The US Senate took on the role of Christmas Grinch for autoworkers when it failed on Thursday to pass a US$14 billion rescue package for Detroit’s three major car manufacturers.
Attention now turns to the US Treasury Department, who Senate Majority Leader Harry Reid and other supporters of a bailout said should dip into the US$700 billion fund Congress created to help Wall Street firms and banks, and lend automakers the money they need to avoid bankruptcy and save millions of jobs.
The Senate late on Thursday came only a few “yes” votes short of the 60 needed to block a filibuster on the bailout bill, effectively killing any chance of Congress providing a lifeline to the financially drowning automakers this year.
“It’s going to be a very, very bad Christmas for a lot of people based on what takes place here tonight,” Reid told his colleagues before the vote. “It’s over with.”
“I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight,” he said.
A Treasury Department official declined to comment on the Senate’s failure to approve the rescue package and said it was up to the White House to respond.
White House spokesman Tony Fratto said the administration would evaluate its options “in light of the breakdown in Congress,” saying the legislation had “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.”
Senators negotiated late into the night on a possible compromise that participants said fell apart over proposed wage concessions by the powerful United Auto Workers union.
“We are about three words — three words — away from a deal,” said Senator Bob Corker, a Tennessee Republican who proposed the alternative and led the talks.
Democrat Chris Dodd, chairman of the Senate banking committee, criticized Republican senators for pushing for steep wage cuts and warned the auto industry’s fate was tied up with the wider economy.
“I’m deeply saddened. But more than saddened, I’m worried,” Dodd said. “This will fail, we will go home, and I’m afraid our country will be in deeper and deeper trouble.”
For workers in the industry, “this will not be a joyous season wondering whether or not their jobs, their livelihoods, their homes, their children’s futures are at risk,” he said.
For GM and Chrysler, the last hope for a government lifeline appeared to rest with the White House, which has so far refused to draw on the US$700 billion Wall Street bailout fund for the reeling car companies.
The financial bailout money “may be where they go next,” said Republican Senator John Thune.
Reid called on US President George W. Bush to reconsider his administration’s opposition to dipping into the Wall Street rescue fund, known as the Troubled Asset Relief Program (TARP).
“I would hope that the president who has worked so well with us the past few weeks on this legislation would now consider using the TARP money to help the auto industry and the workers of this country,” he said.
Democrats initially pushed for a portion of the funds for the auto bailout but the Bush administration refused.
The White House, which suffered a stinging political defeat after backing the Democrats’ proposal for the short-term auto rescue loans, did not say if it would relent on freeing up the financial bailout funds.
General Motors Corp and Chrysler LLC are seeking billions of dollars in immediate aid, while Ford Motor Co wants a hefty line of credit.
As prospects for passage dimmed, US blue chips on Thursday tumbled 195.85 points (2.24 percent) to 8,565.57 at the closing bell while the NASDAQ fell 57.60 points (3.68 percent) to 1,507.88.
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