Senate fails to reach deal on auto bailout

Senate fails to reach deal on auto bailout

Washington: The US Senate on Thursday failed to reach a deal on a controversial multi-billion-dollar bailout for the beleaguered auto industry due to a disagreement over wage cuts, senators said.

As part of the revised $14 billion loan package, Republicans had demanded that US wages be brought in line next year with those paid by foreign automakers, but faced resistance from the US autoworkers’ union.

“I’m terribly disappointed that we are not able to arrive at a conclusion," Senate Majority Leader Harry Reid said after lawmakers spent hours trying to hammer out a compromise over proposed federal loans for the Detroit automakers.

“We have tried very, very hard to arrive at a point where we could legislate for the automobile industry," said Reid.

“I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight. Millions of Americans, not only the auto workers but people who sell cars, car dealerships, people who work on cars are going to be directly impacted and affected."

Republican Minority Leader Mitch McConnell said his allies in the Senate felt that the rescue package, which consisted of some $14 billion in short-term loans, would not succeed in rescuing major automakers from the brink of collapse.

The Senate failure to reach accord means that any government-backed bailout of the US auto sector will likely have to wait until next year.

The House of Representatives passed its version of the rescue plan for Detroit’s automakers on Wednesday, but the proposal met stiff opposition from Republicans, sending lawmakers hustling to make adjustments.

The legislation would have provided General Motors and Chrysler bridge loans to operate until March 31, and required a restructuring plan to ensure their long-term survival while repaying government aid.

Republican Senator Bob Corker, who spearheaded the alternative proposal, attributed the breakdown to differences over employee compensation, and said that a union representative from the United Auto Workers was present for the talks.

After warning it could run out of money within weeks, the largest US automaker GM acknowledged ahead of the vote that it was considering “all options," including bankruptcy, and had hired a team of legal advisers.