Bid to Save GM, Chrysler Loans Dies in Senate Late effort fails to get a deal through the Senate. Bill killed by 52-35 vote.

Dec. 12, 2008 -- U.S. Senators killed an effort to rescue Detroit automakers Thursday night after a last-ditch attempt to renegotiate the deal died.

The package was doomed on a 52-35 procedural vote, well short of the 60 votes needed to bring the bill to the floor for passage.

"To all those within the sound of my voice: We have tried very, very hard to legislate for the automobile industry," Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor before the vote. "I am very sorry we have not been able to find a conclusion."

Reid's comments came after a night of negotiations involving Sen. Bob Corker, R-Tenn., who wanted to revise the existing rescue deal to force pay cuts on union workers by demanding that General Motors and Chrysler pay back $14 billion in proposed government loans if they failed to slash labor costs a specified amount by March 31.

Corker met with fellow Republicans Thursday evening after talks with Democrats, and soon afterward, Reid made his announcement on the Senate floor.

"I dread looking at Wall Street tomorrow," Reid said. "It's not going to be a pleasant sight."

The White House quickly released a statement of regret after the failed Senate vote.

"It's disappointing that Congress failed to act tonight," deputy spokesman Tony Fratto said. "We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable. We will evaluate our options in light of the breakdown in Congress."

GM issued a statement expressing disappointment. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis."

Chrysler also released a statement saying it would: "continue to pursue a workable solution to help ensure the future viability of the company."

In the end, Reid was among the 35 voting against the Senate's shell bill -- but only for procedural reasons, officials said. After the 11:09 p.m. ET vote, he urged the White House to use the part of a $700 billion economic rescue package already approved by Congress to help keep the auto industry afloat.

Democrats blamed Republicans for the bill's failure, but Senate Republican Leader Mitch McConnell, R-Ky., suggested many Republicans genuinely couldn't stomach the terms of the deal.

"The administration negotiated in good faith with the Democratic majority a proposal that was simply unacceptable to the vast majority of our side because we thought it, frankly, wouldn't work," McConnell said.

Failed Last-Ditch Negotiations

The Senate appeared unlikely early Thursday to pass the bill to provide a $14 billion emergency loan to the U.S. auto industry, even though the bill easily passed in the House Wednesday night. But hopes of a deal rose as lawmakers continued to negotiate toward a compromise.

There has been vocal Republican opposition to any bailout for Detroit, but there were at least a dozen Republican senators who were thought to be possibilities to support a revised bill for the emergency loans. Among them are several who are retiring, including Nebraska's Chuck Hagel, Virginia's John Warner, Alaska's Ted Stevens and New Mexico's Pete Domenici.

"This is not the time to let these companies go bankrupt," Domenici told ABC News. "We would just be compounding our economic problems."

Reid held talks with Corker Thursday on crafting a new compromise. Corker, who has been steadfastly opposed to the bill drafted by congressional Democrats and the White House, has a lot of credibility among Republicans on the issue.

"I am at the negotiating table," Corker told ABC News at one point Thursday. "We are working on a great solution, and I think there is a great possibility that we can make it work."

But as staffers in the bipartisan negotiations worked to hash out the new auto bailout language, Corker called a late-night Republican conference meeting to pitch the as-yet unwritten and as-yet-unagreed-to plan.

Republicans seen going into the meeting included auto bailout supporters, like Sen. George Voinovich of Ohio, those on the fence like Domenici, and those opposed to a bailout, including Sen. Tom Coburn, R-Okla.

This afternoon, several Senate Democrats confirmed that negotiations were under way on the new compromise, and said the talks were a serious, late-in-the-game effort to get a deal that would have enough votes to pass the Senate.

If the Senate had changed the legislation, the House, which adjourned Wednesday night, would have been called back into session to reconcile the differences.

Speaker of the House Nancy Pelosi was reluctant to call the House back to start over again.

"The House passed bipartisan, compromise legislation that protects taxpayers, does not weaken environmental standards and places tough accountability measures on the industry to help ensure their long term viability and competitiveness," said Pelosi spokesman Nadeam Elshami. "The Senate should take up this legislation, which was negotiated in good faith and has the best prospects for enactment, and the House has no plans to return at this time."

Corker's Proposed Compromise

The Corker-proposed compromise would have required the auto companies to reduce company debt by two-thirds and to negotiate a new labor deal that would make labor costs for the American automobile companies -- wages, benefits and pension plan expenditures -- the same as labor costs for foreign companies that operate plants in the United States. Estimates are that U.S. workers cost about $70 per vehicle to the $45 that foreign workers cost.

This is already a goal of the Detroit companies, but they are trying to phase in cuts by 2011. Under Corker's proposal, Chrysler and GM would get $14 billion in loans up front, but would have to give the money back if the changes were not implemented by March 31.

