access the TARP. Treasury Secretary Henry Paulson is also not in favor of using public money for rescuing U.S. automakers.

It is being pointed out that a bailout of ailing automakers will undermine the principles of capitalism. In a free market, companies with efficient business practices are rewarded with tax breaks and other incentives while incompetent companies are driven out of the market.

House Republican Leader John Boehner says "spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers' competitiveness around the world is neither fair to taxpayers nor sound fiscal policy."

Republican senator Richard Shelby of Alabama, the senior Republican on the Senate banking committee Housing and Urban Affairs Committee, called the plan "a road to nowhere." Calling the Detroit's three major automakers, "a dinosaur," he said that "they're not building the right products" and "they don't innovate." "Companies fail everyday and others take their place. I think this is a road we should not go down," he added.

Arizona Senator Jon Kyl says "just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning."

Detractors are also pointing out that automakers' bailout will encourage other private companies to clamor for government sponsorships. It is being argued that it doesn't make much sense, spending hard earned taxpayer’s money to bail out companies who made bad decisions. Concerns have been raised about use of bailout money for executive bonuses and pay.

However, House banking Chairman Barney Frank, made it clear that auto bailout money would come with strings attached, including suspending dividends, "no bonuses for anybody making more than $200,000 a year," and "a very tough oversight board."

On Thursday, Goldman Sachs suspended its rating on General Motors Corp (GM) on Thursday and said the automaker needs at least $22 billion (14 billion pounds) in federal aid. Earlier, the automaker said that it will run out of cash before the year’s end.