(1)
Hats off to Senate Republicans.

The Senate on Thursday night abandoned efforts to fashion a government rescue of the American automobile industry, as Senate Republicans refused to support a bill endorsed by the White House and Congressional Democrats.

The failure to reach agreement on Capitol Hill raised a specter of financial collapse for General Motors and Chrysler, which say they may not be able to survive through this month.

After Senate Republicans balked at supporting a $14 billion auto rescue plan approved by the House on Wednesday, negotiators worked late into Thursday evening to broker a deal, but deadlocked over Republican demands for steep cuts in pay and benefits by the United Automobile Workers union in 2009.

After eight years of marching in lockstep with George Bush, cheerfully and obediently signing off on everything from torture and kidnapping, to multi-billion dollar no-bid contracts, to stratospheric budget deficits (not just cheerfully signing off on, but enthusiastically cheering for each one of these things), after unhesitatingly disgorging $700 billion for Hank Paulson‘s zero-planning, zero-oversight financial sector bailout package, what sticks in their craw is spending $14 billion with all kinds of checks and balances and terms and conditions to save the U.S. auto industry from probably going under?

Senate Republicans obviously can’t bear to see the economy in the condition it is in. So they put on their hobnailed boots, trooped over to where the economy was curled up on the ground in a fetal position, and proceeded to give it a therapeutic dose of pounding and kicking.

I think it’s amply clear from news reports that the Senate Republicans who are responsible for scuttling the auto bailout package were never negotiating in good faith, but just posturing for effect. The auto companies and the UAW had both agreed to very substantial concessions. Auto companies agreed to drastic reductions in debt—to one-third of the current level by the end of March 2009. The UAW agreed to major wage concessions—bringing workers’ pay down by 2011 to what Toyota and Nissan pay non-union workers in the U.S. But Senate Republicans insisted on wage parity being achieved by 2009. And they wouldn’t budge at all.

Presumably, Senate Republicans understand full well what the cascading impact of the collapse of the auto industry will be on an economy already reeling from recession the way it is. But somehow they have persuaded themselves that it’s not their problem to solve, since they didn’t create the problem in the first place:

The Republican leader, Senator Mitch McConnell of Kentucky, said: “We have had before us this whole question of the viability of the American automobile manufacturers. None of us want (sic) to see them go down, but very few of us had anything to do with the dilemma that they have created for themselves.”

So that’s how it is: None of us want to see them go down, but damned if we see why we should lift a finger to stop it.

(2)
It’s not just the Republicans, of course, who deserve blame. They may have been the ones responsible for the negotiations going nowhere, but ultimately it came down to votes.

Moments later, the Senate failed to win the 60 votes need to bring up the auto rescue plan for consideration. The Senate voted 52 to 35 with 10 Republicans joining 40 Democrats and 2 independents in favor. The White House issued said it would consider alternatives but offered no assurances.

With 10 Republicans and 2 independents voting against the filibuster, all it needed was 48 Democratic votes. Four Democrats voted for the filibuster (Max Baucus, Montana; Blanche Lincoln, Arkansas; Harry Reid, Nevada; John Tester, Montana) and four Democrats did not vote (Joe Biden, Deaware; Ted Kennedy, Massachusetts; John Kerry, Massachusetts; Ron Wyden, Oregon).

Someone will have to explain those votes to me. Maybe there was some arcane Senate deep strategy involved?

The ten Republicans voting against the filibuster were Kit Bond, Missouri; Sam Brownback, Kansas; Susan Collins, Maine; Liddy Dole, North Carolina; Pete Domenici, New Mexico; Dick Lugar, Indiana; Olympia Snowe, Maine; Arlen Specter, Pennsylvania; George Voinovich, Ohio; John Warner, Virginia.

(3)
So what happens next? Here’s one extreme:

With Congress failing to agree on a bailout for Detroit, the odds that General Motors and Chrysler will be insolvent by year’s end are growing rapidly.

The companies have been warning that they would run out of money for some time, but crushing bills from their suppliers are coming due. It appeared unlikely that they could hold on until President-elect Barack Obama takes office next month, when he and a new Congress might be able to provide a lifeline…

As a result, the hypotheticals about the domino effect of the companies’ troubles through the vast network of auto supplier firms — which employ more than twice as many workers as the carmakers — are becoming real.

General Motors and Chrysler, for example, owe their suppliers a total of roughly $10 billion for parts that have been delivered. G.M. has held off paying them for weeks, and Chrysler is paying in small increments. But the cash shortages at G.M. and Chrysler are getting more severe, according to their top executives and other officials.
[...]
G.M. has said its cash reserves are falling by more than $2 billion a month, and the company has hired bankruptcy advisers…

Many of their suppliers are teetering on the verge of bankruptcy themselves, and do not have the luxury of extending credit much longer.

“I don’t think that suppliers will be able to get through the month without continued payments on their receivables,” said Neil De Koker, chief executive of the Original Equipment Suppliers Association in Troy, Mich., a trade group.

When suppliers big and small start failing, the flow of parts to every automaker in the country will be disrupted because as suppliers typically sell their products to both American and foreign brands with plants in the United States.

“There’s no question it will hit Toyota, Honda and Nissan too,” said John Casesa, principal in the auto consulting firm Casesa Shapiro Group.

“Many of the small suppliers will simply liquidate because they don’t have the resources to go reorganize in Chapter 11 bankruptcy,” Mr. Casesa said. “They’ll just go away.”

It is the dire scene laid out at the first set of Congressional hearings on an auto bailout in mid-November by Ford’s chief executive, Alan R. Mulally.

“Should one of our domestic competitors declare bankruptcy, the effect on Ford’s production operations would be felt within days, if not hours,” Mr. Mulally said.

This is another possibility:

General Motors Corp. and Chrysler LLC, which have said they can’t last the year without federal aid, both hope the White House will now relent and allow the Treasury to provide emergency loans from the $700 billion Wall Street fund, people familiar with the matter said. Mr. Reid also urged that option.

To date, the administration has resisted the idea. But “that may be where they go next,” said Sen. John Thune (R., S.D.). There is always a chance Congress will act sooner if one of the companies totters on the brink, although that possibility appears remote.

Or the Fed could come riding to the rescue:

So far, the Federal Reserve also has shown no willingness to step in to aid the auto industry, but Democrats have argued that it has the authority to do so and some said the central bank may have no choice but to prevent the automakers from bankruptcy proceedings that could have ruinous ripple effects.

*** Update, 7:06 am ***

Most bewildering comment I’ve seen on the bailout fiasco:

In the future I think it will be difficult to explain why this happened, perhaps even more challenging to explain why this key national decision was left in the hands of lame duck senate Republicans.

That’s TPM‘s Josh Marshall. Not known what he was smoking at the time. Mercifully, he didn’t explain by what extra-constitutional means he thinks key national decisions should be made.

(See also: Time To Tweak Filibuster Rules?)