Senate Republicans killed the bailout deal worked out between President Bush and congressional leaders that had previously passed the House. NYT:
The failure to reach agreement on Capitol Hill raised a specter of financial collapse for General Motors and Chrysler, which say they may not be able to survive through this month.
After Senate Republicans balked at supporting a $14 billion auto rescue plan approved by the House on Wednesday, negotiators worked late into Thursday evening to broker a deal, but deadlocked over Republican demands for steep cuts in pay and benefits by the United Automobile Workers union in 2009.
The failure in Congress to provide a financial lifeline for G.M. and Chrysler was a bruising defeat for President Bush in the waning weeks of his term, and also for President-elect Barack Obama, who earlier on Thursday urged Congress to act to avoid a further loss of jobs in an already deeply debilitated economy.
“It’s over with,” the Senate majority leader, Harry Reid of Nevada, said on the Senate floor, after it was clear that a deal could not be reached. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”
AP:
Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit’s beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.
The breakdown left the fate of the auto industry — and the 3 million jobs it touches — in limbo at a time of growing economic turmoil. General Motors Corp. and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. says it does not need federal help now, but its survival is far from certain.
The blogospheric discussion, naturally, is mostly about the politics of this. While unequivocally believing that killing this boondoggle was necessary, my political instincts mirror Jeff Fecke‘s: “Evidently the Republican Party likes being a Southern regional party. Because they wouldn’t be doing this if they ever hoped to win Michigan, Ohio, or Pennsylvania ever again.” (His post title: “Republicans to Detroit: Drop Dead”) He issues a refrain that I expect to see echoed in the coming days, if not years: “[B]ack when we passed the financial bailout, do you remember Republicans hand-wringing about how we had to ensure that the companies significantly cut white collar compensation at those banks? … The GOP saw this as a golden opportunity to screw over unions and blue collar workers, and as such, they’re managing to screw everyone over.”
His counterpoint is Stacy McCain, who’d like to punish Republicans who backed this deal. But he’s dead right here: “After so much bad economic news, it’s good to see real progress. (And if you don’t understand why GM’s bankruptcy is good news, you don’t know anything about economics. Or bankruptcy.)”
Others are all over the map.
Chris Bowers sees this as evidence that, “While Obama is personally very popular, this popularity has not, as of yet, altered the legislative outlook on some key priorities.” Sandy Levinson reaches the same conclusion independently but thinks it’s time to amend the 20th Amendment, further moving up the inauguration of new leaders because “It is, frankly, indefensible that lameducks have the power to block this bill from coming to a vote. . . . There is also no reason in the world to delay the seating of newly elected representatives and senators beyond a week after the election.” That’s probably true. Newly elected presidents need time to put together a team; not so much new Members of Congress.
Digby: “So, the Republicans are saying that if the Democrats don’t agree to destroy the unions, they will block any loans to Detroit, and allow the auto companies to fail. And even that might not be enough to stop them because this wrecking crew seems have decided that the country needs to understand that if they vote for Democrats the Republicans will make them pay by ushering in another great depression.”
Robert in Monterey titles his post “Yacht Party Decides to Let Ship of State Sink” and focuses on the antics of California Republicans.
Sarah Binder is more tactical, observing, “All of the eight Michigan Republicans who participated in the vote supported the bailout. Indeed, Republicans from Rustbelt states were disproportionately (though not surprisingly) more likely to vote with the auto manufacturers, even controlling for ideological predispositions.” The upshot? “The geographic concentration of the domestic auto industry in the Rustbelt radically limits the industry’s voting power in the Senate.”
Former Clinton Labor Secretary Bob Reich is simultaneously reasoned and hyperbolic in making a similar point: “There’s a new Civil War going on when it comes to automaking in America. Japanese, Korean, and German automakers are now building 18 auto assembly plants in the United States, none of which is unionized. . . . So there’s no reason to suppose the good citizens of Kentucky, Tennessee, or Alabama are particularly excited at the prospect of handing over their taxpayer money to competing firms and their workforces.”
Pat Garofalo thinks the Republican alternative amounts to “union busting” and contends that “The UAW has already conceded to help the Big 3 manage their financial troubles. New innovations — not a lower-paid, uncared for workforce — will help Detroit get back on its feet.”
Doug Mataconis offers disdain for both sides, observing, “Not only is the Corker plan a bailout, it’s also an even greater imposition of state corporatism than anything we’ve ever seen before. It would give the Federal Government, represented by a self-described ‘car czar’ unprecedented control over a huge segment of the American economy, and anyone who thinks that power will be surrendered easily is kidding themselves.”
Hilzoy: “[A]fter years of being willing to spend money on whatever George W. Bush and their lobbyist friends wanted, after supporting Duke Cunningham’s and Tom DeLay’s buddies in the style to which they had become accustomed, now they decide to prove that they care about fiscal responsibility. In the middle of the worst downturn in half a century. Thanks a million.”
Of course, failing to adhere to their principles has been rewarded with ballot box calamity two election cycles in a row. Why not try something new?
Ed Morrissey congratulates Senate Republicans and snarks that, “Most of them, and a few Democrats like Baucus and Tester and Blanche Lincoln, must have read their Robert Byrd Pocket Constitutions and realized that the federal government has no role in bailing out out private enterprise with taxpayer money.”
Bowers’ counterpoint, though, is also valid: With a Democratic president and increased Democratic majorities in both Houses, any bailout that passes six weeks from now will likely be shorn of the sops to conservative sensibilities necessary to get Bush and House Republicans on board.
Image: Mike Licht, NotionsCapital.com‘s photostream under Creative Commons license.
