Senate Vote on Auto Bailout Fails Over Auto Workers Concessions

The Senate vote on the auto bailout failed to pass Thursday in what may be seen as a Pyrrhic victory of sorts. The Big 3 Bailout, if a bailout is to occur, will not be a work of Congressional legislature it would seem. At a little past 11 p.m EST Thursday evening (December 11), Senate Majority Leader Harry Reid called for a "test" vote for the proposed $14 billion worth of assistance for the automotive industry. Reid knew before the vote that he would not have the 60 needed for passage. Dana Bash, a correspondent for CNN, told Anderson Cooper that test votes were taken to see where voting stands so that last minute deals can be wrangled.

Sometimes.

But in the case of the Big 3 Bailout, the wrangling had already been done. In an hour and a half closed-door session between leading Democrats and opposing Republicans, negotiations centering around auto workers wages fell through, leaving the bailout just shy of votes needed. The final vote, 53 - 35.

And it was believed that the vote was in hopeless deadlock.

The Big 3 Bailout passed the House of Representatives Wednesday evening.

CNN reported that part of the problem may have come from rumors emanating from the White House. It seems that it was "general knowledge" that the Bush administration was believed to be extremely reluctant to allow even one of the Big 3 auto manufacturers to fail while Bush was still in office. Rumors involving using money from the $700 billion Wall Street bailout have been circulating.

Such rumors would have given Republican hardliners hope of defeating the Big 3 Bailout. It would also let them keep their promises of maintaining fiscal responsibility and not reneging on the position of not extending any corporate handouts. If the opposing Senators (whether they were Democrats or Republicans) could defeat the proposed unpopular measure knowing that Ford, General Motors, and Chrysler would still get assistance, so much the better.

Whether that was the case or not, the hardliners, many of which are Republicans like Senator Richard Shelby of Alabama, managed to not be swayed.

A disheartened Harry Reid told a tired group of Senators after the vote that he feared seeing the results of their efforts reflected on Wall Street and world markets Friday morning.

But what killed the negotiations? What brought the measure hammered out between the White House and Congressional Democrats just seven votes shy of passage but no further?

The largely bipartisan effort to pass the emergency legislation failed when the United Auto Workers refused to agree to Republican demands of wage cuts. Hardline Republicans wanted union concessions in the areas of wages and benefits. Many legislators wanted the United Auto Workers to agree to wages commensurate with those of foreign auto manufacturers. There were also demands of company concessions, including restructuring.

General Motors and Chrysler have both announced that they might not survive until the end of the year or very far into the first quarter next year without some form of federal assistance. Republican lawmakers like Mitch McConnell of Kenturcky said the proposal "was not tough enough."

A CNN/Opinion Research Poll taken last week showed 61% of Americans opposed to any kind of Big 3 Bailout.

But the death of the legislation may not be the demise of the automakers' last hope. That hope still rests with the president and whether or not he will demand that Secretary of the Treasury Henry Paulson relinquish emergency funds from the $700 billion bailout money. Paulson and the president have both strongly opposed loaning the Detroit automakers money from the bailout - Troubled Asset Relief Program (TARP) - money.

The Senate may not have given them but two choices: either bail out the automakers or watch them collapse or go into bankruptcy. It could be too late to work out a suitable deal for all parties concerned in Congress. But the $700 billion bailout money is a discretionary fund, where Paulson controls how much goes to who. And if Bush does not wish to see even one of the automakers go down on his watch, in effect forestalling what many believe to be the inevitable until after he leaves office, getting Paulson to loan money to the automakers may be the only option left.

Loaning money fromthe $700 billion bailout (TARP) fund was what many suggested should be done when General Motors, Ford, and Chrysler originally asked Washington for help. It would seem that all parties are back to where they were when it all began - automakers waiting to be saved, politicians wrangling over deals, and the American public opposed to any and all handouts.

Except that it is weeks later and the Detroit automakers are closer to extinction, the "ripple effect" of collapse closer to occurring, the delay causing more and more financial and commercial damage with each accumulating day. Which means the emergency bailout, regardless of the final form it will take, has less chance to succeed. Which again leads to more handouts, or bankruptcies, or collapse.

After all the weeks of political posturing, dire warnings, and legislative maneuvering, the fate of an industry may very well be decided by a man more worried about his legacy than about his convictions.

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Sources:

Associated Press

CNN.com

"Anderson Cooper 360," CNN Television