My position on the auto bailout is simple. The big three should be allowed to go bankrupt. This is true even if one ignores the moral hazard and other intrinsic costs of bailing out private firms.
Bankruptcy now is, quite simply, the best course of action not just for the taxpayer and the rest of the economy but also for the auto companies themselves. For a short but excellent analysis, read this post by Prof. Becker.
Here’s hoping that the Democrats and the Republicans, in all their partisan politicking and in-fighting, end up doing the right thing.