The United Auto Workers union has been taking much of the blame for the failure of the auto bailout. 

The $14 billion bailout for Detroit tanked Thursday night after talks broke down over the refusal of the United Auto Workers union to meet Republican demands for more wage reductions.

From The Detroit News:

The key issue in the end was the role of the United Auto Workers, and whether the union would accept concessions demanded by Senate Republicans, including agreeing to wage parity with workers of foreign automakers in the United States by 2009. The UAW agreed to do it, but without a specific date.

"We wondered if we were just being set up," UAW President Ron Gettelfinger said Friday morning, blaming Republicans for the bailout failure. Gettelfinger also said he was told by Sen. Bob Corker, R-TN, that the other discussions about wages holding up the deal "were largely about politics within the GOP caucus." He charged the GOP caucus with trying to force a deal "on the backs of workers and retirees."

Senate Majority Leader Harry Reid, D-NV, wasn’t pleased by the breakdown, and called it "a loss for the country."

"I dread looking at Wall Street tomorrow," Reid said Thursday. "It’s not going to be a pleasant sight. This is going to be a very bad Christmas for many people."

He had reason to be afraid.

World stocks tumbled in response to the news, and here at home, Wall Street was set to fall hard. Stock index futures have also plummeted.

The last hope for General Motors and Chrysler – which say they could literally run out of money within weeks and go belly up – is the Bush administration. Some lawmakers are calling on President Bush to give the auto industry a lifeline by tapping into what’s left of the $700 billion Wall Street bailout package. About $15 billion is left of the first $350 billion of that money. Bush so far has opposed using that money for the Big 3. But news later Friday morning indicated he was thinking about it.

“Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” White House spokeswoman Dana Perino said. “However given the current weakened state of the U.S. economy we will consider other options if necessary, including use of the TARP program to prevent a collapse of troubled automakers.” 

The Detroit News reports that auto lobbyists said Thursday night that the Bush administration may seek to link funding for automakers to winning approval from Congress to spend the second $350 billion.

Although Senate leaders said the bailout won’t be revisited until January, there’s a chance Congress could act sooner if one of the car companies totters on the brink of complete and total failure. Wait — we thought they were there now! But why wait? Why can’t the Senate postpone its recess and fix this? The failure of these two companies could result in the loss of millions of jobs and have a disastrous ripple effect across the broader global economy.

Sen. Debbie Stabenow, D-MI, was actually in tears.

"There are those who think they can play games with this," she said. "President Bush, please use the authority you have to make sure we do not add another 2.5 million people to the unemployment rolls."

In the wake of this mess, the companies seem to be preparing for the worst, reports the Wall Street Journal:

GM has already hired some of the U.S.’s biggest names in restructuring to consider whether to file for bankruptcy protection, said several people familiar with the matter, in what would be one of the largest and most controversial filings in U.S. history. GM Chief Executive Rick Wagoner has been reluctant to embrace the concept, fearing it would scare off potential buyers, and he ‘still believes the company can’t and shouldn’t file,’ but decided in the last few weeks to hire the outside advisers, said a person familiar with the matter.

Hold on Detroit. Help may still be on the horizon — we hope!