What to do with the automaker bailout

Whether to bailout the big-3 automakers, that is the big question facing Congress and in a way, the President-Elected. There are difficult, philosophical, and conflicting views that in a capitalist market, companies are to die or survive base on their abilities to compete, and not on the government handout. Let's not forget UAW contracts and pension obligations are heavily burden on these companies also. They made the automakers uncompetitive. But the managements are not blameless either. They made terrible and unreliable products. Invested on the wrong line of business in SUV rather than high-mileage cars. Their marketing, branding, and distributions are so diluted that are inefficient and wasteful.

A bankruptcy and maybe new management would allow them a clean restart. But it could also wipe out the entire auto industry in the U.S. and lose millions of jobs. Frankly, I don't think it will be as bad as it might seem. Toyota, Honda, and others will simply come in and fill the void by hiring the same worker, making a different brand of cars, and selling to the same American people. Oh yes, the workers would have less perks than today.

The Congress did ask for detail plans from the big-3 executives on what they will do with the bailout. Here is what I suggest the Congress should do.

1. There is no rule that say the government has to rescue all-3 or none of the automakers. What about rescuing 1 or at most 2 automakers. So, that would create a competition for the best plan. The best plan will survive. The worst plan will mean bankruptcy and possible acquire by the surviving automakers.

2. Bailout money should only go to do research and manufacture of high-mileage and green vehicles only. Yes, they can funnel existing high-mileage budget to save other line of businesses, but it should be clear on what the government's priorities are.

3. There should be no more mileage exception for trucks. Trucks and SUVs are under the same mileage standard as cars.

4. The 35 mph mileage standard to be effective in 2020 needs to move to 2010.

5. Last but not least, UAW needs to make some concessions also. No more perks, just an ordinary salary and 401k, like the rest of us. And at the comparable pay as those work at the Toyota plans in the U.S.

I am sure they don't like any of these proposal. Who would. But they do beat the alternative of going bankrupt and losing their jobs.