The US Senate has failed to reach a deal on a controversial multi-billion-dollar bail-out for the beleaguered auto industry.

“I’m terribly disappointed that we are not able to arrive at a conclusion,” Senate Majority Leader Harry Reid said late Thursday in Washington after politicians spent hours trying to hammer out a compromise over proposed federal loans for the Detroit automakers.

“We have tried very, very hard to arrive at a point where we could legislate for the automobile industry.” 

Earlier in the evening, Read had been more upbeat, saying negotiators had reached tentative agreement on an emergency $US14 billion ($20.8 billion) bail-out.
 
He said the lead Republican architect of the deal was briefing colleagues on the compromise, and Democrats were prepared to move forward on it quickly.

“We’re ready to go,” Reid said.

Marathon talks

The failure to reach a deal came after hours of marathon talks in Washington between labour, lawmakers and the auto industry to salvage the rescue. The talks centered on possible wage and benefit concessions from the United Auto Workers union as well as large-scale debt restructuring by General Motors, Ford Motor and Chrysler.

Progress in the negotiations were the latest development in a long-running debate over bailing out the beleaguered auto industry. The issue 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.

It was unclear how far the participants were willing to go to seal the federal aid that General Motors and Chrysler said was essential to keep them from bankruptcy. Ford is in better financial shape than its rivals, although its survival is not assured, either.

The developments unfolded after Senate Republican leader Mitch McConnell joined other party lawmakers in announcing his opposition to a White House-backed rescue bill that was approved by the House a day earlier.

Calls for alternative

He called for an alternative that would reduce the wages and benefits of US autoworkers to bring them in line with those paid by Japanese carmakers Nissan, Toyota and Honda in the United States.

Sen. Bob Corker of Tennessee took a leading role in the closed-door talks for Republicans.

“The meetings have gone very well,” he said as he ducked out at one point. “We’ve got some issues to work out.”

When he re-entered the talks a short while later, industry representatives had departed, leaving only the autoworker union and lawmakers.

The negotiations marked the latest development in a long-running debate over bailing out the beleaguered auto industry.

The issue 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 White House monitored the talks but was not directly participating. Administration officials had been deeply involved in recent days in drafting a compromise with House and Senate Democrats - the measure that McConnell and other Senate Republicans promptly repudiated.

Bush and Obama support plan

A growing number of Republicans and Democrats were 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 White House said Bush was calling Republican lawmakers, while Obama told reporters at a news conference in Chicago an industry shutdown would have a “devastating ripple effect” on the already ragged economy.”

The bill, which has already passed the House of Representatives, would create 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.”
 
Pushing to convert skeptics in both parties, Democrats agreed to drop at least one unrelated provision that threatened to sink the measure, a congressional official said.

They were eliminating a pay raise for federal judges after Democratic Sen. Claire McCaskill of Missouri, who represents an automobile manufacturing state, announced she would oppose the carmaker aid unless that provision was removed.

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. Forced together by growing economic turmoil, the incoming and outgoing presidents were united in pressing hard for swift approval.

Republicans were directly challenging Bush, arguing that any support for the domestic auto industry should carry significant, specific concessions from autoworkers and creditors.

They are also bitterly opposed to tougher environmental rules carmakers would have to meet as part of the House-passed version of the rescue package - something that also faces some Democratic opposition.

A Senate version of the bill omits the environmental provision.

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% 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% of Democrats and 31% of Republicans supported the idea.

Source: The Age