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Bailout Stalls In Senate

WASHINGTON (AP) - 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.
Senate Majority Leader Harry Reid said he was "terribly
disappointed" about the demise of an emerging bipartisan deal to
rescue Detroit's Big Three.
He spoke shortly after Republicans left a closed-door meeting
where they balked at giving the automakers federal aid unless their
powerful union agreed to slash wages next year to bring them into
line with those of Japanese carmakers.
Republican Sen. George V. Voinovich of Ohio, a strong bailout
supporter, said the UAW was willing to make the cuts - but not
until 2011.
Reid was working to set a swift test vote on the measure
Thursday night, but it was just a formality. The bill was virtually
certain to fail to reach the 60-vote threshold it would need to
clear to advance.
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."
The implosion followed an unprecedented marathon set of talks 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.
"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.
Sen. Bob Corker of Tennessee, the GOP point man in the talks,
said the two sides had been tantalizingly close to a deal, but the
UAW's refusal to agree wage concessions by a specific date in 2009
kept them apart.
The autoworkers' contract doesn't expire until 2011.
"We were about three words away from a deal," said Corker.
"We solved everything substantively and about three words keep us
from reaching a conclusion."
The stunning breakdown 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
President George W. Bush.
It wasn't immediately clear, however, how the auto aid measure
might be resurrected.
Congressional Republicans revolted against a version that the
Bush White House negotiated with congressional Democrats and the
House passed on Wednesday.
The talks centered on wage and benefit concessions from the UAW
as well as debt-restructuring by General Motors Corp., Ford Motor
Co. and Chrysler LLC, and officials from the union and companies
participated in the talks at one point or another.
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.
Efforts to stitch together a rescue package for the automakers
gained urgency last week when the government reported the economy
had lost more than a half-million jobs in November, the most in any
month for more than 30 years.
"There's a lot of hardship out there. People are losing their
jobs, losing their homes, losing their cars and losing their
patience," said Reid, D-Nev. "We don't need to pile on."
It was unclear how far the participants were willing to go to
seal the federal aid that General Motors and Chrysler said was
essential to keep them from bankruptcy. Ford is in better financial
shape than its rivals, although its survival is not assured,
either.
The developments unfolded after Senate Republican leader Mitch
McConnell of Kentucky joined other GOP lawmakers in announcing his
opposition to the White House-backed rescue bill passed by the
House on Wednesday.
He and other Republicans said wages and benefits for employees
of Detroit's Big Three should be renegotiated to bring them in line
with those paid by Japanese carmakers Toyota, Honda and Nissan in
the United States.
Hourly wages for UAW workers at GM factories are about equal to
those paid by Toyota Motor Corp. at its older U.S. factories,
according to the companies. GM says the average UAW laborer makes
$29.78 per hour, while Toyota says it pays about $30 per hour. But
the unionized factories have far higher benefit costs.
GM says its total hourly labor costs are now $69, including
wages, pensions and health care for active workers, plus the
pension and health care costs of more than 432,000 retirees and
spouses. Toyota says its total costs are around $48. The Japanese
automaker has far fewer retirees and its pension and health care
benefits are not as rich as those paid to UAW workers.
Republicans also bitterly opposed tougher environmental rules
carmakers would have to meet as part of the House-passed version of
the rescue package and the Senate dropped it from its package.
The negotiations marked the latest development in a long-running
debate over bailing out the beleaguered auto industry. The issue
gained urgency last week when the government reported the economy
had lost more than a half-million jobs in November, the most in any
month for more than 30 years.
The White House monitored the talks but was not directly
participating. Administration officials had been deeply involved in
recent days in drafting a compromise with House and Senate
Democrats - the measure that McConnell and other Senate Republicans
promptly repudiated.
Some Senate Democrats joined Republicans in turning against the
House-passed bill - despite increasingly urgent expressions of
support from the White House and President-elect Barack Obama for
quick action to spare the economy the added pain of a potential
automaker collapse.
The White House said President George W. Bush was calling
Republican lawmakers, while Obama told reporters at a news
conference in Chicago an industry shutdown would have a
"devastating ripple effect" on the already ragged economy."
The House-passed bill would create a Bush-appointed overseer to
dole out the money. At the same time, carmakers would be compelled
to return the aid if the "car czar" decided the carmakers hadn't
done enough to restructure by spring.
McConnell said that measure "isn't nearly tough enough."
Pushing to convert skeptics in both parties, Democrats agreed to
drop at least one unrelated provision that threatened to sink the
measure, a congressional official said. They were eliminating a pay
raise for federal judges after Democratic Sen. Claire McCaskill of
Missouri, who represents an automobile manufacturing state,
announced she would oppose the carmaker aid unless that provision
was removed.
Supporters had an uphill battle pressing the rescue package on a
bailout-fatigued Congress - particularly a measure designed to span
the administrations of a lame-duck president and his successor.
Before the late-day negotiations, patience had begun wearing thin
at the Capitol as lawmakers looked ahead to adjourning for the
holidays.
Reid at one point called for swift separate votes Thursday on
compromise legislation backed by Democrats and the White House as
well as the GOP proposal. "We have danced this tune long enough,"
he declared.
But with Republicans staunchly opposed to the rescue and some
Democrats ill or absent from the emergency, postelection
congressional session, bailout supporters acknowledged that getting
the needed 60 votes to pass either would be very difficult.
The House approved its plan late Wednesday on a vote of 237-170.
Supporters cited dire warnings from GM and Chrysler executives, who
have said they could run out of cash within weeks.
A pair of polls released Thursday indicated that the public is
dubious about the rescue plan.
Just 39 percent said it would be right to spend billions in
loans to keep GM, Ford and Chrysler in business, according to a
poll by the nonpartisan Pew Research Center. Just 45 percent of
Democrats and 31 percent of Republicans supported the idea.
In a separate Marist College poll, 48 percent said they oppose
federal loans for the struggling automakers while 41 percent
approved.
---
Associated Press writers David Espo and Alan Fram in Washington
and Kimberly S. Johnson in Detroit contributed to this report.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

(Copyright 2008 by The Associated Press. All Rights Reserved.)


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