$14 Billion Auto Bailout Dies In Senate

A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.

Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.

The White House said it was evaluating its options in light of the breakdown.

"It's disappointing that Congress failed to act tonight," a White House statement said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 required — after the talks fell apart.

The implosion followed an unprecedented marathon negotiations at the Capitol among labor, the auto industry and lawmakers who bargained into the night in efforts to salvage the auto bailout at a time of soaring job losses and widespread economic turmoil.

The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans, in turn, balked at giving the automakers federal aid.

Reid called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.

Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson.

The stunning disintegration was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.

It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued postelection Congress, with Bush's influence at a low ebb.

Congressional Republicans were already in open revolt against Bush over an auto bailout deal the White House negotiated with congressional Democrats, passed by the House passed on Wednesday.

The momentum flagged even amid evidence of deepening economic meltdown. The government reported last week that the economy had lost more than a half-million jobs in November, the most in any month for more than 30 years.

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  • by Samuel on Dec 24, 2008 at 08:54 AM
    I recently saw in the news that BYD a Chinese electric (hybrid) electric automotive manufacture is positioned to begin selling their product in the USA which is 1/2 the price of the new VOLT! Also Buffett-backed the project! Where are the GM,FORD and Chrysler - If these companies are unable to engineer the technology please purchase one and reverse engineer it. I would be more than happy to help these companies understand economics 101; high unemployment = decreased discretionary income. Volt 2010 $40,000 plus, BYD 2009 $22,000. I prefer to invest with Buffett if these American companies can not get with the program.
  • by Blog Refuter Location: NC on Dec 13, 2008 at 09:47 PM
    These 3 companies have been the backbone of the American economy for a long time. If they were to fail, the American economy would continue to fall.
  • by Tad Location: Jamesville on Dec 12, 2008 at 10:44 PM
    Biden, Wyden, Kennedy and Kerry are the worst of the lot. They lack the courage to take a stand at all, even if wrong. They remind me of obama, famous for being merely "present" quite often on anything meaningful. Keep making your noise for the UAW refluter, you probably will get your way eventually. In 12 to 18 months when the pelosi, reid, and obama crowd have dumped ever increasing piles of the taxpayers cash into these three black holes, the people will know who to blame. These companies are going to tank regardless of how many millions you waste on them, unless they restructure, including the cancellation of union contracts.
  • by S Location: Washington,NC on Dec 12, 2008 at 03:50 PM
    The unions are a big part of the problem in this country...sure,they do some good for working people;but they have gotten completely out of hand....Our American automobiles made by Americans are not even half the quality that foreign cars are,and workers who made the foreign cars were paid far less;I hope the car companies do not receive a penny of our hard-earned money because they should be treated like any other business....if you can't make a good product for a reasonable cost and sell it at a reasonable price,then you should not be in business...Let the car dealers lower the prices of their product like any other business that is struggling...then maybe they can survive...instead they give their CEO's & higher echelon management huge bonuses rather than lower their prices....Let 'em fail....maybe,just maybe,they will start to learn their lesson about gouging their customers. It looks as if the UAW & the Big 3 need to hit rock bottom & restructure badly.
  • by Anonymous Location: greenville on Dec 12, 2008 at 03:27 PM
    who cares about Japanese how their pay being in line with the rest of us i don't make 50.000 a yr love to if they file bankruptcy they can get relief from a lot of these problems it will force them to restructure and renegotiate contracts people will lose jobs either way this way they either restructure or go out? the unions don't want to lose their money trains???
  • by George Location: Kinston on Dec 12, 2008 at 12:37 PM
    I would love to know how much money the big 3 has donated to these people over the years, Just for times like this. The dems and some reps. will not turn them down because they will not get anymore money.
  • by Obama Snake Oil Co Location: Washington on Dec 12, 2008 at 10:10 AM
    If a company fails, you close the door. If the UAW will not give up concession with their employees making $136,000 on average per year then close the doors. Democrats are trying to pay back the unions that helped them get elected period. Sounds to me like the democrats didn't even totally support this bill. Let them go into bankruptcy and reorganize, its there only hope to get the unions to negociate. Don't blame the auto industry for not planning, this pig has been getting milk for way too long. Change?, here is where the "chosen one" could show real change. He won't, hes one of the piglets drinking mama sows milk, just like some of the other democrats. Well, to remind you, you voted for these guys, we blame you for voting this party of corruption, money and lies, back in. Its only just begun.
  • by Blog Refuter Location: Triangle, NC on Dec 12, 2008 at 09:21 AM
    The bailout was rejected because 52 senators were in favor of supporting the bailout and 35 senators were against it. A total of 60 senators were needed to pass this necessary bill. Ten Republican senators voted in support of the bill. I applaud them. Four Democrats (Baucus, Tester, Lincoln and Reid) voted against the bill. Reid voted against it for procedural reasons so that it could be brought back up to be voted on again. Four Democrats did not vote: Biden, Kennedy, Kerry, and Wyden. Yes, if these 8 senators had voted in support of the bill, it would have just reached the threshold of 60. However, anybody familiar with government at all knows that a whole party hardly ever votes one way. The majority of the Democrats did the right thing and so did a few of the Republicans, but the majority of the current Republican senators are pitiful. The Democrat does not have too much of an edge number-wise. Please research and understand government in general.
  • by Phillip Location: ENC on Dec 12, 2008 at 06:29 AM
    Thank God some sense. Let them fail and I hope all the unions crumble since they were the cause of it. If the UAW doesn't want to budge then let it be their fault and the US Auto Companies that should have planned ahead for hard times.
  • by Tad Location: Jamesville on Dec 12, 2008 at 05:57 AM
    Thank God the senate had more sense than the house. The American auto companies cannot survive unless they get labor in line with other car manufacturers. If the UAW won't budge, let them declare bankruptcy and restructure. The democrats are trying as hard as they can to take care of big labor but bloated labor and legacy costs are the problem. The US auto industry cannot survive with union workers making the kind of wages they currently do. Even with a bailout they will still fail.
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