Senators fail to reach a compromise on a rescue package for General Motors and Chrysler.

Senators fail to reach a compromise on a rescue package for General Motors and Chrysler.

Senators fail to reach a compromise on a rescue package for General Motors and Chrysler.

A summary of what's in the major U.S. newspapers.
Dec. 12 2008 6:18 AM

Senate: Drop Dead, Big Three

The Senate didn't reach a deal. After some brief bouts of optimism throughout the day, senators failed to reach a compromise on a $14 billion rescue package for Chrysler and General Motors last night. "It's over with," Senate Majority Leader Harry Reid said, suggesting that lawmakers won't take up the issue again until January. GM and Chrysler have both said they might not be able to survive beyond this month without help. "There is always a chance Congress will act sooner if one of the companies totters on the brink," notes the Wall Street Journal, "although that possibility appears remote." The Washington Postspecifies that it's not clear "whether GM, in particular, could survive until January," when Democrats will have a larger majority in the Senate. USA Todaypoints out that GM and Chrysler could save money "by shutting down operations between now and Jan. 20," but it would be a risky gamble that could end up devastating suppliers.

The New York Timescharacterizes the failure to get Senate Republicans to agree on a rescue for Detroit as "bruising defeat for President Bush in the waning weeks of his term, and also for President-elect Barack Obama," who had urged lawmakers to act quickly. The Los Angeles Timesnotes that Bush personally lobbied reluctant Republicans after Vice President Dick Cheney failed to change their minds at a meeting Wednesday at which he told them, "If we don't do this, we will be known as the party of Herbert Hoover forever." Last night, Reid warned that financial markets would feel the effects of their inaction. "I dread looking at Wall Street tomorrow," he said. "It's not going to be a pleasant sight." Indeed, Asian markets tumbled today, and European markets were also in negative territory this morning.

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Negotiations in the Senate essentially broke down over one issue: the timing of wage cuts. The two sides had agreed on most other issues, including a controversial Republican proposal that would have required the automakers to cut their debt obligations by at least two-thirds by the end of March. There was even agreement that the automakers needed to bring down their wages and benefits to match those of U.S. employees of foreign automakers.

The problem was the date. Republicans insisted that these wage cuts had to come by a specific date in 2009, while Democrats and the United Auto Workers said the deadline should be 2011, when the UAW contract expires. After the talks broke down, union representatives said they were willing to do their part but asked only that they not be treated unfairly. "Unfortunately, Senate Republicans insisted that workers and retirees be singled out and treated differently from all other stakeholders," said the UAW's legislative director. Of course, Republicans quickly blamed the union for the failure to reach a deal.

At this point, it might be worth asking how much of a big deal this wage issue is in the grand scheme of things. The WP takes a stab at the question by pointing out that GM told Congress that in 2010 their labor costs would add up to around $14 per hour more than what Toyota pays at its plants inside the United States. But to really understand the meaning of all the numbers that get thrown around, TP recommends a piece by the NYT's David Leonhardt from earlier this week, where he specified that there really is a disparity between the Big Three and foreign automakers, but it's not as big as one might think. Bottom line? "[T]he main problem facing Detroit, overwhelmingly, is not the pay gap," Leonhardt wrote. "That's unfortunate because fixing the pay gap would be fairly straightforward." Detroit's unionized workers make about $10 an hour more than those at nonunionized plants, mostly because of benefits. In addition, the Big Three pay more in retiree benefits, but that's mainly due to the obvious fact that they're responsible for more retired workers. Ultimately, and perhaps most importantly, despite all the attention that is paid to the issue, labor costs add up to about 10 percent of the cost of making a vehicle.

So, what now? As soon as the rescue package failed in the Senate, Democrats urged the administration to act on its own to make sure that GM and Chrysler don't go under. The White House has so far been resistant to push the Treasury to provide the auto companies with emergency loans from the $700 billion bailout package, but now it may have no other choice. The problem is that there's only around $15 billion left of the initial $350 billion that was disbursed by Congress, and Treasury officials have been adamant that they need the money as a cushion in case any of their other rescue efforts run into trouble. There's also a possibility that the Federal Reserve might step in, but it has been reluctant to get involved so far.

