BIG THREE BAILOUT? NOT SO FAST

BIG THREE BAILOUT? NOT SO FAST
(CBS) This column, Other People's Money, is written by CNET's Decian McCullagh. It appears each Wednesday on CBSNews.com
This story came from CBSNews.com. This is one viewpoint of course, everyone in Michigan hopes the fortunes of the “Big Three” Automakers turn around. A government bailout might help, it might not. Here is one side.
Detroit's problems aren't caused by a one time slump. They can't be fixed by another infusion of cash. One caused is that union labor and legacy costs are too high and make the so-called Big Three companies uncompetitive. Another is that their profitability is tied to large, heavy trucks and SUV's that Americans no longer want to buy, at least in such large numbers.
That's just common sense. Unfortunately, such a virtue is in short supply in Washington, D.C., where politicians are scurrying to find excuses for a handout.
The better solution is a simple one: Allow automakers to declare bankruptcy.
Contrary to popular belief, that will mean the end of a company such as GM, which has indicated it may run out of cash by the end of this year, Under Chapter 11, a bankruptcy judge will weight the different interests of GM's creditors., labor unions, shareholders, and so on, and the resulting company will emerge leaner and stronger. Many current customers of United Airlines, Texaco, Global Crossing, and Pacific Gas and Electric probably don't even know that those companies once filed for Chapter 11.
Chapter 11 also would let a judge alter gold-platted union contracts and benefits that have hamstrung the Big Three and crippled their ability to compete against Japanese and European car makers. Toyota, Honda, and other non-Big Three manufacturers that employ over 100,000 Americans, most in right-to-work states, have shown that they can make money building cars in the United States. The best to keep U.S. Auto workers employed in the future—Tens of thousands already have lost their jobs—is to make it profitable to keep them on the payoff.
One explanation for Washington's haste is that while bankruptcy would alter contracts, a bailout probably won't.