A GM Bailout? Here Are My Terms for a Deal

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Here are My Terms

But at least in the case of Wall Street, we had a week's debate in Congress about what conditions to affix to the handout. We wound up with more oversight protection and some shares in the banks. If Motor City has us over a barrel, at least it owes us a similar discussion (maybe Senator John McCain will suspend his campaign again, too). In any event, here are my terms for handing a check to Detroit:

End of discussion about higher mileage rules. For years, honest efforts to boost fuel efficiency were snuffed out in Washington by Detroit and its fellow travelers in Congress. Enough. I say we build right into bailout legislation a 40-mpg average for cars by 2020. That's up from 27.5 today, and a big step up from the 35 mpg goal that Detroit is supposed to achieve. I don't care how they get there: Build cars that burn corn cobs—or For Sale signs, for that matter. Just get there.

I'll take mine in stock. Chrysler famously got bailed out by the U.S. back in the early '80s (before being bought, sold, and now apparently bought again) with loan guarantees that turned into stock warrants that paid off handsomely. Today, auto stocks are absurdly low: GM is trading at $6.25 a share, compared with almost $40 a year ago. The whole company is worth about $3.5 billion, roughly half the market cap for video game maker Electronic Arts (ERTS). Forget a loan; let's get in on the ground floor. If the combined GM/Chrysler can survive until the market picks up and savings from a new auto-worker contract kick in, you have to think the shares will be worth more than $6 and change. And if not, we're probably not getting the money back anyway.

No favoritism for factories. Detroit is actually pretty good about deciding which auto plants live or die based on their relative efficiency. So the last thing we need is Congress mandating protection for factories like it does for defense plants. But I would go a step further: Think about whether you need factories at all. Maybe it makes sense for core engine and other technologies.

Smart tech companies learned a long time ago, though, that their expertise wasn't in assembly lines. Maybe it's time for automakers to learn that lesson, too, especially when the global auto industry has a glut of car factories. This may not be practical for the next year or two. Who needs more layoffs now? But within, say, three or four years, why can't the carmakers contract out assembly to low-cost independent producers, and even competitors if it makes economic sense? Let's face it: The next wave of competition isn't from Japan; it's from China and India. And it's probably from cars that you and I can snap together in a garage.

A moratorium on truck commercials. Yes, the next couple of years are going to be painful. But less so if I could be assured that my football games on TV won't be interrupted by ridiculous scenarios where a ton of rebar is dropped 20 feet into the bed of a pickup truck or a truck has to navigate a gauntlet of giant smashing hammers. If you can't sell a truck on the basis of its looks and price, then maybe you shouldn't be making them.

I'm sure there are other demands that are just as worthy as mine, and I look forward to hearing about them. In the meantime, I find it helps to think of our ever-expanding investment in nationalized industry as a sort of parallel retirement account. A few banks here, some insurers and credit-card companies there. Add a couple of auto companies. What's next? Airlines? Newspapers? Pretty soon we'll have a nice little distressed asset fund going here.

Beucke is the News Director at BusinessWeek.com .