The Detroit Bailout: Unsafe at Any Cost

(By James L. Gattuso and Nicolas Loris, The Heritage Foundation) - Should Washington bail out Detroit? That is the question facing Congress as it reconvenes this week for a special post-election session. Nearly everyone agrees that, with losses piling up, Detroit automakers need to change the way they operate and change soon. The real issue is how best to do that.

The Detroit-based automakers--General Motors, Ford, and Chrysler--argue that they need more money from U.S. taxpayers. That approach, however, is more likely to extend the status quo rather than lead to reform. A far better approach is to restructure the old-fashioned way, through a formal bankruptcy process if necessary. Bankruptcy--and the prospect of it--would provide both the incentive and means for making the hard and painful choices that Detroit needs to make. Lawmakers should turn down pleas for subsidies that would detour that process.