In an editorial posted today, Automotive News (subscription required) reports than Congress should consider the cost of a General Motors failure if it thinks a bailout of the troubled automaker is expensive.

Let's be clear, the publication states: The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and autoworkers in their place, ensuring future success.

No, even if GM could get debtor-in-possession financing to keep the lights on (which it can't), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation.

GM's 100,000 American jobs will die, Automotive News states. Health care for a million Americans will be lost or at risk. Hundreds of GM's 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close.

The government will face greater unemployment, more Americans without health insurance and greater pension liabilities.

Criticize Detroit 3 executives all you want, the publication states, but the issue today is not whether GM should have closed Buick years ago, been tougher with the UAW or supported higher fuel economy standards.

In the next two to four months, GM will run out of cash and turn out the lights. Only government money can prevent that. Every other alternative is fantasy.

The editorial states that "Ford, which borrowed big two years ago and thus has more cash today, may skip a bailout and the strings attached. Cerberus, which bought Chrysler last year, doesn't deserve money. Government cash might help sell Chrysler to a strategic owner."

A few paragraphs down the editorial concludes: "The stark fact remains: Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing–now.

Tags: gm, ford

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