| Saturday, December 13, 2008 (12-13) 04:00 PST Washington -- The Bush administration offered a new lifeline to struggling U.S. automakers Friday, just hours after efforts to pass a bailout package in the Senate collapsed in a partisan dispute over plans to slash the wages of autoworkers. The White House, seeking to avert another shock to the nation's financial system after the defeat of the $14 billion auto rescue bill, indicated that the Treasury Department probably would tap the $700 billion bailout fund for financial firms to offer the Big Three short-term loans. "A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time," White House press secretary Dana Perino said Friday. The move was a sharp reversal for the White House, which has insisted for weeks that the funds should be reserved for stabilizing the country's financial markets. But the short-term loans are likely to help General Motors and perhaps Chrysler avoid having to file bankruptcy before the year's end, which would be a stain on the Bush presidency. The decision came on a day of angry finger-pointing on Capitol Hill between Senate Democrats and Republicans over who was to blame for the collapse of talks to save the domestic auto industry. Senate Republicans had balked at a House bill, negotiated by the White House and Democrats and passed by the House on Wednesday, that would have created a "car czar" to force the industry to cut costs and restructure in return for federal aid. Senators appeared close to a deal Thursday night over a plan by Sen. Bob Corker, R-Tenn., and had agreed to key provisions, including a requirement that automakers reduce their debt obligations by at least two-thirds in an equity swap with bondholders. Bondholders would have ended up getting about 30 cents on the dollar on their investment. But the talks broke down over a proposal to require the United Auto Workers union to accept wage and benefit cuts to the level of workers at U.S. plants owned by foreign automakers such as Honda and Toyota. The union was willing to accept the cuts starting in summer 2011, when their current labor contract expires, but Republicans demanded that the union accept lower salaries starting next year. Republicans blamed the UAW and suggested that Senate Democrats failed to push the union to accept the deal. After the Senate vote to kill the bill Thursday night, Sen. Jim DeMint, R-S.C., said, "It sounds like the UAW blew it up." Dispute over pay cutsUAW President Ron Gettelfinger said at a news conference in Detroit Friday that the union was willing to go along with salary cuts, but only if other parties - including management and creditors - agreed to sacrifices at the same time. "We've already stepped forward and made enormous concessions," Gettelfinger said. "But we could not accept the effort by the Senate GOP caucus to single out workers and retirees for different treatment and to make them shoulder the entire burden of any restructuring." Union officials said there was also disagreement about how deep the pay cuts for autoworkers would be. Critics suggest that the Big Three's union workers make about $78 an hour in wages and benefits, compared with about $45 an hour for U.S. workers employed by Toyota. But UAW officials insist the figure is closer to $60 if the costs for pensions for retired workers are subtracted. They said new younger employees make just $15 an hour in wages - similar to the rates paid by foreign automakers in the United States. Corker, in a news conference Friday, said he believes the White House contributed to the failure of the auto talks by signaling that the administration would do whatever it takes to keep automakers afloat. "I think it being known that the White House at the end of the day would probably blink probably helped keep us from a deal," Corker said. Sen. Chris Dodd, D-Conn., who chairs the Senate Banking Committee and oversaw the negotiations, complained that Republicans had singled out the autoworkers for concessions that they never required of executives or employees of the financial firms that were bailed out. "Where are the voices talking about cramming down wages and salaries of people in the financial institutions?" Dodd asked. "Where are those voices being raised?" Sen. George Voinovich, R-Ohio, a co-chair of the Senate Auto Caucus who supported the bailout package, acknowledged that anti-union sentiment might have been part of the reason some of his GOP colleagues opposed the bill. "We have many senators from right-to-work states, and I quite frankly think they have no use for labor," Voinovich told reporters on a conference call Friday. "If you look at the campaign funds that have come in, labor unions support very heavily Democrats. And I think some of the lack of enthusiasm for this was the fact some (Republican senators) didn't want to do anything for the United Auto Workers." Praise for White HouseDemocrats praised the White House's willingness to intervene on behalf of the automakers. President-elect Barack Obama, who will have to deal with the automakers' plight early next year, said in a statement Friday that he hopes the government "will still find a way to give the industry the temporary assistance it needs while demanding the long-term restructuring that is absolutely required." The failure of the auto bill could help the White House gain access to the second half of the $700 billion in funds in the Troubled Asset Relief Program. Treasury Secretary Henry Paulson needs congressional approval to access the second $350 billion, but Democrats have balked because of concerns over lax oversights of spending of the first portion. But Democratic leaders may be more amenable to approving some of the funds as part of a deal to aid the automakers. E-mail Zachary Coile at zcoile@sfchronicle.com. This article appeared on page A - 1 of the San Francisco Chronicle |
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Peter S. Lopez aka: Peta
Email: peter.lopez51@yahoo.com
Sacramento, California, U.S.A.
girlicious
12/12/2008 8:36:31 PMi hate to say it but the republican senators are so right on this one . uaw has made the u.s. automakers unprofitable and bloated wages and beneffits so far past what foreign automakers in the u.s. are making . those companies are doing fine at $20 less per worker per hour and no lifetime benefits . until the u.s. automakers can pull together their business , they should be allowed to go belly up like any other business that doesn't want to use sound business practices .
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