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Friday, December 12, 2008

Auto Bailout Killed In Senate

The Auto Industry Financing and Restructuring Act that passed the U.S. House of Representatives on December 10, 2008, with a vote of 237 ayes, 170 noes, 1 voting present and 26 not voting, has hit a few snags in the Senate and is being pronounced dead. (Final roll call from the House vote here)

Via Wall Street Journal:

WASHINGTON -- A frantic, last-ditch attempt to forge a relief package for the auto industry collapsed in the U.S. Senate, dealing a giant blow to the immediate hopes of the Big Three.

Senate Majority Leader Harry Reid of Nevada suggested the $14 billion wouldn't be revisited until January. "It's over with," he said.

The talks, which appeared close to a deal several times, broke off due to a sharp partisan dispute over the wages paid to workers at the manufacturing giants.


WASHINGTON – A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency aid before year's end.

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.

Friday morning the world stock markets "plunged" with the news.

The Senate vote for cloture on the Motion to Proceed failed with a vote of 52 to 35 with 12 not voting, effectively killing the bill for the time being.

In the meantime, Bush may ok using part of the Wall Street Bailout to help the auto industry.

Ten hours after the Senate rejected a separate lifeline for the automakers, White House Press Secretary Dana Perino said in a statement it would be "irresponsible" to let the companies crash. So she said Bush will "consider other options," including the $700 billion Troubled Assets Relief Program that Congress created for the Treasury Department in October.

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," Perino said in a statement. "However, given the current weakened state of the U.S. economy, we will consider other options if necessary – including use of the TARP program — to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."

Big mistake, private firms shoud not be bailed out using taxpayer's money. let the file for bankruptcy, restructure and have the Government guarantee the warranties for buyers.

The whole point of capitalism is to fly or die on your own, not to have privately owned companies fall back and be handed money from the taxes Americans pay.