Optimism, but uncertainty, surrounds this week’s lame-duck session of Congress, with lawmakers scrambling over the weekend to come up with a proposal to save the auto industry from collapse.

As of press time Friday, Senate Democrats appeared to be taking the lead with Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) expected to work through the weekend to try to hammer out a deal so that language could be available for vetting today.

One Senate Democratic leadership staffer said Majority Leader Harry Reid (D-Nev.) had asked Dodd “to prepare several options to consider first thing [Monday] morning. Ideally, we would reach consensus on process and substance with our caucus and [Minority Leader Mitch] McConnell midday [today] and would be able to reach agreement on scheduling any necessary votes no later than midweek.”

Another senior Senate Democratic aide said the outlook was “cautiously optimistic” given that “the problem is we don’t have [Members] here. It could all change when they get in one place.”

Indeed, House and Senate aides cautioned that even with Dodd’s staff working overtime to craft a measure that would extend as much as $34 billion in federal loans to automakers, the reaction of the rank and file would likely determine the outcome.

House and Senate Democrats are still divided over whether to bow to the Bush administration’s demand that any bailout be drawn from a $25 billion loan fund that is intended to help automakers develop and manufacture more fuel-efficient vehicles. Democrats on both sides of the Capitol would rather have the U.S. Treasury use part of the $700 billion financial industry rescue package passed earlier this fall, but Senate Democrats have been more willing to consider using the fuel-efficiency loans than their House counterparts.

Though he continued to push for the administration to use its existing financial rescue authority, Dodd appeared to be leaning toward a hybrid of the two approaches by using some money from the fuel-efficiency loans and some funds from the Treasury’s program to extend the money that car manufacturers have asked for.

“If we’re going to get anything, it’s going to have to use” the fuel-efficiency loans, another senior Senate Democratic aide said.

Though Speaker Nancy Pelosi (D-Calif.) has remained publicly opposed to bailing out the industry with the fuel-efficiency loans, one senior House Democratic aide said last week that she and other Democratic leaders are open to a hybrid approach.

Dodd had been asked to vet his proposals with the House as he crafted them this weekend, but House Financial Services Chairman Barney Frank (D-Mass.) said he was not aware of any imperative for his panel to produce a bill. House Democratic aides indicated that they would allow the Senate to go first because the hurdles to passage are potentially more substantial.

The House will come in “if we see movement out of the Senate. That’s where the pressure point is,” one House aide said.

The House is now expected to come into session Tuesday to be prepared to handle bailout legislation, Majority Leader Steny Hoyer (D-Md.) announced Friday.

Emerging from an all-day hearing with auto industry leaders Friday, Frank signaled that not passing an auto rescue package this week would not result in mass chaos.

“If we didn’t act next week, would we then say, ‘Oh sorry, the world ends’?” Frank asked. “No. These deadlines are artificial.”

Of course, some car companies have warned Congress that they do not have enough money to make it to January should Congress fail to act.

Meanwhile, Senate Republicans — who have been cool to the notion of an auto bailout or prefer using the fuel-efficiency loans — said they were waiting to see what Dodd and the Senate Democratic leadership come up with before weighing in on whether they would make the process difficult or easy from a procedural standpoint.

“They don’t have anything to talk about with us yet,” one Senate GOP leadership aide said. Senate Democrats, however, insisted they would work to reach a deal that would allow the Senate to act this week.

Even if the auto bailout fails to materialize this week, the Senate is likely to vote on the confirmation of Neil Barofsky to be the inspector general for the Treasury’s financial industry bailout program.

Another issue that could surface this week is a stimulus measure focused solely on food stamps and state Medicaid assistance. Pelosi has upped her rhetoric in recent days on the need for passing these measures.