Wage Demands Sink Auto Bailout In Senate

Despite Coming Within "About 3 Words" Of A Deal, Republicans Block $14B Package Over UAW Refusal To Accept Pay Cuts

(CBS/AP)  A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.

"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.

Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. 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.

Reid 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.

Earlier in the day, in a move that signaled their lack of confidence in a bailout, GM and Chrysler hired teams of bankruptcy attorneys, reports CBS News correspondent Sharyl Attkisson.

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

"It's disappointing that Congress failed to act tonight," a White House statement said. "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 the talks fell apart.

"I think [the Senators] are calling their bluff, but I think they felt the American people were at greater risk," Peter Morici, a University of Maryland economist, told CBS' The Early Show.

The implosion followed an unprecedented marathon negotiations 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.

The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans, in turn, balked at giving the automakers federal aid.

"This is a colossal failure in leadership," Lansing Mayor Virg Bernero said on The Early Show. "It puts the economy closer to the cliff and I think we see that already in the reaction."

World markets plunged following news of the bailout's failure and most expect a rough day on Wall Street.

(Left: Workers leave the Chrysler Truck Assembly plant in Warren, Mich., Dec. 11, 2008.)

Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson.

"I believe the president of the UAW, Ron Gettelfinger, was too unrealistic and too selfish," Morici said on The Early Show.

But some are taking Congress to task for expecting too much from the union.

"I find it highly ironic to have Congress people lecturing the UAW about cutting their wages," Bernero told the The Early Show. "Why don't we put Congress people and senators on merit pay and see what they would be making. What has their productivity been? Give me a break."

Aid the automakers 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 stunning disintegration 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 Bush.

It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued postelection Congress, with Mr. Bush's influence at a low ebb.

Democratic House Speaker Nancy Pelosi called Senate Republicans' refusal to support the White House-negotiated bill irresponsible and also urged the Bush administration and the Federal Reserve to provide short-term relief for the automakers. "That is the only viable option available at this time," she said.

Congressional Republicans were already in open revolt against Mr. Bush over an auto bailout deal the White House negotiated with congressional Democrats, passed by the House passed on Wednesday.

The developments unfolded after Senate Republican leader Mitch McConnell of Kentucky joined other GOP lawmakers in announcing his opposition to the White House-backed rescue bill passed by the House on Wednesday.

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 around $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 and the Senate dropped them from its package.

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 for quick action to spare the economy the added pain of a potential automaker collapse.

The House-passed bill would have created 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."

Supporters had an uphill battle pressing the rescue package on a bailout-fatigued Congress - particularly a measure designed to span the administrations of a lame-duck president and his successor. Before the late-day negotiations, patience had begun wearing thin at the Capitol as lawmakers looked ahead to adjourning for the holidays.

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. Just 45 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.

[jsd330]

If you think chapter 11 is going to get rid of the uaw,go back a few years when the airlines went chapter 11 they still have unions and they will probobly be the next ones looking for a bailout.

[faletinme]

Don''t worry Smithville. Once the Big 3 go Chapter 11 the assets will be sold to a buyer who will be unencumbered by the unconscienable inflated union contracts. (Hint: it takes less skill to screw lug nuts on all day than it does to work at a McDonald''s). With labor costs in the $12/hr range the Big3 should do just fine.

It''s funny how unions always want pay hikes when the company is profitable, but never want to give back when the companies are losing money. With the monkeys on the assembly lines being paid monkey wages for monkey work things will be fine. Oh except the monkeys wont live like doctors anymore.

[smithville01]

It is clear who Corker sides with - foreign automakers. He is ready to throw Detroit under the bus in order that his state gets more low paying jobs from non-American producers.

Key - if one of the big three fails - just wait and see how much you will pay for your Toyota. At minimum, due to supply and demand consumer will pay at least 30% more. This would average out to be approximately $9000 more due to lack of competition.

Note: GM is still the largest producer of cars in the world, with Toyota being second. People tend to forget what happens when you take 9 million vehicles out of the supply chain. There is no possible way for these other vehicle makers to bring this type of volume to the table. Therefore, prices will rise dramatically and goes to the highest bidder.

[jsd330]

USgeneral You say the uaw wages are non competitive, the detroit free press reports toyota workers make $30 per hour uaw workers make $29.00 and change. That sounds pretty competitive to me. And you should deny retirees health coverage,for most of them the companys are probobly only paying for the medicare supplement. And the last time I checked most unions have a healthcare plan for their retirees, as do federal, state, county, and city governments and they are all hurting for money to. So are all of them cancer to?

[starleo146]

The UAW is a CANCER on the American auto industry that has been eating away at the foundation of this industry for decades. The greed of this group is unprecedented and reaches CEO levels.

The UAW would have the American auto industry collapse, rather than give up one penny of excessive, non-competitive salaries and gold-plated health benefits - that are provided even to non-working union members (which is probably the majority.)

This CANCER must be eradicated, before it kills the patient.


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Posted by USGENERAL at 05:22 PM : Dec 13, 2008
+ report

Oh yes, the CEO''s make millions go on retreats that eat up the money , if fired get a golden parachute to beat the band, yep the unions who fight for the worker is just eating up the profits of the industry

[usgeneral-2009]

The UAW is a CANCER on the American auto industry that has been eating away at the foundation of this industry for decades. The greed of this group is unprecedented and reaches CEO levels.

The UAW would have the American auto industry collapse, rather than give up one penny of excessive, non-competitive salaries and gold-plated health benefits - that are provided even to non-working union members (which is probably the majority.)

This CANCER must be eradicated, before it kills the patient.

