Thread: Auto Bail-out Rejected

I know most probably know this by now... but since Mino isn't on top of the game here... thought I would post.

globeandmail.com: Bailout talks collapse, GM consults on bankruptcy

WASHINGTON, TORONTO -- A refusal by the United Auto Workers union to accept swift wage cuts scuttled a $14-billion bailout of the Detroit Three auto makers last night, as General Motors was said to have hired legal and banking experts to consult on bankruptcy protection and Chrysler warned it was nearly out of cash. After a day of intense negotiations it appeared a deal was close on revisions to the bailout bill, first passed by Congress earlier this week. But Republican senators had earlier balked at the plan, instead demanding wage concessions and pension reform.
Those two issues led to the breakdown last night after the UAW refused immediate concessions, Senate Majority Leader Harry Reid said.
Mr. Reid said he was "terribly disappointed." He had hoped that a revised deal would be voted on last night.


"I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight," he said.
The collapse came after hours of marathon talks, as the bailout transformed into a clash over how far the U.S. government should go to ease the pain of the deepening recession. Senate Republicans refused to sign off on the House-approved deal, saying Americans are struggling to understand why the auto makers deserve bailouts when half a million workers are losing their jobs every month.
"This proposal isn't nearly tough enough. We simply cannot ask the American taxpayer to subsidize failure," Senate Republican Leader Mitch McConnell said earlier yesterday in a speech on the Senate floor.
The bill passed by Congress specified emergency short-term loans to GM and Chrysler and put a government-appointed "car czar" in charge of making sure the companies become competitive.
Republicans had been pushing an alternative that would slash worker pay and benefits at the Detroit Three, force bondholders to take a bigger hit and fund auto workers' pensions with stock instead of cash.
Those demands proved to be the sticking point, angering Democrats supporting a bailout plan.
"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Senator Chris Dodd, the banking committee chairman who led negotiations on the package.
Tennessee Republican Senator Bob Corker, the point man on the Republican side, had proposed setting a strict March 15 deadline for GM and Chrysler to cut their debt, persuade bondholders to accept an equity swap and start labour renegotiations to compete with foreign auto makers' work rules.
Mr. Corker said GM and Chrysler had been "working with us. They like this."
While several Republicans had warmly greeted the idea, some Democrats viewed the proposal as demanding too much from the UAW, which Democratic congressional aides said earlier yesterday had still been willing to negotiate.
Republican Senator George Voinovich of Ohio, a strong bailout supporter, said the UAW was willing to make the cuts - but not until 2011, when their contract expires.
The collapse came as two top Chrysler executives, vice-chairman Tom LaSorda and chief financial officer Ron Kolka, said the company is almost out of cash and wouldn't be able to pay its bills in the new year.
The Wall Street Journal also reported that GM was now considering bankruptcy protection.
Ford says it's in slightly better shape, but could also falter if its competitors go bankrupt.
The rescue package has become a victim of growing bailout fatigue. In recent months, the U.S. government has thrown hundreds of billions of dollars at banks, insurers and brokerages. Even so, credit markets remain dysfunctional and banks continue to tighten lending standards.
The political battle over the auto bailout has also exposed a growing geographic rift between Democrats and Republicans. Auto jobs are heavily concentrated in the U.S. Midwest, which voted heavily Democratic in the November election.
Republican opposition to the bailout is also crassly political. Most of the Asian and European car makers now have plants in the south and southwest staunchly Republican states. These plants are all non-union, and their workers earn lower wages, pensions and benefits than workers at the Detroit Three.
Mr. McConnell's home state of Kentucky, for example, is home to Toyota's first U.S. plant. And like other foreign auto makers, Toyota isn't seeking a bailout. Mr. Corker's state of Tennessee is home to a non-union Nissan plant.
The auto bailout issue gained urgency last week when the government reported the economy had lost more than a half-million jobs in November, the most in any month for more than 30 years.
The Democrats hold a razor-thin 50-49 majority in the Senate. (There's one vacancy because president-elect Barack Obama has resigned his Illinois seat). To avoid procedural stalling tactics, the legislation would need 60 votes.
With no deal in place, the White House could dip into a $700-billion bank rescue fund to help the auto makers, although President George W. Bush has repeatedly said he won't do that.
The uncertainty leaves the fate of the Detroit Three's Canadian operations in limbo. They, too, are seeking government loans, but they are contingent on the parent companies also securing financial aid.
Mr. Obama, who supports a bailout, said he shares taxpayers' "anger and frustration" with the Detroit Three. But "at this moment of great challenge for our economy, we cannot simply stand by and watch this industry collapse," he told reporters in Chicago. "Doing so would lead to a devastating ripple effect throughout our economy."

Originally Posted by lnvanry

Are you aware of how many members there are in the AFL-CIO?

I will go out on a limb and say 10 million between Canada and the US.

So whoopi they played hardball and lost there jobs... great negotiating.