Chrysler auto dealership in Redwood, California (file photo)

The U.S. Senate has failed to reach agreement on an aid package to shore up the U.S. automobile industry.  Despite intense negotiations this week, Democrats and Republicans could not bridge their differences over several issues, including Republican demands for wage cuts for unionized workers.  Congressional leaders have decided to put off further consideration of the legislation until next year.

In a procedural vote, the Senate voted 52 to 35 to advance a House-passed bill that would provide $14 billion to General Motors, Chrysler and Ford.   The vote was eight short of the 60 necessary to move the legislation forward.

Asian stocks immediately began falling after the vote, which came late Thursday night after negotiations broke down on a Republican-sponsored compromise. 

Sen. Christopher Dodd, left, talks to Sen. Carl Levin, following the Senate's rejection of an emergency loan bailout for US auto companies on Capitol Hill, 11 Dec. 2008

Senator Chris Dodd, a Connecticut Democrat who had played a key role in the negotiations, said the main stumbling block in the talks was a Republican demand that unionized autoworkers accept a wage cut next year to match the salaries at foreign automobile manufacturers.

The Bush administration issued a statement describing the collapse of the talks as "disappointing," and saying it is evaluating its options.   

Senate Majority Leader Harry Reid expressed disappointment.

"We're not going to get it over the finish line," he said.

Efforts to reach a deal were unsuccessful despite warnings from many Democrats that millions of jobs could be lost if one or more of the automakers go bankrupt.

White House spokeswoman Dana Perino echoed the concerns.

"We believe the economy is in such a weakened state right now that adding another possible loss of one million jobs is just something our economy cannot sustain at the moment," she said.

But many Senate Republicans said the House bill was the wrong approach. 

"Unless these companies are materially reconstructed, we're wasting our time to try to keep them alive," said Senator Richard Shelby, an Alabama Republican.

Lawmakers are now urging the Bush administration to help automakers by using funds from the $700 billion rescue package approved earlier this year for the financial industry - something the White House had opposed.