In a stunning development, the U.S. Senate dealt a fatal blow to the auto bailout proposal: Democrats and Republicans in the Senate were unable to reach a compromised deal that would get bipartisan support for the bailout. Is Big Three bankruptcy looming?
Digital Journal -- On Thursday night, the economic news for Americans and the auto industry worsened: Senate leaders announced a 52-35 procedural vote, killing the bailout proposal. The vote followed the break-up of negotiations between Democrats and Republicans looking for a compromise that all sides could accept.
The main issue during the debate concerned the United Auto Workers' refusal to set a date that would put employees at American auto manufacturers at "parity pay" with U.S. employees at foreign automakers in the U.S. Analysts say union workers at U.S. automakers earn about $3 to $4 per hour more than the non-union U.S. employees of foreign automakers like Toyota and Honda.
The bill that easily passed the House Wednesday would have provided $14 billion in federal loans as a Band-Aid measure until the incoming Obama administration could try to iron out a long-term solution. But the Republican minority blocked an attempt to clear way for a vote on the measure. Senate Majority Leader Harry Reid, D.-Nev.,said, "That's just the way it is. There's too much difference between the two sides."
With the collapse of the bailout, bankruptcy looms closer to the Big Three automakers. General Motors and Chrysler are in the biggest danger of bankruptcy while Ford Motor supposedly has more cash to avoid this immediate crisis.
The White House issued a statement immediately, expressing disappointment with the Congress's failure to pass the bailout: "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."
