While some might have thought the federal bailout dollars for GM and Chrysler would trickle down to local dealerships, that hasn’t been the case for many dealerships, which can’t acquire loans to operate during the credit crunch if they’re spurned by both banks and the parent car company.

Some cities achieve a large part of their tax base from the money generated in sales taxes from each new car purchase; the cities would face a crunch without the sales tax revenue, so they’re loaning the dealerships money in their own version of the federal bailout. For example, Victorville, California extended a $200,000 loan to a local Chrysler auto plaza that generates half the town’s sales taxes (the town doesn’t have a property tax).

In the NPR comment section, Chartreuse Jones of Portland, Oregon notes: “I guess I missed the part of the story where giving the dealerships money somehow means that people will miraculously start buying cars again (and therefore generating sales tax income).”

Victorville City Councilman Terry Caldwell : “How do you say no the next company? If you help one, from a competition standpoint, do you have an obligation to help others?”

City Councilwoman JoAnn Almond: “I voted against it for one reason. There’s so many car dealers and businesses having a hard time right now and I don’t feel it’s fair to give a loan or bailout, so to speak, to one and not to others.”

The owner of the GMC/Pontiac dealership in Victorville said that he had not considered asking the local government for money, and he didn’t like to be in debt.

Councilman Mike Rothschild said he’s against the bailouts on a national level, but he feels that the local city should make an exception in this case.

President George W. Bush announced that he would provide low-cost loans to GM and Chrysler, provided that they can create a plan for “viability” in the next three months. Chrysler and GM have said they would have to declare bankruptcy without the loans, with major payments due to suppliers in January that they can’t pay for.

Two of the Big Three will receive $17.4 billion in exchange for certain wage concessions. If at the end of three months the two companies have not submitted a viable plan for stability, the government will “call its loans regardless.” The government can also take 20 percent stakes in the companies in exchange for the loans if it decides to do so. The terms of the loans can be changed by incoming President Barack Obama, since the bailout was done on executive order and not through Congress. Obama said that he agreed with Bush’s move to bail out the auto industry.

General Motors gets a larger chunk of the first bailout outside of the financial industry, $9.4 billion, while Chrysler gets $4 billion.

Why was Ford left out? Ford has said it doesn’t need “immediate assistance” and might be waiting on the sidelines for a relief package from Congress with fewer strings attached.

The billions will come from the $700 billion Troubled Asset Relief Fund (TARP), the “Wall Street bailout” approved with discretion to be doled out by the Treasury. Carmakers will become eligible for $4 billion more in February.

As a condition of the loans, Bush said that auto workers will be forced to accept “competitive” compensation with that of foreign auto companies in the United States. Other conditions are:

-No bonus payments to the top 25 executives
-Bondholders have to swap their bonds for bonds worth much less than the ones they hold, with two-thirds of GM and Chrysler’s debt required to be restructured
-End union benefits that continue to pay laid-off workers’ salaries for two years, called the “jobs bank” program
-Companies must issue new stock to pay for underfunded health funds administered by UAW

These conditions would decimate the value of current carmaker shareholders’ stock.

GM’s CEO, G. Richard Wagoner Jr., said that GM “helped build the country” and that the bailout would allow GM to restructure.

Some questions to ponder:
Will the loans keep Chrysler and GM from declaring bankruptcy or simply postpone the inevitable?
How will the bailout encourage consumers to buy cars when they’re simply not doing so right now?

Pat Buchanan is amazed the Senate Republicans are blocking a bailout of automakers, especially since the proposed $14 billion would be a fraction of the $700 billion they just approved for banks under the TARP scheme.

The AP reports that as of last night, chances of a GM/Ford/Chrysler bailout by the American people have diminished.

While automakers want the taxpayer-funded cushion to get through a “bleak and dangerous December,” members of Congress have been attacked by their constituents for agreeing to the previous $700+ billion Wall Street bailout. Apparently, “Bailout fatigue has set in” on Capitol Hill.

GM has already said that without a bailout, it will run out of cash by year’s end. Democrats pushing a bailout stated in legislation put forth on Monday that the auto industry employs 355,000 workers directly, one million retired dependents, and 4.5 million in related industries. However, does this separate out foreign automakers from domestic ones? The 4.5 million employed in related industries surely benefit from Toyota and Honda as well. Toyota and Honda might not do as well if their competitors are propped up.

A bailout of sorts was already approved in September, consisting of loans for the auto makers to develop alternative energies. Republican leaders want to lift the restriction on that money and give it to the automakers, while Democrats want to keep the previous allocation and add another $25 billion, meaning $50 billion in total for automakers.

Senate leaders don’t think that, as of this time, the auto bailout has enough votes to pass and are holding the bill until they can get a required 60-vote supermajority in the Senate.

Reuters reports that Americans are thinking twice about bailing out American car companies, feeling that a bailout would encourage bad business practices and make it harder to reform the companies for the better.

Congressional Democrats have proposed a $25 billion bailout of car companies, including GM (General Motors), Ford and Chrysler. They are hoping to pass it in the special lame-duck session of Congress that began today.

The three American car companies, who have fallen behind Honda and Toyota for years, see the current economic downturn and recent Wall Street bailout as reason enough to ask for their own bailout from the federal government.

On Friday, Goldman Sachs suspended its rating for GM, declaring that the company needs $22 billion to survive. Chrysler was also said by Goldman to need a similar amount of money.

The three companies have ruled out Chapter 11 bankruptcy or restructuring.

Arizona Republican Senator Jon Kyl has come out against a proposed bailout, saying that companies that made bad business decisions need to pay for it and not at the expense of others.

The three automakers have claimed that they cannot make a profit manufacturing small cars. Scott Porter of Los Angeles tells Reuters: “If you cannot make a profit then you go bankrupt.”