Car bailout falters in US senate

$14bn rescue plan fails as Democrats and Republicans fail to reach deal over wage cuts.

    Senate Republicans expressed scepticism that the bailout would have worked [GALLO/GETTY]

    Harry Reid, the Democratic senate majority leader, said the bill's collapse was "a loss for the country" after Democrats and Republicans spent hours trying to hammer out a deal.

    "I'm terribly disappointed that we are not able to arrive at a conclusion," he said. "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

    The White House, meanwhile, announced it would assess its options for moving forward.

    "It's disappointing that congress failed to act tonight," Tony Fratto, a spokesman for the White House, said. "We will evaluate our options in light of the breakdown in congress."

    Republican opposition

    The Senate pushed ahead on Thursday with a procedural vote on the Democratic-sponsored bill negotiated with the White House, to test support for it. But the bill ultimately failed due to a lack of Republican backing.

    "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight"

    Harry Reid,
    Democratic Senate majority leader

    A similar version of the plan had passed in the US House of Representatives on Wednesday night by a vote of 237-170, but the senate had to pass the deal before George Bush, the US president, could sign it into law.

    Rob Reynolds, Al Jazeera's Washington correspondent, said there was a political battle behind fought behind the scenes and some Republicans were being open about their desire to see trade unions take a "big hit" on the issue.

    "[UAW] has spent a lot of money ... to defeat Republican candidates, including some of the very senators who have voted on the measure," Al Jazeera's correspondent said.

    "So there's political bad blood in there, and there's a desire, many union officials feel, on the part of these Republicans from southern states to cut the union down to size."

    The White House and Barack Obama, the US president-elect, had pleaded for legislators to pass the measure.

    Firms criticised

    Ford, Chrysler and General Motors, have spent weeks pleading with US politicians to assist their ailing firms, saying their collapse could devastate the economy and cause millions of job losses.

    GM said in a statement it was "deeply disappointed" that the bipartisan agreement had faltered.

    Car manufacturer executives say their firms will collapse if no bailout is passed [Reuters]
    "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," it said.

    Chrysler also said it "will continue to pursue a workable solution to help ensure the future viability of the company".

    All three firms have been criticised for failing to restructure and adapt to the market by providing more fuel-efficient vehicles.

    GM and Chrysler were asking for billions of dollars of federal asisstance by the end of the month just to survive while Ford has asked for a line of credit if its finances worsen more than expected in 2009.

    Under the proposed bailout terms, the loans were intended to assist the firms until the end of March 2009, after which future help would depend on the quality of restructuring plans demonstrating their viability.

    A presidentially appointed trustee, or "car czar" would have then enforced the loan conditions and judged the restructuring plans and could recommend bankruptcy if he or she deemed the companies' plans to be insufficient.

    SOURCE: Al Jazeera and agencies


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