Auto Bailout Talks Collapse as Senate Deadlocks Over Wages
Friday, December 12, 2008
An eleventh-hour effort to salvage a proposed $14 billion rescue plan for the auto industry collapsed late last night as Republicans and Democrats failed to agree on the timing of deep wage cuts for union workers, killing the legislative plan and threatening America's carmakers with bankruptcy.
"We're not going to get to the finish line. That's just the way it is. There's too much difference between the two sides," Senate Majority Leader Harry M. Reid (D-Nev.) announced after 10 p.m., concluding a marathon negotiating session that ended in gridlock. Reid warned that financial markets could plummet when trading opens this morning.
"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," he said.
The legislation would have provided emergency loans to General Motors and Chrysler, which have said they face imminent collapse without federal help. The high-stakes talks broke down over when the wages of union workers would be slashed to the same level as those paid to nonunion workers at U.S. plants of foreign automakers such as Toyota and Honda.
Sen. Bob Corker (Tenn.), the lead GOP negotiator, said the sides were on the brink of a deal on the amendment he had offered. Representatives from the United Auto Workers -- who were present for most of the negotiations -- would not agree to a specific date, Corker said.
"We offered any day -- any day -- in 2009," Corker said.
Minutes after the talks failed, the Senate voted on the bailout measure that had been approved Wednesday by the House on a largely party-line vote, 237-170. In the Senate, the vote was 52-35, eight votes short of the 60 needed to override a Republican filibuster. Of those voting yes, 10 Republicans joined 42 Democrats.
"It's disappointing that Congress failed to act tonight," the White House said in a statement. "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."
GM said last night it was "deeply disappointed" that negotiations failed to produce an agreement. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said in a statement.
A Chrysler spokeswoman said the company would "continue to pursue a workable solution to help ensure [its] future viability."
The Senate closed out its legislative session for the year but will stay open for pro forma sessions until the next Congress begins Jan. 6. Reid and Senate Minority Leader Mitch McConnell (R.-Ky.) agreed that the auto rescue would not happen this year.
Stock markets in Asia tumbled on the news. Japan's benchmark Nikkei average fell more than 6 percent in midday trading, while stocks in Hong Kong slipped more than 7 percent.