An eleventh-hour effort to salvage a proposed $14 billion rescue plan for the auto industry collapsed tonight 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. That's just the way it is. There 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 markets could plummet when trading begins this morning.
"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," he said.
Reid said the Senate would adjourn after a procedural vote on the bill later tonight that he said he expected would fail.
Now, the final vote was 52-35. On January 6th, Democrats gain a minimum of seven votes in the Senate, which would likely move us to 59 votes in this bill, only one short of passage. The roll call is not yet available, but if any Democrats did not vote, if Franken wins the recount, or if Reid voted with Republicans (as Majority Leaders sometimes do on these bills for procedural purposes), then it will pass in early January anyway. If none of these three are the case, then we need to find one more vote between now and January 6th. That is, of course, assuming that there are still any auto manufacturers in America to bailout by that date. (Update: Four Democrats did not vote, and Reid voted with Republicans. With nine ten Republicans defecting, six seven of whom will be around in 2009, new legislation will easily pass in January upon the arrival of at least seven new Democratic votes.)
In the meantime, as lord_mike notes in Quick Hits, Bush may well instruct Paulson to provide the auto industry with a bridge through the Troubled Assets Relief Program, or TARP. It would be a surprising move, and I will believe it when I see it, but perhaps the Gringch's heart is growing a size toward the end of his term. He also just might find the collapse of the American auto industry during his final month in office too hard to swallow.
I am of two minds on this. First, I think the American automakers should be bailed out, although strings should be attached and the government should get an ownership stake. After all, as Matt writes, why should the financial sector get $700 billion, but manufactures who produce cars and provide three million middle class jobs get nothing? Surely, if we can spend $700 billion to "save" Wall Street, $25 billion of that money can be spent to save Detroit. The collapse of this bailout leave me worried that these jobs will all be gone by January. We are not talking chapter eleven bankruptcy here, but possible chapter seven, which means total liquidation. It might very well happen before Congress re-convenes.
Second, this bill kept getting worse every day. Concession after concession after concession was made, and it still didn't pass. This legislation had turned into a real stinker, which would have actually retarded the growth of cleaner vehicles in America rather than attached strings to push them along. The government would likely have not received any meaningful investment stake, either. We need to save these jobs and this domestic industry, but swallowing this pill would have been extremely difficult.
Clearly, winning the election did not guarantee progressive governance. Here is Harry Reid's statement:
"Given the unhappy choice between a bridge loan and bankruptcy, Democrats have always believed that we must give the Big Three and the millions of Americans they employ every possible chance to succeed.
"By rejecting every good-faith bipartisan compromise - including those from the White House and Senator Bob Corker - it is now abundantly clear that Republicans have no interest in keeping the Big Three from collapsing.
"Because Republicans failed to act, three million Americans are more likely than ever to lose their jobs and our economy is at risk of suffering even
greater damage. Our hearts go out to those families who will now have to deal with this burden as the holidays near.
"Republicans may think that rejecting this legislation sent a message to the auto industry. Instead, they sent a message to every single American that they are more interested in settling scores than solving problems
I know how it feels to lose a job close to the holidays, and to have family members lose jobs close to the holidays. Pretty bad stuff.
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