- The Washington Times - Friday, December 12, 2008
UPDATED:

Senate leaders gave up Thursday night on a $14 billion automaker bailout, sunk by the refusal of the autoworkers union to agree to the concessions that Republicans had demanded as their price for support.

After a negotiating marathon dragged into the night, Senate Majority Leader Harry Reid, Nevada Democrat, pulled the plug on efforts to tweak the bailout deal brokered by Democrats and the White House but opposed by Republicans.

The talks broke off when the United Auto Workers refused Republican demands that the union set “a date certain” by which its members would have a lower pay scale, one comparable to such manufacturers as Nissan and Volkswagen.

A vote to end debate on the bill and go to a vote on passage received only a 52-35 margin, falling short of the 60 votes needed and killing the bill’s chances in the Senate for the year.

“It’s over with,” Mr. Reid said on the Senate floor shortly before the vote, acknowledging that he didn’t have enough support.

Mr. Reid said the Senate was finished with the bailout legislation for the year, leaving the troubled Big Three automakers for President-elect Barack Obama and the new Congress to worry about next year.

However, Mr. Reid did call on President Bush to extend a loan to the car companies from the $700 billion Wall Street bailout program - a move the president has long resisted.

The Bush administration gave no indication Thursday night that it would change its stance, simply saying in a statement that it was “disappointing that Congress failed to act tonight” and that there was nothing wrong with the legislation it had helped broker.

Senate Minority Leader Mitch McConnell, Kentucky Republican, said while standing next to Mr. Reid that the bailout was “simply unacceptable to the vast majority of our side, because we … thought it wouldn’t work.”

Mr. McConnell cited the UAW wage stance as the sticking point that could not be overcome.

“We were about three words away from a deal,” said Sen. Bob Corker of Tennessee, the Republican point man in the auto bailout talks, referring to the phrase “a date certain,” which both he and Mr. McConnell repeated in their floor speeches.

“We solved everything substantively and about three words keep us from reaching a conclusion.”

Pro-bailout senators told the Associated Press that the UAW would agree to wage concessions, but only in the context of the regularly scheduled renegotiation of its contract, which runs out in the 2011.

“A lot of struggling Americans are asking where their bailout is,” Mr. McConnell said earlier Thursday. “They wonder why one business would get support over another. When it comes to the auto industry, many Republicans in Congress have asked these same questions.”

Both General Motors Corp. and Chrysler LLC have suggested they could be just a few weeks away from bankruptcy without the prompt passage of a bill. Ford Motor Co. is in somewhat better short-term shape, but the collapse of even one of Detroit’s Big Three would have huge repercussions throughout the economy. Together, they employ about 3 million people in autoworker and industry-related jobs.

Republicans had voiced other qualms with the proposed federal handout to GM, Chrysler and Ford Motor Co., including that it wasn’t tough enough to change Detroit’s business ways, didn’t do enough to protect taxpayers and gave too much power to a “car czar” to oversee the deal.

The bailout, a version of which the House passed Wednesday with scant Republican support, appeared headed for failure as soon as it reached the Senate chamber Thursday morning.

On Wall Street, major market indexes dropped in afternoon sell-offs as investors grew fearful that no bill would emerge from the Senate and new claims for unemployment benefits rose last week to their highest levels in 26 years. At the close, the Dow Jones Industrial Average fell 196.33, or 2.24 percent, to 8,565.09.

Mr. Reid predicted a much worse performance Friday and warned of massive job losses in the reeling industry.

“I dread looking at Wall Street tomorrow. It’s not going to be a pretty sight,” he said. The bill’s death means “it’s going to be a very bad Christmas for a lot of people.”

Democrats decried the vote, with Sen. Barbara Boxer, California Democrat, saying it showed “who cares about working people and who doesn’t.”

Mr. Corker presented Republican demands that would impose severe conditions on creditors and unions, including eliminating payments to union workers getting nearly full compensation up to four years after losing their jobs.

It also would have forced bondholders to accept 30 cents on the dollar to help reduce the companies overall debt load; brought union wages immediately in line with lower-paid workers at companies such as Nissan and Volkswagen; and replaced half the $23 billion that GM owes the United Auto Workers’ benefit account with company stock.

“Without this kind of hammer, nothing is going to happen,” Mr. Corker said.

But the wage-scale concession proved too much for the UAW to swallow.

Under a House-passed bill, the government could have taken an equity stake in the companies to help safeguard taxpayer money and imposed restrictions on management, including limits on executive pay and prohibitions on paying shareholder dividends and expensive severance packages, or “golden parachutes,” for company bosses.

House Speaker Nancy Pelosi, California Democrat, had called on Mr. Bush to twist Republican arms in the Senate to get the bailout loan passed.

“With one in 10 American jobs tied to the auto industry, we must provide this jump-start for an industry that is essential to our nation’s economic health,” Mrs. Pelosi said.

The House passed a bailout bill Wednesday night with scant Republican support.

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