A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency
aid before year's end.
Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.
Good. Chapter 11 was made for this kind of situation, and folks will quickly come to understand that productive assets don't go *poof* in a bankruptcy (though equity values can).
By the way, you will note that Senate Republicans did not suddenly become economic libertarians. Their objection seems to be that the bill does not micro-manage the auto industry they same way they would want to micro-manage the auto industry. You can see in these political battles that Congress brings its usual identity politics to these decisions: Republicans want to hammer the unions, Democrats want to hammer executive pay. Which is why these restructuring discussions don't belong in Congress.