The drama continued on Capitol Hill today as the Republican minority in the Senate balked at signing onto the bill to bailout the Detroit auto companies and the Democratic majority said it was giving up. The Bush administration rode to the rescue, indicating that it would save at least GM by diverting TARP funds to the company.

There were a couple of interesting subplots that developed throughout the day.

A war of words appears to be breaking out between the UAW and the Republican party. The Republicans were blaming the UAW for part of the failure due to their reluctance to accept deep wage cuts and the UAW claimed the Republican senators, mostly from the South, were protecting their non-union auto industry. Both are right and both are over the top.

The Republicans set up the UAW with a wage demand that they knew would be unacceptable. Sure salaries are going to have to come down, but you have to give the union some room to save face with its rank and file. On the other side, the unions have set themselves up for this. First, it’s only natural that a politician is going to try and protect his or her home state industry. The UAW is banking on this law of nature to gain the support of the representatives from the upper Midwest. More importantly, the UAW and unions in general have written off the Republican Party completely. Massive financial support directed solely to the Democratic Party has pretty much insured that they can count on no support from Republicans. In the long run that’s not smart politics.

Another subplot has to do with what seems to be a growing resistance to assisting Chrysler. Cerberus Capital, a very substantial private equity fund owns Chrysler. More people seem to be asking why they aren’t stepping up to preserve their asset. It almost seems as if Cerberus has determined that further cash to Chrysler would constitute throwing good money after bad. If that’s the case then it’s hard to make a case for putting taxpayer money into the enterprise. So, since Ford has said they don’t need the money now, it looks increasingly likely that GM may be the sole recipient.

As I’ve said before, the government is one way or the other going to preserve most of the auto industry jobs at least for the time being. The game today was to let the Republicans make a statement and lay some ground work for the “Card Check” battle while the administration gave them cover by coming in with the TARP money. It’s only a temporary fix and one that places the whole mess squarely in Obama’s lap. I rather suspect he would like to have seen a different outcome.

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