WASHINGTON (AP): Citing danger to the U.S. economy, the Bush administration came to the rescue of the nation's auto industry on Friday, offering $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 $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 $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 hardworking Americans'' across the economy.

One official said $13.4 billion of the money would be available this month and next, $9.4 billion for General Motors Corp. and $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 automakers three months to come up with restructuring plans to become viable companies.

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

``The time to make hard decisions to become viable is now, or the only option will be bankruptcy,'' Bush said. ``The automakers 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 automakers by the end of next year.

Also, he 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% 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.

He said he was confident that the Treasury Department, the Federal Reserve and Federal Deposit Insurance Corp. have the resources to deal with a significant market crisis if one should occur before Congress has approved the use of the second half of the rescue fund. The Federal Reserve is the U.S. central bank, and the FDIC insures most accounts in American banks.

Paulson said he would discuss the process with congressional leaders and Obama's transition team ``in the near future.''

Environmental groups said they were disappointed that the rescue plan did not include requirements to build more environmentally responsible cars and urged the incoming Obama administration to make higher fuel efficiency a condition for any additional money next year.

``We believe that if Detroit begins to build highly fuel-efficient cars and reduce global warming pollution, the Big Three will have a good opportunity to both regain market share and protect American jobs,'' said Phyllis Cuttino, director of the U.S. Global Warming Campaign for the Pew Environment Group. ``This will save consumers money at the pump, curtail our dependence on oil and reduce greenhouse gas emissions.''

The White House package is the lifeline desperately sought by U.S. automakers, 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.

The car makers have announced extended holiday shutdowns. Chrysler is closing all 30 of its North American manufacturing plants for four weeks because of slumping sales; Ford will shut 10 North American assembly plants for an extra week in January, and General Motors will close 20 factories temporarily _ many for the entire month of January _ to cut vehicle production.

Bush said the auto manufacturers have faced serious challenges for many years: burdensome costs, a shrinking share of the market and plunging profits. ``In recent months, the global financial crisis has made these challenges even more severe,'' he said.

The president said that on the one hand, the government has a responsibility not to undermine the private enterprise system; on the other, it must safeguard the broader health and stability of the U.S. economy.

``If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers,'' he said.

``Under ordinary economic circumstances, I would say this is the price that failed companies must pay,'' the president said. ``And I would not favor intervening to prevent the automakers from going out of business. But these are not ordinary circumstances.

``In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.''

Chrysler CEO Bob Nardelli thanked the administration for its help.

In a statement Friday morning, Nardelli said the initial injection of capital will help the company get through its cash crisis and help eventually return to profitability. He said Chrysler was committed to meeting the conditions set by Bush in exchange for the money.

Ford President and CEO Alan Mulally said his company would not seek the short-term financial assistance but predicted the aid would stabilize the industry.

``The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened U.S. economy,'' Mulally said.

General Motors said the short-term loans would help preserve jobs and ``lead to a leaner, stronger General Motors.''

``We know we have much work in front of us to accomplish our plan. It is our intention to continue to be transparent as we execute our plan, and we will provide regular updates on our progress,'' the automaker said.