The automaker made it clear last week that it needs $3 billion more in federal loans to close its proposed alliance with Italian automaker Fiat SpA -- a deal that many view as essential for Chrysler's long-term survival.

The alliance would help Chrysler quickly bring small, green cars to the United States and open up overseas markets to Chrysler, Dodge and Jeep vehicles.

But that deal, which would give Fiat an initial 35% stake in Chrysler, also could lead to Fiat owning a majority stake in the Auburn Hills automaker.

That has sparked some political leaders to question whether Chrysler, which already is operating on $4 billion in federal loans, should receive any more U.S. money -- especially since Chrysler is asking for federal money to close the deal, even though Fiat is not offering any of its own.

"It's a big catch-22," said auto analyst Erich Merkle. "You're trying to take the actions necessary for long-term viability. But if you take the actions necessary, you don't know what the government's reaction is going to be."

Adding to Chrysler's challenge, the skepticism comes at a time when the government faces more scrutiny than ever from the electorate, which is frustrated over bailouts that haven't given the economy the boost they have promised.

What's more, Chrysler's bid for more cash runs in the seam between administrations, a changeover that rarely has as much urgency as it does today.

The Obama administration still is hiring thousands of workers to fill open slots, a process that could take weeks. While the idea of a so-called car czar has been tossed around, and a few names surfaced outside the White House, it's not even certain that the administration would choose just one person to oversee all the industry's contacts.

Well aware of the obstacles it faces and the urgency of its request, Chrysler has been on a public relations march, talking to dealers and journalists across the country to make its case that a deal with Fiat would be a win for Chrysler, its workforce and the American auto industry.

Chrysler Chief Executive Officer Bob Nardelli and other top officials have emphasized in public and private that no loan money would go to Fiat if a deal is signed, contending that Fiat was contributing engineering resources worth billions of dollars to Chrysler.

Political backlash

While the automotive industry generally has been enthusiastic about the proposed Chrysler-Fiat deal -- and some even initially felt it bettered Chrysler's chances of getting more federal aid -- it's too soon to tell whether the political machine in Washington is leaning for or against the deal.

Already, some members of Congress have voiced their objections.

New Jersey Democratic Sen. Robert Menendez asked the Obama administration last week to take back the loans if Fiat takes control of Chrysler, saying he did not want "American taxpayers paying to prop up the foreign auto industry."

However, congressional objections such as Menendez's might not matter much, since the Obama administration is now overseeing the approval of the rescue funds.

"Everyone is hoping they get the folks in place in the near future to deal with a wide range of issues," said Alan Reuther, chief lobbyist for the UAW.

The union supports Chrysler's bid for an additional $3 billion and has been in talks with Chrysler on cost cuts that are required by the $4-billion loan. Under the terms of the loans written by the Bush administration, Chrysler and GM must show how they can be competitive, pay back the government loans and reach a "positive net present value," an accounting hurdle that could be particularly challenging given their debts.

"It does need to happen soon," Reuther said of the decisions on Chrysler's loans.

A lifesaver for Chrysler?

In the absence of a car czar, the person with the most sway over Chrysler's request is Neel Kashkari, the U.S. Treasury official appointed by former Secretary Henry Paulson to oversee the $700-billion financial industry rescue; he has stayed on with the Obama administration while it considers a replacement.

Whether Chrysler will receive the additional $3 billion it has requested from the federal government is a tough call, said Rebecca Lindland, director of IHS Global Insight's automotive group.

"I think their chances are a lot better if they continue to develop this Fiat alliance," Lindland said.

That's because Chrysler needs Fiat to fill in gaps in its passenger car lineup.

Fiat has made a name for itself for fuel-efficient, low emission vehicles in Europe. For 2007, Fiat was named as the automaker with the lowest carbon dioxide emissions in Europe.

At a time when the federal government is open to allowing states each to declare their own emission standards, Fiat could be a lifesaver for Chrysler.

"Many of the things that Chrysler doesn't have, that Washington is advocating the American automakers develop, is available through Fiat," Merkle said.

Fiat chief executive officer Sergio Marchionne, who recalls Lee Iacocca's bid to save Chrysler, said he sees a future for the American automaker.

"With the help of Fiat, Chrysler has a pretty good opportunity to come back and be a viable car player," Marchionne told analysts last month.

"I think the Chrysler arrangement is the first step in that direction -- not the last," Marchionne said.