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The prospect of collapse is real enough that both GM and Chrysler have hired some of the top lawyers in the business to help them figure out whether they should file for bankruptcy. But they're hardly the only ones at risk. As the NYT details in a separate front-page piece, an increasing number of auto suppliers, which employ more than twice the number of workers as the Big Three, are getting worried they won't be able to survive much longer. "I don't think that suppliers will be able to get through the month without continued payments on their receivables," the head of a supplier trade group said. If suppliers start collapsing, it wouldn't affect just the Big Three but the entire auto industry, since they often sell their products to both American and foreign manufacturers. GM and Chrysler owe their suppliers around $10 billion, and while that may not have been a big deal in a normal economic environment, it could prove lethal at a time when credit markets are frozen.

In other news, Obama made his first lengthy comments about the scandal surrounding the Illinois governor and vowed to release a list of contacts between his transition team and Gov. Rod Blagojevich. "What I'm absolutely certain about is that our office had no involvement in any deal-making around my Senate seat," Obama said. "That would be a violation of everything that this campaign has been about." As the WSJ details, there are some key questions that remain unanswered, and one of the main ones is the identity of the Obama adviser whom, according to the federal affidavit, Blagojevich ordered his staff to contact. There are rumors that the person identified as "President-elect Advisor" referred to Rahm Emanuel, who will be Obama's chief of staff. Still, despite the unanswered questions, the LAT notes that Obama "struck an emotional chord that had been absent" by noting how "appalled" he was by the scandal. Many who had criticized Obama's early response to the scandal said he managed to hit the right tone yesterday.

The NYT talks to Obama's successor in the state Senate, Kwame Raoul, who said he was approached by Blagojevich about the president-elect's old seat, but he withdrew his name from consideration after he felt pressured to provide something in return for the position. "It was open knowledge among people in and around Springfield," Raoul said. "Legislators and lobbyists alike openly talked about the fact that the governor would want to appoint somebody who would benefit him." Of course, just because Blagojevich wanted someone who "would benefit him" doesn't mean he's guilty of criminal activity, and Raoul refused to get into details with the NYT.

The NYT is alone in fronting news out of Iraq, where a suicide bomber detonated explosives inside a packed restaurant north of Kirkuk and killed at least 48 people. (The WP says 57 people were killed.) It was the deadliest bombing in Iraq in six months. The apparent target was a meeting that was taking place in the restaurant between Kurdish officials and Sunni Arab members of the Awakening movement, which is mostly composed of former insurgents.

The Post fronts, and everyone mentions, a bipartisan report released yesterday by the Senate armed services committee that says decisions made by former Defense Secretary Donald Rumsfeld and other top administration officials were directly responsible for widespread detainee abuse in Guantanamo and other detention facilities. The report says that the most severe cases of prisoner abuse, including Abu Ghraib, weren't simply due to "the actions of 'a few bad apples' acting on their own," as the Bush administration has always claimed. Rather, decisions made by high-level officials in the administration "conveyed the message that physical pressures and degradation were appropriate treatment for detainees."

Bettie Page, the legendary pinup model, died last night. Her controversial, and extremely popular, photos that were seemingly everywhere in the 1950s helped set the stage for the sexual revolution of the '60s. At the height of her fame she decided to walk away from everything and had a rough life in seclusion that was marked by her fight against mental illness. In the late 1980s, "she was rediscovered and a Bettie Page renaissance began," notes the NYT. She would occasionally grant interviews but refused to allow her picture to be taken. "I want to be remembered," she told the LAT in 2006, "as I was when I was young and in my golden times. ... I want to be remembered as the woman who changed people's perspectives concerning nudity in its natural form."

USAT reports that your community's nativity scene may have gone high-tech. A number of churches, synagogues, and others that display holiday scenes are embedding Baby Jesus, menorahs, and other figures with satellite tracking devices to avoid theft. "Given the storied history of the nativity scene," the Rev. George Smith explained, "we were interested in seeing if having a GPS would deter people from 'borrowing' from it."

Daniel Politi has been contributing to Slate since 2004 and wrote the Today’s Papers column from 2006 to 2009. Follow him on Twitter.