I keep seeing "let the domestics fail" because they mismanaged themselves and they don't build quality cars and people don't buy them, etc. And then the response seems to be "but all the jobs..." which is valid, but i'd like to look at it a little differently, hopefully. Follow me...
The compare and contrast here seems to be the $700B financial bailout vs. the $25b loan to domestic automakers. So, I'd like to first explore this in those terms:
Manufacturing Industry vs. Debt Industry
Congress appropriated roughly $700B to buy assets and shares in banks that were failing to keep them afloat. When the money came online, that's not what in ended up going towards, but even if it was, that would mean we're pouring $700B into an industry whose major commodity is debt. It's a speculation game of chance that eventually collapsed under its own weight, and congress seems to have no problem dumping hundreds of billions of dollars that we may not ever see a return on.
Domestic automakers actually produce a product. Parts are manufactured, shipped, assembled and sold. You have an actual product being built, assembled, shipped and sold. Money is exchanging hands for actual physical goods. In this way you are actually keeping real money in real peoples pockets.
Job creation can actually occur in the domestic auto industry on a fairly large scale. When you have domestic automakers seeking out new battery and hybrid and alternative fuel technologies, you find suppliers to provide the parts needed therefore creating real actual middle class jobs in this environment. You also need the engineering resources both internally and externally to make these systems work.
The further away a country gets from actual production as the source of wealth creation and the further you trend into wealth by way of debt trading, the more the middle class will shrink. If a financial person could back me up on this, I'd appreciate it.
This loan is necessary specifically because of the financial crisis that we've plowed hundreds and hundreds of billions of dollars into. We're in disturbing financial times and people are less and less likely to make big ticket purchases. If you recall the start of this year, Ford had posted a profit. Now that the stock markets crazy, banks are holding onto bail out money to purchase other banks instead of using it to credit credit, and on people with mediocre credit are going to be more likely to sit on their money than make a big purchase. This isn't exclusive to the big 3, this is all automakers. Everyone's down.
This is where profit margin comes into play. In many of the $25b loan scenarios thrown around these parts, people keep saying that the domestics need to reduce their costs. But there are at least two things that prevent them from being as profitable as their Japanese counterparts. The first two are legacy and current health care and pension costs. These will always be higher because the domestics have been producing for far longer and have far more many retired workers than the Japanese. Imports make far more money on car sales than domestics do. Which is why GM can make and sell more cars than Toyota (barely) using less people (barely) and still be in a financial crunch. (Also, foreign automakers use much cheaper steel than the domestics because domestics usually use the much higher priced U.S. Steel, if you recall the tariff flap from 2005.)
The $25b Loan
When people discuss the $25b loan, there seems to be a lot about stream lining the automakers to make them more profitable. To "re-structure". Two things on this. Each time i hear this i hear the destruction of the middle class. The UAW that you imagine in your head is not the UAW as it exists today. They've done a lot of give backs in the most recent years. And again, people hammer on this as though having a union to protect you is a bad thing.
When you see the $74/hr floating about i can understand why. But i promise you that's not the real take home money UAW people are making. At the metal fabrication plant my father worked at (as an accountant) before it was shut down, on the line, your hire in salary was $12/hr and the top hourly salary was $28/hr. I honestly don't know how much money it'd take to get you to work in metal fab, or in plastic molding where you're doing physical labor in a 110 - 120 degree environment, but i honestly dare you to get people to do it for less. This is lower middle class money. Period.
The second thing I hear when you say "re-structure" is that you haven't been paying close attention to the auto industry recently. Mitt Romney says that the domestics should get CEO's from outside the car culture. Well, Ford did. They hired the CEO of Boeing. They're staking their survival on reasonably priced fuel efficient cars. GM's focus and resources have been on bringing hydrogen fuel cells to market and the much lauded Chevy Volt which will basically be an electric car with a gasoline generator when you run out of juice. Chrysler had previously announced a slate of electric and hybrid cars before the giant downturn in the market, and their eventual sale became imminent.
And finally. This is a LOAN. This is not money that's going into a hole to never come back. The government will see this money again. The previous $25B that was allocated is for future vehicle technologies. At this rate that may never get touched. This would be to keep the cash flowing so that current cars will still be produced, suppliers will get paid and the lights are still on so to speak.
Now, to address the criticism that usually comes from these parts.
I'm going to direct you to this article about 6 Myths about the Detroit 3 by Mark Phelan of the Detroit Free Press. I ask that you read it with an open mind. When i read comments and out right lies fly around here as though they were fact i feel like i'm in a room with a bunch of creationists and i'm the only one saying "yeah, but according to FACT dinosaurs totally didn't hang out and play pick up games of basketball with Moses.". I'm not asking you to like or buy the vehicles. I'm saying look at the actual numbers objectively, preferences aside.