"Give me bailout or give me death!"  That's what Democrats and GM are saying - that GM will liquidate itself (commit suicide) before it would reorganize in bankruptcy. However, the Democrats and GM are creating a false choice - identifying only two options (bailout or liquidation), when bankruptcy reorganization remains available.  For the GOP the question is whether they cave into GM's suicide threats, thereby committing political suicide themselves? There is another way - retake the mantle of fiscal responsibility from the Democrats.

Democrats and GM are threatening GM suicide - bankruptcy liquidation.  In a CNBC interview this morning, Rep. Jeb Hensarling (R-TX) debated Sen. Debbie Stabenow (D-MI) over bailing out Detroit.  In the interview, Sen. Stabenow claims that "Bankruptcy would be a disaster. What they're talking about is not Chapter 11 [reorganization] but Chapter 7, which would involve liquidation".  Bloomberg quotes a GM spokeswoman as saying, "A bankruptcy wouldn't address our immediate liquidity concerns."  So, it's bailout or death.

However, "bailout or death" are not the only choices because reorganization is available.  Noted hedge fund manager William Ackman argues that GM should be allowed to go bankrupt to allow debtholders to take over.  Ackman argues that "What you need to do is reduce the amount of debt at General Motors to a level that the company can support, and the debt holders, in exchange for giving up their debt claim, will end up owning the business."

Bailout supporters wrongly claim that reorganization is not an option because "in order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit."  The Wall Street meltdown, they continue, "has also dried up the [credit] GM would need to operate."  If true, their argument supports extension of government credit only in reorganization (and then only if credit is not available in the free market), since taxpayer dollars must be a last resort.

Automaker executives, directors, and Big Labor oppose reorganization out of selfishness and greed.  Reorganization would put management out of a job, wipe out any equity owned by management (many who acquired stock at no cost) and the shareholders they represent, and force Big Labor to negotiate competitive contracts.  In reorganization, the losers are the guilty - management (who mismanaged for decades), Big Labor (who sold out future workers for past and present workers), and the shareholders (who failed in their oversight of management). 

This is the GOP's opportunity to retake the mantle of fiscal responsibility from the Democrats.  By caving into GM's suicide threats, the GOP will likely commit political suicide.  GOP leadership must take this opportunity to stand up for fiscal responsibility.  The GOP should take this position:
- Taxpayer dollars are a last resort.
- We don't punish the innocent (taxpayers and their children) to reward the guilty.
- Bad management and selfish labor unions are guilty of ruining America's automakers.
- Only bankruptcy reorganization will save the automakers.
- Taxpayers will lend their money only to automakers in bankruptcy reorganization, under the supervision of the courts.
The GOP must remind America how Nancy Pelosi, Barney Frank, and Chris Dodd talked Congress into rewarding the guilty by bailing out Fannie Mae, Freddie Mac, AIG, and Wall Street.  And we punished the innocent by sticking our children with the bill.  These Democrat bailouts are Change We Don't Need.