In addition to meeting with Democratic leaders and Republicans, Corker also met today with United Auto Worker representatives and talked to executives at GM, Chrysler and Ford.

Earlier, McConnell announced on the Senate floor that he would oppose the earlier bipartisan auto rescue package backed by Democrats and the White House, and instead backed a proposal for a pre-packaged bankruptcy being pushed by Corker.

"A lot of struggling Americans are wondering where their bailout is," said McConnell, arguing that, at some point, the bailouts have to stop, and that the Wall Street bailout he supported was for the entire economy and not just one industry.

McConnell's announcement came at the same time that President-elect Barack Obama was speaking in Chicago, saying, "we cannot simply stand by and watch this industry collapse."

Obama said that "doing so would lead to a devastating ripple effect throughout our economy." He said the government should provide a short-term loan and said he hopes an agreement can be reached this week on Capitol Hill.

"I understand people's anger and frustration at the situation our auto companies find themselves in today," Obama said. "I raised concerns about the health of our auto industry a year and a half ago, when I spoke to industry leaders in Detroit. I urged them to act quickly to adopt new technologies and a new business approach that would help them stay competitive in these changing times."

The White House, too, promised to work with Republicans and Democrats to pass legislation to aid automakers, despite mounting criticism from GOP senators who said they would not support the plan as it stood.

"The president and others are reaching out to senators today, listening to their concerns, listening to their questions, trying to answer their questions as best we can, making the case for why this legislation is the most effective and appropriate approach to help the auto companies become viable for the long term," White House press secretary Dana Perino said.

Some Dems Voice Bailout Concerns

Republicans have been vocal about their hang-ups with the bill throughout the week, but more recently some Democrats, including Sen. Tom Harkin of Iowa, Sen. Ron Wyden of Oregon and Sen. Dianne Feinstein of California, were also wavering.

To get the 60 votes necessary to end debate and vote for passage, the bill likely would have needed the support of at least 10 Republicans, probably more.

Missouri's Sen. Kit Bond, one of the few Republicans who had supported a bailout, said the version passed in the House "fails" to force needed reforms on the auto companies.

"While I am fighting to save Missouri auto jobs, Congress is just putting off the inevitable unless we force the companies to reform fundamentally, which this latest plan fails to do and is why I am offering changes to make it work," Bond said in a statement.

Sen. David Vitter, R-La., condemned the White House's approach to provide money before the carmakers prove they have workable plans for restructuring.

Others object to the idea that a government-appointed "car czar" would know how to fix the industry and say the money will simply be wasted with no real changes being made.

"Americans are not stupid," said Sen. Jim Demint, R-S.C. "They know this bailout is only a temporary solution."

"The public doesn't like it," McConnell said. "And in our line of work, that's important."

As Republicans lashed out at specific elements of the package, the White House came out in its defense Wednesday, saying in a statement that the legislation developed with congressional Democrats to rescue automakers is an "effective and responsible approach" that will "ensure the necessary restructuring occurs."

Congressional Democrats drafted the latest text of the measure Wednesday after coming to an agreement with the White House on the language.

"This gets us to the 20-yard line, but getting over the goal line will take a major effort," said Sen. Carl Levin, D-Mich., Tuesday night. "We will need the personal involvement of President Bush and President-elect Obama."

For the measure to pass in the House, Pelosi caved on several major points. According to her aides, she now feels the House bill is a "take it or leave it" proposition to the Senate.

The bill, first sent to the White House Monday, would provide Chrysler and General Motors with a short-term infusion in low-interest loans to stay afloat in the months ahead. It also would call on Bush to select one or more people within the executive branch to authorize, disperse and oversee a loan for the auto industry.

The car czar would have the power to reshape the industry and negotiate deals among auto companies, unions, creditors and suppliers. The designee also could force car companies into Chapter 11 bankruptcy if they don't have a viability plan by March 31.

"They either have a long-term plan that's viable, or we get our money back," White House deputy chief of staff for policy Joel Kaplan, who is leading White House negotiations on the bailout, said today. "And if we call our money back, which is required under this bill, then those firms are not going to be able to survive."

Threat of Bankruptcy Looms Over Carmakers

General Motors, Chrysler and Ford have repeatedly made their case to lawmakers and U.S. taxpayers to explain why they need a loan. GM CEO Rick Wagoner told lawmakers last week that, without an infusion of $4 billion in taxpayer loans before the end of the year, the company would go bankrupt.

Negotiators have decided that Ford, not in immediate need of a loan, will not receive funding at this point.

ABC News' Kirit Radia, Rachel Martin and Dean Norland contributed to this report.