By Phil KerpenPolicy Director, Americans for Prosperity

Americans for Prosperity said, back in November, that any taxpayer bailout of General Motors and Chrysler would be money that would disappear into a black hole while buying them only a few months.

Congress sensibly rejected the auto bailout, but the Bush administration went ahead and bailed them out anyway, twisting the TARP to bail out automakers using a program that--we were told--was supposed to be for the banks.

Unfortunately, Obama gets only one cheer because instead of proceeding to a bankruptcy or a bankruptcy-like proceeding where a real restructuring can be imposed in an orderly, legal fashion, the federal government is giving another round of TARP funds . . . in the hopes that somehow they can square the circle and restructure without a bankruptcy.
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Instead it's $17.4 billion of TARP later, and GM and Chrysler are in no better shape than they were last fall. Obama has correctly concluded that their plans won't work, largely because the bondholders and unions are not willing to make the massive concessions that are needed.

Unfortunately, Obama gets only one cheer because instead of proceeding to a bankruptcy or a bankruptcy-like proceeding where a real restructuring can be imposed in an orderly, legal fashion, the federal government is giving another round of TARP (they haven't said how much, but GM wants another $17 billion) in bailouts to GM (for 60 days) and Chrysler (for 30 days) in the hopes that somehow they can square the circle and restructure without a bankruptcy. It won't work. The money will be lost. -- Bondholders simply have little incentive to accept a haircut as long as the prospects exist for more transfers from taxpayers.

We can only hope that when these 30 and 60 day periods are over there is enough political will to cut off the bailout funds.

Editor's note: Mr. Kerpen's piece also appears today on the AFP Web site. Clickhere to read more.

Phil Kerpen is the founder of American Commitment Action Fund, on the web at www.BookerFAIL.com.