The bailout is contingent upon the Big 3 fixing themselves in three months: "The new deal threatens only to call back existing loans if the companies fail to demonstrate viability by March 31."
Anybody think there is a nonzero probability of this happening? Wanna bet? These companies haven't been viable in 25 years, as McArdle reminds us in her excellent look back at the last 50 years of the Detroit auto industry.
This statement by Bush sums up my feelings on the matter:
"Under ordinary economic circumstances, I would say this is the price that failed companies must pay, and I would not favor intervening to prevent the auto makers from going out of business," the president said. "But these are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action."
He's buying time, punting to Obama, and hoping to do so in a way that doesn't cost the government much money, if any at all. I think this is probably the correct action given the present economic circumstances, and by that I'm referring to workers in Detroit but also those outside of Detroit: to the thousands of small businesses and hundreds of thousands of workers throughout the country who depends on orders from Detroit to stay alive.