The proposal to bailout the auto industry is currently running into difficulties on the Senate floor. The bailout plan, which totals to about $14 billion in federal loans as a stopgap tactic, is, in the words of Sen. Bob Corker (Tenn.), “three words away from a deal.”

The US auto industry badly needs this bailout, as General Motors may well file for bankruptcy and closure in the next few weeks, with Chrysler LLC to follow. Ford will probably survive, as it has more cash on hand, but even companies like Toyota and Honda will be affected, thanks to their U.S. production facilities.

However, a prominent factor in the discussion was the difference in pay — American auto industry union workers are paid much higher than the average non-union worker (around $4 more). Moreover, companies also pay for health care benefits of retired workers numbering by the hundreds of thousands.

Sen. Bob Corker, R-Tenn., proposed deadlines in 2009 by which time the bailed out automakers will have implemented cost-cutting measures with unions and creditors, or, go into bankruptcy. Democrat and Republican senators were very close to reaching a settlement but ran into problems with the deadlines for the union to agree to the decrease in pay.

Requiring 60 votes to pass the bailout bill, the auto industry bailout plan fell short, with a 52-35 vote result. With this happening, the White House has evaluated options, and signified that they would use part of the $700 billion reserved for the banking sector as a temporary bailout solution for the auto industry, if necessary. This move comes from the fact that should the US auto industry collapse, the subsequent unemployement crisis may cause further instability, not to mention the damage to the economy itself, as the sun sets on the American auto industry.

With the bailout for the auto industry becoming an increasingly controversial subject, thanks in part to the perceived lack of quality vehicles (and environmentally friendly ones, as well) coming out of Detroit, the US auto industry can and should hope for the best, but prepare for the worst.

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