The Big Three Auto makers are appealing to Congress Thursday and Friday for why they deserve $34 billion in government loans.

With resistance high to a bailout of the auto industry, the Chief Executives of Ford (F), General Motors (GM) and Chrysler are making their cases as to what they will do with the government lifeline.

Despite the appeals, at least one government agency isn’t sympathetic. The Wall Street Journal is reporting that the Federal Reserve is expected to dismiss any request to lend directly to the auto makers.

According to the Journal, Democratic leaders are asking the Fed to review the turnaround plans of the auto makers and are asking the Fed is there is anything that would prevent the agency from lending to the car companies. The Fed has the authority to lend to nonfinancial companies only on a fully secured basis, which means the loans would have to be backed by assets, which the auto companies may not have.

During the hearing, Mark Zandi, chief economist at Moody's Economy.com said the price tag to bailout the car makers would end up being much more than the $34 billion they are asking for and could be upwards of $75 billion to $125 billion. Zandi predicted the car makers would come back to Congress in the fall to ask for more money.  

Ford, the only of the three that said it doesn’t need a loan from the government but rather wants $9 billion as a safeguard against worsening market conditions warned the collapse of GM or Chrysler would threaten Ford.

In prepared remarks, Ford CEO Alan Mulally testified that given Ford, GM and Chrysler have a 80% overlap in supplier networks and close to 25% of its top dealers also own GM and Chrysler franchises the collapse of one or both could hurt Ford.

“The impact of a bankruptcy also reaches beyond Ford and the U.S. auto industry,” Mulally said in prepared testimony. “It would cause further stress to our domestic banking industry and private retirement systems.”

Mulally  reiterated Ford’s plan is working and that the company hopes to complete is turnaround without having to access a $9 billion bridge loan if it’s approved. Mulally also said barring a bankruptcy of GM or Chrysler, Ford doesn’t expect to have a liquidity crisis next year.

Echoing the dismal circumstances of the auto maker, United Auto Workers union President Ron Gettelfinger said the situation at GM, Ford and Chrysler is “extremely dire.” Gettelfinger said without aid GM may run out of funds by the end of the year and Chrysler soon after.

“These companies would then be forced to liquidate, ceasing all business operations. The collapse of these companies would inevitably drag down numerous auto parts suppliers, which in turn could lead to the collapse of Ford,” Gettelfinger testified.

Gettelfinger painted a picture if a bankruptcy were to happen to the auto makers, including hundreds of thousands of jobs lost, a million retirees losing part of their pension benefits, a Pension Benefit Guarantee Corporation that could be saddled with enormous pension liabilities that would jeopardize its ability to protect the pension of millions of other workers and retires and a sharp drop in revenue for federal, state and local wonderments.

“The ripple effects from the collapse of the Detroit-based auto companies would deal serious blow to the entire economy making the current recession much deeper and longer,” said the UAW president.

Gettelfinger reiterated that the UAW is continuing to negotiate with the auto companies on ways to make their operations more efficient and competitive.

“We are willing to do our part,” Gettelfinger said. “But the UAW vigorously opposes any attempt to make workers and retirees the scapegoats and to make them shoulder the entire burden of any restructuring. Wages and benefits only make up 10% of the costs of the domestic auto companies. So the current difficulties facing the Detroit-based auto companies cannot be blamed on workers and retirees.”

Gettelfinger pointed out that wages for UAW members range from about $14 per hour for newly hired workers to $28 per hour for assemblers -- not the $73 an hour that has been circulated.

Meanwhile GM, which is asking for $18 billion in loans, thinks the aid will enable GM to come out a leaner and profitable company.

“Our plan dramatically accelerates and expand the restructuring that we’ve been driving in North America for the past several quarter,” GM CEO Rick Wagoner said in his testimony. “It’s a blue print for creating a new General Motors…one that is lean, profitable, self sustaining and fully committed to product excellence and technology leadership, especially in alternative propulsion.”

Wagoner acknowledged he’s learn from the previous round of testimony in front of Congress.

“We’re here today because we made mistakes. And we’re here because forces beyond our control have pushed us to the brink. Most importantly, we’re here because saving General Motors…and all this company represents…it’s a job worth doing.”

Chrysler CEO Robert Nardelli testified that with the support of the government, the auto industry in the U.S could accelerate cutting-edge technology.

He’s calling for an Automotive Energy Security Alliance that would coordinate public and private spending already earmarked for advance vehicle technologies, produce basic technology that would be available to all manufacturers and collaboration of national labs and research universities to draw private investment in.

“Such an alliance would help ensure that as a country, we do not trade our current dependence on foreign oil for a future dependence on foreign technologies,” Nardelli said.

Chrysler is asking for a $7 billion loan from the government.