There Is Already A Way To Do This

Robert J. Samuelson writes on the bailout vs. bankruptcy choice:

In bankruptcy, a judge can modify a firm’s labor contracts and debts. GM needs the benefits of bankruptcy without the uncertainties, but the political process — so far — disdains that desirable bargain. The conditions that Democrats mention are mostly rhetorical gestures against high executive compensation and in favor of more fuel efficiency. The Bush administration resists additional assistance without saying why.

But there seems to be virtually no will, let alone a competent mechanism, to restructure GM within the context of a Congressional bailout. What givebacks by labor are needed, what pay cuts by management are in order, what suppliers must take a hit, and what pension and retirement health obligations must be modified? No one in Congress has the expertise to makes these determinations, and the Democrats are not about to insist on tough medicine. So we are back to the fundamental choice: shovel more taxpayer money into a failing business, or allow the existing mechanism  (the bankruptcy court) to do its job.

Yes, “bankruputcy” has a bad rap — for good reason. It denotes failure. But that is what GM is. And bankruptcy courts, with court-appointed personnel, are very good at doing the dirty work of examining the damage, spreading the pain, and reconstituting a functioning firm, if possible.