Breaking: Senate GOP Torpedoes Auto Bailout!
by bobswern, Thu Dec 11, 2008 at 06:41:33 PM EST
The US Senate failed to muster enough votes in a "test-vote," this evening, to bailout the U.S. auto industry. The Senate's failure to pass the bill, which CNN analyst and long-time political pundit David Gergen just referred to as "irresponsible," all but insures the unemployment of at least another 1.5+/- million Americans in coming months.
After following US Treasury Secretary Henry Paulson off of a proverbial cliff, just over 70 days ago, by passing what now amounts to an $8 trillion (potentially almost doubling our total national debt in one fell swoop) bailout, with most of those funds totally unaccounted for, even now, as I write this, the US Senate tonight decided they'd demonstrate just how tough they really were, in terms of protecting US taxpayer's financial interests, by running an entire industry into the ground through even greater acts of negligence than those we witnessed at the end of September.
These travesties of "governance" just get greater with every passing day.
Automaker bailout falls apart in Senate.
Republicans torpedo House-passed measure.
By Robert Schroeder, MarketWatch
Last update: 10:45 p.m. EST Dec. 11, 2008
WASHINGTON (MarketWatch) -- A $14 billion bailout deal to aid the struggling Big Three automakers fell apart in the Senate on Thursday night, Senate Majority Leader Harry Reid, D-Nevada said.
"There's too much difference between the two sides," Reid said.
Senate Republican Leader Mitch McConnell of Kentucky said the sticking point was whether the United Autoworkers union was willing to agree to a parity pay structure as part of the deal to assist Ford Motor Co., and privately held Chrysler LLC.
It was unclear what the next step would be. The measure passed by the House of Representatives and sent to the House reportedly had the support of President Bush.
Senate Republicans earlier had made it clear they would block the House legislation.
Earlier in the day, McConnell, the Senate's top Republican, said he'd oppose the House-passed bill, making its passage unlikely in the Senate and Reid acknowledged a vote on it wouldn't pass.
"This proposal isn't nearly tough enough," he said. "It's pretty clear that there's no need to vote on the House measure, because it's pretty clear there aren't enough votes to pass that," Reid said.
Senators including Bob Corker, R-Tenn., and John Ensign, R-Nevada, were working on a plan that would give bondholders 30 cents on the dollar to help reduce the Big Three's debt load, bring wages into line with companies like Nissan and scrap union payments to workers still getting nearly full pay four years after retiring.
Acknowledging the opposition to the bill, Reid invited Republicans to offer their own version, but said Thursday morning that if no compromise can be reached, he'd bring a final vote to the floor Friday.
"We have danced this tune long enough," Reid said on the Senate floor Thursday.
The $14 billion loan package easily passed the House on Wednesday night, but its fate in the Senate was far less certain from the start. Democrats enjoy a slim 50-49 majority, and Reid said that the auto measure will need 60 votes to pass. Republican Sen. Richard Shelby of Alabama had threatened to filibuster the bill.
Uncertainty about the bill sent the stocks of Ford and GM down Thursday. Ford and GM ended about 10% lower at $2.90 and $4.12, respectively.
President-elect Barack Obama also repeated a call to aid the companies.
"I believe our government should provide short-term assistance to the auto industry to avoid a collapse, while holding the companies accountable and protecting taxpayers' interests," Obama said at a news conference in Chicago. "The legislation in Congress right now is an important step in that direction, and I am hopeful that a final agreement can be reached this week."
The bill passed by the House on Thursday would create a White House-chosen "car czar" for the auto industry, empowered to hold the companies accountable for developing long-term viability plans.
The car czar would be able to require immediate repayment of the loans if the companies don't make adequate progress by Feb. 15. Final restructuring plans would be due March 31.
The legislation also would stop shareholder dividends, along with "golden parachutes" and bonuses for executives. The government would also get warrants for nonvoting stock equal to 20% of the value of the loan it makes to each company.
The $14 billion is a long way from the $34 billion initially sought by the Big Three. Of the three companies, GM and Chrysler are in the greatest need of cash. Ford says it is seeking a long-term line of credit and doesn't need money in the short term.
I'm beyond words. So, I'll just stop writing now. I think I'm going to be sick.