The WSJ reports that the Rescue Bid for Detroit Collapses in Senate. I read about it last night after I got home but I was tired and decided to post on it today.

Here’s the situation:
GM was already working at filing bankruptcy:

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.

It can file, and it should.

The Senate Republicans insisted that

But those talks fell apart after Republicans insisted that wages reach parity in 2009. Sen. Bob Corker (R., Tenn.), who emerged as a pivotal player this week in negotiations over the industry’s future, said negotiators were close to striking a bipartisan compromise.

Mitch McConnel did what the White House should have done:

On Wednesday, the House approved the White House-backed package, kicking the issue into the narrowly divided Senate, where balky Republicans have the power to block action. The bill’s limping progress was dealt a big blow Thursday by the Senate’s top Republican, Mitch McConnell of Kentucky. He came out against the initial White House-backed package saying it doesn’t require auto makers and their unions, suppliers, creditors and dealers to make changes needed to return to a sound financial footing.

“We simply cannot ask the American taxpayer to subsidize failure,” said Sen. McConnell, suggesting the Big Three would have to find a way to survive without congressional help.

Thank you Bob Corker and Mitch McConnel.

Most interesting of all, Chrysler’s own investors wouldn’t put their own money on the line:

The collapse of the deal raises the stakes for Chrysler and its majority owner, Cerberus Capital Management LP. Lawmakers had called for Cerberus to put more money into the company, but Cerberus maintains it can’t because the bylaw of its investment funds prevents it from putting more than a small percentage of its investors’ funds into any single investment.

If one of the Big 3 own’s investors don’t believe in their own company enough to bail themselves out, why should we?

In related matters, James introduces The Schumpeter Club, and I think I’m in love:

For my purposes, members of the Schumpeter Club are those folks who believe a crucial way to strengthen the floundering American economy is by unleashing our free-market, entrepreneurial, innovative dynamism through lower taxes. Now this doesn’t mean you can’t also be for smart infrastructure investments or selected capital injections into our banking system or a federal homeowners refinancing plan. You can even also be a carbon-tax-loving member of the Pigou Club. But Schumpeterarians understand that reinvigorating private enterprise needs to be key to any pro-growth economic recovery plan. (Not bailouts. Not government spending. Not quantitative easing by the Fed.)

Count me in!

Brian looks at What Could Have Been.

UPDATE
Andy McCarthy was thinking along the same lines regarding Chrysler:

So Chrysler’s owners say, “You’re nuts if you think we’re going to throw our money at our loser business model” — they sit on their own wallets, play chicken with their workers and creditors, and expect the idiot taxpayers to say, “No prob — we’ll pony up for you.”

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