I have wrestled with this problem for a few months now, but I finally have come to an opinion. When reading through GM's plan presented to congress, I don't see how we can ever be repaid. Moreover I don't see how GM survives even with loans.
Today GM is roughly $60 billion dollars in debt. In December their operating cost is going to be roughly $4 billion dollars. Even if we gave a loan of a little over $8 billion dollars ($25 billion spread between Ford, GM, and Chrysler), the company would survive till February. The reality is that car sales will continue to decrease through at least the second quarter of 2009. If we begin this process now, we will be stuck bailing them out several times till car sales rebound. That could be five years from now.
I know that many people are concerned about the jobs that this will cost, but that is unavoidable whether or not we bail them out. There is no way GM can avoid massive layoffs, even if they have federal funds. There is also no way they will maintain vendor orders, causing great pains to businesses that rely on GM. This bail out will only save the trademark and corporate executives, and will cost just as many regular people their jobs as if there was no bail out at all.
Instead of trying to save GM, I think the money would be better invested in new companies. I doubt any new manufacture will be ready to put cars on the sales floor, but I believe they might be able to get prototypes together. With the sale of research from a dead GM, companies working on efficient electric engines will be able to accelerate their time to market. Other companies working on battery technology could make big advances, that would be applicable to many applications beyond automobiles.
We know that times are going to be bad over the next few years, and I think the decisions we make will be judged harshly by history. When you do the math on GM, it just isn't viable. We can dump dollar after dollar trying to keep them afloat for some patriotic sentiment, but that money would be better spent helping new companies come to prominence. At the turn of the last century, many older established companies died off and were replaced with newer more innovative ones. I'm sure many of those giants were seen as immortal in their time, but in the end America benefited from their demise.
If we want a 21rst century economy, it is time to let 21rst century minds take charge. Their are a number of companies, who have taken the chance on new technologies. If they are forced to close their doors, while larger poorly run companies are bailed out, it will be a tragic. If we are demanding the cars of the future, then we need to help the people who have set out to build them, and not the people who are begrudgingly considering it just so we give them a loan.