Auto bailout deal fails in U.S. Senate

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused late Thursday to back federal aid for Detroit's beleaguered Big Three automakers. They wanted a guarantee that the United Auto Workers would agree by the end of next year to bring their pay into line with Japanese carmakers, something it refused to do 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.

Democratic leaders called on Bush to immediately tap the $700 billion Wall Street bailout fund for the emergency aid.

Majority Leader Harry Reid, a Democrat, called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

GM said in a statement it was "deeply disappointed" that the bipartisan agreement faltered. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said. Chrysler also said it "will continue to pursue a workable solution to help ensure the future viability of the company."

The White House said it was evaluating its options in light of the breakdown.

"It's disappointing that Congress failed to act tonight," Deputy Press Secretary Tony Fratto said in a statement. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

The Senate rejected the bailout 52-35 on a procedural vote - well short of the 60 required - after talks fell apart. Just 10 Republicans joined 40 Democrats and two independents in backing it. Three Democrats sided with 31 Republicans in opposition. Reid also voted "no" for procedural reasons.

Congress is not scheduled to return for legislative work until early January.

Some Senate Democrats joined Republicans in turning against the House-passed bill despite increasingly urgent expressions of support from the White House and President-elect Barack Obama.

"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Democratic Sen. Chris Dodd, the Banking Committee chairman who led negotiations on the package.

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