Bush Considering "Orderly Bankruptcy" for Automakers

That's better than an outright bailout:

WASHINGTON (AP) - The Bush administration is looking at "orderly" bankruptcy as a way to deal with the desperately ailing U.S. auto industry, the White House said Thursday as carmakers readied more plant closings and a half million Americans filed new jobless claims.

With Detroit anxiously holding its breath and waiting for federal help, White House press secretary Dana Perino said, "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."
President George W. Bush, asked about an auto rescue plan, said he hadn't decided what he would do.

But he, like Perino, spoke of the idea of bankruptcies organized by the federal government as a possible way to go—without committing to it.

"Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring," he said during a speech and question-and-answer session at the American Enterprise Institute, a conservative Washington think tank. "These aren't normal circumstances. That's the problem."

A bankruptcy gives them the opportunity to break the union contracts that are killing the companies. A bailout wouldn't fix that problem.

One other issue related to a possible bailout is the news that Chrysler is shutting down for a month. If the government were to give Chrysler a bunch of money, wouldn't they be expected to go back into production to keep the employees paid and make more cars they can't sell? I can't imagine how more excess inventory would help solve the problem.