By Warren Brown
Sunday, September 21, 2008

This might seem a bad time to ask Uncle Sam for money. The government is feeling a tad tapped-out after launching multibillion-dollar rescues of mortgage giants Freddie Mac and Fannie Mae and drafting plans to spend $85 billion to save global insurer American International Group from default.

The government could be forgiven for grumpily dismissing any other requests for help, especially from enterprises that are supposed to rise or fall on their merits in our putative free-enterprise system.

Enough is enough!

Or is it?

There is the outstanding matter of $25 billion, money approved in last year's energy bill but not yet funded. It's the sum of proposed, low-interest direct loans to domestic automobile manufacturers -- "domestic" in this case applying to any car company that has been manufacturing automobiles in the United States for 20 years.

That would include General Motors, Ford, Chrysler . . . and Honda.

Critics view the proposed auto industry loan package as another federal bailout of corporations that got themselves into trouble and that now are trying to escape the consequences of their mismanagement at taxpayers' expense.

But that view understandably is rejected by domestic automobile industry executives.

"It's neither a bailout nor a handout," said Elizabeth A. Lowery, GM's vice president for energy and environment. "It's a loan, money that will be paid back. It's not going to cost the taxpayers anything."

That's debatable.

There is little that is certain in the global automobile industry, other than that it is changing rapidly and will continue to do so for the foreseeable future. How companies respond to those changes will determine their failure or success . . . and the consequences or benefits attached to either outcome.

There is some justifiable concern, especially in this troubled economy, that at least one of the domestic car companies might go under and, in doing so, sock American taxpayers with another multibillion-dollar bill. The Congressional Budget Office, for example, estimates that such a failure could cost $7.5 billion in taxpayer losses.

But here's betting that direct loans to the domestic car companies will yield greater dividends to the American economy than the money being invested in our faltering mortgage and insurance institutions.

Car companies actually make things -- cars and trucks. Their enterprise encourages the development of future, saleable technology. Their success in that endeavor would ensure the continuation of an American-owned industrial base. That speaks to American manufacturing jobs and to all of the ancillary employment stemming from those jobs.

And there' s this:

We have nothing except vague promises and hope of the good that supposedly will transpire from the federal government's financial intervention in our troubled mortgage and insurance businesses. Maybe they will develop some kind of fiscal discipline. Maybe they won't. But it's a safe guess that, whatever happens with them, most of us will see precious little benefit.

But at least with the car companies, we have the promise of something tangible -- more fuel-efficient, environmentally friendly vehicles such as the plug-in electric Chevrolet Volt car that GM displayed last week at its 100th corporate birthday celebration.

The Volt and similar cars promise to revolutionize personal transportation, to make it less dependent on oil and all of the political, economic and social evils attached thereto.

That's worth $25 billion, I think. It's a better risk than betting that the investors and speculators who got us into our current financial trouble by buying and selling poorly vetted loans have our best economic interests at heart.