A GM Bailout? Here Are My Terms for a Deal

A longtime GM customer says Washington needs to attach some strings to any financing help for a GM-Chrysler merger

By Dan Beucke

Taxpayers are mad as hell about the looming bailout of General Motors (GM) and Chrysler. They just don't know it yet. That's because the fix isn't quite in. Auto executives and federal officials still have to figure out whether they'll pull this off by redefining GM as a bank and grandfathering it into the Treasury Dept.'s $700 billion financial industry rescue, or by carving off some of the $25 billion of federal loans that were supposed to encourage development of alternative-fuel vehicles.

Details, details. What's important is that once it dawns on people that they're about to become major investors in the long-failing enterprise known as the U.S. car industry, they'll hit the roof. And I don't mean a ragtop convertible roof.

This is an even more outrageous public expenditure than the Wall Street bailout. In that case, the public was incensed that rich bankers who had stuffed their pockets with billions during the good times were having their fannies saved by regular folks—with the strong likelihood that once things stabilized, they would get even richer. The Detroit bailout raises a more depressing scenario: There's no reason to believe anyone is going to get rich after this money goes down the rat hole. Or that the situation is going to stabilize. Good luck selling this to John Q. Public, who's been running away from GM's cars for the past two decades.

Remember the Plymouth Acclaim?

Let's be clear. I'm not a Detroit hater. I've owned American cars all my life, starting with a '61 Chevrolet station wagon in 1974 and including a Chevy Vega and Chevette, Ford Pinto and two Tauruses, and Plymouth—remember them?—Acclaim. Some of these car names live in infamy, but buying used and American gave me good bang for my auto buck and better quality than you'd think. Granted, I'm a bit less selective than most folks and I accepted compromises along the way. The Vega departed after its aluminum engine block caught fire. And the Chevette was kept running only with the help of a For Sale sign strategically placed over the rotted floorboard.

Was all that penny-pinching for naught, swallowed by my portion of a $10 billion federal handout?

The argument, of course, is that if GM fails it will take a couple million jobs with it, including those in auto dealerships, parts factories, ad agencies, and so on. This is a variation on the Wall Street ransom note, which said that if the banks went under, Main Street businesses would follow. I don't doubt that's true. Cutting adrift the biggest U.S. industrial employer just when a horrific recession is picking up speed might prove to be as smart as letting Lehman fail in the middle of a financial panic.