WASHINGTON 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.
Senator Reid 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.
The White House said it was evaluating its options in light of the breakdown.
It s disappointing that Congress failed to act tonight, a White House statement said.
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.
The Senate rejected the bailout 52-35 on a procedural vote after the talks collapsed.
Senator Reid of Nevada 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.
Senator 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 Senator 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.