Senate leaders struggled Thursday to salvage a $14 billion automaker bailout headed for defeat amid Republican qualms that it wasn’t tough enough to change the Big Three’s business ways, didn’t do enough to protect taxpayers and gave too much power to a “car czar” to oversee the deal.
Senate Majority Leader Harry Reid, Nevada Democrat, pushed for a series of votes Friday to possibly tweak the bailout loan brokered by Democrats and the White House. But it was unclear whether Mr. Reid would accept the types of changes Republicans wanted in order to avoid killing the bill in a filibuster.
“If there’s no agreement that can be reached on that, we have danced this tune long enough,” Mr. Reid told the chamber. “That’s what’s taken place for the last two years, and look what it got the Republicans - lost seven or eight Senate seats, lost the presidency.”
The Senate remains narrowly divided between the parties so that bipartisan support is critical to achieve the 60 votes required to advance most legislation.
Senate Minority Leader Mitch McConnell, Kentucky Republican, joined the mounting filibuster, saying he backed a Republican plan demanding upfront concessions from the autoworkers union. That proposal would create a much tougher restructuring plan than in the deal brokered by Democrats and the White House, which won House passage Wednesday.
United Auto Workers officials were in talks with lawmakers, though it was unclear what concessions the union would agree to or whether Democrats would ratchet up the pressure on union bosses.
On Wall Street, major market indexes dropped in afternoon sell-offs as investors grew fearful that a bill wouldn’t emerge from the Senate and new claims for unemployment benefits rose last week to their highest level in 26 years. At the close, the Dow Jones Industrial Average fell 196.33, or 2.24 percent, to 8,565.09.
House Democratic leaders suggested that a defeat in the Senate could keep lawmakers in Washington into next week to rework a rescue for General Motors Corp., Chrysler LLC and Ford Motor Co. Together, the Big Three employ about 3 million people in autoworker and industry-related jobs.
Members of Congress suffered fierce criticism back home for the $700 billion Wall Street rescue and potentially face more constituent outrage for backing another bailout, especially in conservative states where the auto industry is dominant. Still, lawmakers on both sides of the aisle agreed that the failing car companies need help.
“A lot of struggling Americans are asking where their bailout is,” Mr. McConnell said. “They wonder why one business would get support over another. When it comes to the auto industry, many Republicans in Congress have asked these same questions.”
An amendment by Sen. Bob Corker, Tennessee Republican, would impose severe conditions on creditors and unions, including doing away with payments to union workers getting nearly full compensation up to four years after losing their jobs.
It also forces bondholders to accept 30 cents on the dollar to help reduce the companies overall debt load; brings union wages immediately in line with lesser-paid workers at companies such as Nissan and Volkswagen; and replaces half the $23 billion that GM owes the United Auto Workers’ benefit account with company stock.
“Without this kind of hammer, nothing is going to happen,” Mr. Corker said.
Under the House-passed bill, the government can take an equity stake in the companies to help safeguard taxpayer money and would impose restrictions on management, including limits on executive pay and prohibitions on paying shareholder dividends and expensive severance packages, or “golden parachutes,” for company bosses.
In a concession by Democrats, the money will come out of a previously approved $25 billion in federal loan guarantees, which were intended to help the Big Three build more fuel-efficient cars. But the bailout deal includes requirements for production of cars with higher fuel efficiency and reduced emissions.
House Speaker Nancy Pelosi called on President Bush to twist some Republican arms in the Senate to get the bailout loan passed, stressing that the deal requires sweeping restricting of the auto industry and makes the Big Three fully accountable to taxpayers.
“With one in 10 American jobs tied to the auto industry, we must provide this jump start for an industry that is essential to our nation’s economic health,” said Mrs. Pelosi, California Democrat.
The House passed the bill Wednesday night with scant Republican support.
“I don’t know that any president could move a bailout right now, ” a senior Republican aide said. “Bailouts are more unpopular than Congress and Congress is terribly unpopular.”
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