The United States Senate has voted down the automobile company bailout bill, having failed to come up with the required 60 votes to close off debate. The sticking point appears to be UAW intransigence on realigning wages and benefits.
The vote appears to be not quite along party lines, according to AP. 40 Democrats, 10 Republicans, and both Independents voted yes. 4 Democrats and 31 Republicans voted no.
The possibility of a deal that would have brought the Senate Republicans on board collapsed when the United Auto Workers refused to realign worker compensation to that of auto workers employed by Japanese owned auto plants in the United States before the current contract expires in 2011. The Japanese owned auto companies, unlike the big three auto companies, have been profitable in the North American market.
The collapse of the automobile bailout leaves the fate of the big three auto companies in limbo. General Motors is said to be near collapse and has started contemplating filing bankruptcy. Ford is said to be in relatively sound shape, but its long term survival is far from certain.
The idea of a massive bailout of the automobile companies has proven to be unpopular with the American people, irritated at the idea of tax money being spent to cover the losses of badly run companies while many Americans are suffering from economic hardship without the prospect of a government bailout. There is also some suspicion that the real purpose of the bailout bill is to help the UAW avoid painful changes in compensation and work rules that would make the big three auto companies profitable again. On the other hand, some people worry that if the auto companies are forced into bankruptcy, economic turmoil will deepen and worsen.
Congressional action on another attempt to craft a bailout bill is unlikely this year. On the other hand, Senate Majority Leader Harry Reid has suggested that President Bush has executive powers to offer bailout money from existing 700 billion dollar Troubled Assets Relief Program (TARP) imposing any conditions he sees fit.
The failure of the auto bailout bill in the Senate illustrates a growing disquiet about how far the federal government is willing to go to bailout companies, states, and other entities who claim to need it. Under a capitalist system, it is not the business of government to bailout private businesses except under extraordinary circumstances, usually having to do with national security. Also government bailouts tend to allow companies to continue the bad habits that got them into trouble in the first place.
The story is not over. Next month, a new Congress with increased Democratic majorities and a new Democratic President, Barack Obama, come to power. The new government may be more willing to shell out tens of billions of dollars to private companies, especially if they are well politically connected.
Source: Union balks and $14B auto bailout dies in Senate, Julie Hirschfield Davis and Ken Thomas, Myway, December 12th, 2008
Senate roll vote on $14B auto bailout, AP, December 11th, 2008
Bailout cloture vote: Republicans hold the line, Ed Morrissey, Hotair.com, December 11th, 2008