WASHINGTON — A $14 billion emergency bailout for U.S. automakers collapsed Thursday night in the Senate 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.
He spoke shortly after Republicans left a closed-door meeting in which 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 Voinovich of Ohio, a strong bailout supporter, said the UAW was willing to make the cuts — but not until 2011.
Reid 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 in order to advance.
Reid called the bill’s collapse “a loss for the country.” He added, “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 Republican point man in the talks, said the two sides had been tantalizingly close to a deal, but the UAW’s refusal to agree to 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,” Corker said. “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 Wednesday.
Senate Republican leader Mitch McConnell of Kentucky joined other GOP lawmakers in announcing his opposition to that bill. He and other Republicans said wages and benefits for employees of Detroit’s Big Three should be renegotiated to bring them in line with those paid by Japanese carmakers Toyota, Honda and Nissan in the United States.
Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.
GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are about $48. The Japanese automaker has far fewer retirees, and its pension and health care benefits are not as rich as those paid to UAW workers.
Republicans also bitterly opposed tougher environmental rules carmakers would have to meet as part of the House- passed version of the rescue package. The Senate dropped those rules from its package.
The White House monitored the talks but was not directly participating.
The House-passed bill would create a Bush-appointed overseer to dole out the money. At the same time, carmakers would be compelled to return the aid if the “car czar” decided the carmakers hadn’t done enough to restructure by spring.
McConnell said that measure “isn’t nearly tough enough.”
Pushing to convert skeptics in both parties, Democrats agreed to drop at least one unrelated provision that threatened to sink the measure, a congressional official said. They were eliminating a pay raise for federal judges.
The House approved its plan late Wednesday on a vote of 237-170.
Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks.
A pair of polls released Thursday indicated that the public is dubious about the rescue plan. Just 39 percent said it would be right to spend billions in loans to keep GM, Ford and Chrysler in business, according to a poll by the nonpartisan Pew Research Center. Forty-five percent of Democrats and 31 percent of Republicans supported the idea.
In a separate Marist College poll, 48 percent said they oppose federal loans for the struggling automakers while 41 percent approved.
