Here's another idea that could save the auto companies and not cost us taxpayers any more than it would if nothing was done.

If we stand by and do nothing the auto companies will go into bankruptcy and probably be liquidated. The creditors who would be involved in a reorganization under bankruptcy are so diverse that the companies would never come out. In the meantime, who would buy cars from a bankrupt company with an uncertain future?

If the auto companies were liquidated, a huge amount of the unfunded pension liabilities would be dropped on the doorstep of the Pension Benefit Guaranty Corporation (PBGC). They would wind up paying the auto worker's pensions, but significantly less generously than the terms of the UAW contracts call for. PBGC is limited by law as to how much they can pay to individual pensioners. But the payments would still be a huge number, which us taxpayers would have to fund.

So, as long as we're going to be presented with the bill for the auto worker's pensions, why not try to save the auto companies without spending more money than we would anyway? The single biggest cost factor that is making our auto companies uncompetitive and in financial distress is the cost of pensions and healthcare for both active and retired employees. If they could get out from under those costs, they would very likely be able to compete quite well with any foreign manufacturer. Behind that are hourly labor rates that are somewhat higher than reasonable--not egregiously high, but somewhat higher than their non-union competitors.

So what an enlightened and proactive administration could do would be to call the auto company management and unions together and make the following proposals. They could tell them that they are inclined to make an investment in the auto companies to assure that they can be sustained, but only with the following conditions...

• Government contributions would only be made to the PBGC, not to the auto companies themselves.

• All pension obligations for current and retired employees above a very basic and reduced pension benefit (far less than currently required under the UAW contract) would be transferred to the PBGC. PBGC would pay those benefits as required by the union contracts. The lower, more basic pension benefits would continue to be paid by the auto companies (see my proposal for a new UAW contract below).

• Such an agreement would be conditional on the UAW agreeing to a new contract with the auto companies that provide pension benefits to all yet-to-be hired, new U.S. workers that are substantially reduced, something akin to pension plans available to the foreign auto companies operating in the U.S. or other comparable manufacturing companies. That contract would be required to be permanent, non-negotiable and "non strikable" in the future.

• Further, the new contract shall provide for hourly pay rates that are comparable to other non-U.S. auto makers in the U.S. or other manufacturing companies. These new rates would go into effect immediately and any future raises negotiated by the union would be pegged to inflation.

• Similarly, the healthcare benefits and premiums paid by auto workers shall be immediately modified to reperesent some average of halthcare benefits provided to other large U.S. manufacturing firms. Those benefits should be permitted to remain totally negotiable in future contract negotiations and "strikable" if agreement cannot be reached. (My thought here is that some changes in government-provided healthcare, which is a high Obama priority, will likely occur before such negotiations become necessary.)

• Lastly, there could be other terms negotiated having to do with executive compensation and benefits and some requirements for Congressional oversight of auto companu research and development and future product planning.

So what woud this accomplish and how much would it cost? It would relieve the U.S. auto companies with the costs that have made them uncompetitive. It would cost the U.S. taxpayers a pretty penny in contributions to the PBGC. But probably no more--maybe less--than the costs we would incur if we simply let the U.S. auto makers fail and be liquidated.

I guess I'm thinking that as long as we're going be stuck with the bill anyway, why not try something different and save the auto compamies at the same time? Is it socialism? No, the government wouldn't own any part of the auto companies. But the new oversight regulations would reserve a considerable influence that the government could place on the still privately-owned companies. The price of government assistance, one might say.

Now, what do you think the chances are that members of Congress would do such a thing and incur the wrath of union members throughout the country that somehow have negotiated unreasonably generous benefit packages over the years that are now actually threatening the survival of the companies they work for?

Yep, your right. No chance. I guess we'll just have to get ready to pay the bill and live without any U.S. auto companies.