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Auto Bailout Talks Collapse as Senate Deadlocks Over Wages

A $14 billion bailout for Detroit's struggling Big Three has died in the Senate. The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the labor union agree to steep wage cuts. Video by AP

If the firms failed to make progress toward that goal, the agreement would have required the car czar to revoke the loans and develop a new plan that could have included the option of seeking Chapter 11 bankruptcy protection. If the companies had failed to agree on steps to guarantee their long-term survival, they would have been denied additional federal assistance.

Corker -- a freshman senator who a few years ago was mayor of Chattanooga -- was a strong opponent of the House plan to save the automakers.

He and other Republicans had revolted against the earlier plan because they thought it did not go far enough in forcing contracts on the UAW. GM officials have told Congress, for instance, that under the most recent contract, labor costs would be about $62 per hour in 2010 -- $30 per hour in wages and slightly more than that in benefits to current workers and retirees. That's about $14 per hour more than at Toyota's U.S. plants.

Some Republicans said they doubted that the automakers could remain viable and return to profitability. Others, frustrated with the Treasury's financial rescue program, were skeptical of approving another bailout.

The Corker plan was the last chance at passing any legislation for the auto industry, senators said.

"Absent that," said Sen. Jon Kyl (R-Ariz.), the minority whip, "nothing's going to pass."

Staff writers Kendra Marr, David Cho and Steven Mufson contributed to this report.

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