[peetrerb]

get real UAW. you are so overpaid while we bail your azzes out!

I hope you all enjoy unemployment!. Asian CEO do make less... It costs less to live there!

[dralex999]

I''m with starleo14672, let GM go into bankruptcy and give the whole mess to the UAW. I bet they would be willing to take pay cuts then.

[agidoi]

we are also paying money out to the ones in congress more money the any worker and they are passing bills to control your live is that fair

[agidoi]

why should the auto worker take a cut in pay, and our congress keep getting raises

[psp190]

please get things straight. You interviewed Congressman Sander Levin from DETROIT, MICHIGAN. He is not the democratic from Mississippi. He has to much class to be from the South. He was standing in front of the GM Ren Cen. What a stupid error.
Don''t insult the people of Michigan this way. We have had enough

[starleo146]

Get your facts straight.

http://www.thenation.com/doc/2
0081110/dreier_atlas


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Posted by ofbyfor3 at 11:25 PM : Dec 12, 2008

Well this is so informative, and I appreciate this comment, we are so easy to blame this one, or that one, and we never go to the very ones who are at fault.I can not tell you what I have read in these comments, It is all Barney Frank, it is all the UAW c''mon folks we wrote a blank check of our taxpayer money to a bunch of greedy no accounts, and the blame starts there and they should be punished by law every last one of them.NO, Secretary Paulsen saw fit to give these greedy nothings every penny alloted to save there behinds, and use it to a point that if any more is needed they have to go back to congress. Do you really believe Bush will do anything, he has been late and a dollar short for 8 years, and how he can show his face at all is beyond me, and how he has gotten away with everything is beyond me.

[starleo146]

Wouldn''''t the simplest solution be to put GM into bankruptcy, revoke all it''''s stock and pay off the stockholders at pennies on the dollar, then give the entire company to the UAW? Let the UAW own GM and figure it out.


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Posted by tmittelstaed at 01:36 AM : Dec 13, 2008

I understand your frustration I to am as mad as a wet hen over this ,but an airline that filed for bankrupcy isn''t the same as a auto industry filing for bankrupcy, when an airline files it doesn''t affect you you get off the plane and that is the last you have with them, people buy cars, and want a service for years to support the car they bought so therefore a auto industry will not sell cars if in bankrupcy for fear ther warranty or parts service will not be there, another bad idea by republicans, these guys do not get it every industry that makes parts for the auto big three will be affected, and every dealer will be affected think about this, we need to scream loud and clear about this, not to say ok you CEO''s did a lousy job, but the workers have to be saved none of this is there fault and that is who is bearing it all, those fat cats in Congress need to stop this today,tired of there rhetoric and Mitch Mc Connell needs to go back to the south where they think they have all the answers, but as usual they don''t get it.

[jsd330]

How many workers drink their lunch then go back to the workplace because they are "protected" yet put other workers at risk?
posted by joule18
How many many white coller people go have there so called 2 martini lunches everyday, that last for more then an hour. OH I forgot they are talking business. The last I heared autoworkers get 30 min from the time they leave until they have to be back.
That doesn''t seem like enough time to go to a bar and get back to work.
And I still want to know where toyota has a plant in the U.S. that has been here for 25 years?

[carealot-2009]

Sorry people the easy answer..
If you want to keep jobs in the US and help the US economy, BUY AMERICAN.......

[homespunlady]

Well, Merry fracken Christmas folks...

I don''t get it...what a couple of TRILLION with NO oversight or even hesitation when it comes to PONZI ARTISTS running Wall Street but NOTHING to help "Joe Six Pack" or "Joe The Plumber" to survive?

I just came home from ANOTHER of my favorite Bargain stores "going out of business" sales.

That makes at least SIX retail businesses around here in LESS than 3 weeks that have passed on that notification to me and their other customers - and I''m out in the middle of NOWHERE USA!

It''s now "official" that this Neo-Depression has been going on for at least a year before they admitted it up on Capital Hill and all this nation is getting is a KEYSTONE COPS ROUTINE from our elected so-called leaders.

When are the American PEOPLE going to see some REAL LEADERSHIP - before or after they finally get fed up enough to take matters in their own hands and incarcerate the lot of them for incompetence?

[tmittelstaed]

Wouldn''t the simplest solution be to put GM into bankruptcy, revoke all it''s stock and pay off the stockholders at pennies on the dollar, then give the entire company to the UAW? Let the UAW own GM and figure it out.

[cheetah-man7]

The UAW deserve to lose their jobs - forget about losing a couple of bucks an hour. Unions are great to a point - but it always leads to greed! I stopped caring about these folks when learning of their complete lack of flexibility to save the companies that PAY THEM THEIR SALARIES.

[irritated3]

Let GM fail and see how the UAW likes that, if you count up their wages and their benefits these people are making $50 to $60 dollars and hour for line work. Come on people there is no reason that these people can''t join the rest of the real working class.
Besides all that I am against any type of bailout if I owned a business you can bet, the Government is not going to bail me out. Proof of this is that when the executives showed up in Washington they each arrived in their own personal jet. They lost the money let them find it for themselves and not the taxpayer. In my opinion the taxpayers should not bailout any one for miss management of funds. That''s the reason that we have bankruptcy Laws































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[ofbyfor3]

without capitalism..where would socialism leech from?

Posted by LordSunTzu at 09:35 PM : Dec 12, 2008

Seems like capitalists such as AIG are the ones benefiting from corporate socialism at this point. How do you explain that?

Or do you just not think that it''s ''socialism'' when corporations benefit?