Ford Motor Co. is not faring much better, and though Chrysler LLC has been tight-lipped about its financial situation (a privilege bestowed by its status as a private equity firm), the indication is that it, too, is teetering on the brink of collapse. Together these firms comprise the entirety of our domestic automotive industry, employing hundreds of thousands of workers, contractors and engineers whose jobs hang in the balance. It has fallen upon Congress, in a lame-duck session no less, to decide how to handle this news. Should the U.S. government provide liquidity to these firms or should our auto industry be allowed to fail as a consequence of its hubris and inability to adapt?

Bailouts, as a rule, are unpopular creatures. This was true in September when the House first rejected the $700 billion giveaway, and it is no less so now. There is a genuine revulsion felt when one hears of those grossly overpaid executives, gambling with shareholders’ money and expecting the taxpayer to cover the loss. A strong sentiment against corporate welfare has emerged as a result.

“Let the auto industry go bankrupt,” the argument goes. “After all, they sat on their hands while being undercut by foreign competition and they mulishly refused to drop their SUV line even when it became clear it was no longer viable. This is their problem. And anyway, bankruptcy reorganization might actually do these companies some good.”

In another time, with a different set of circumstances, this would be a perfectly reasonable line of analysis. However, it is worth considering what would happen if the Big Three simultaneously collapsed.

If it does not receive money quickly, odds are GM will not survive very far into next year. Ordinarily, it would undergo Chapter 11 bankruptcy, which is humiliating but not catastrophic. Under this system the company declaring bankruptcy continues operation throughout — some of its debts are canceled, ownership is passed along to its creditors and many jobs are saved.

In order to operate while in bankruptcy, companies rely on what are known as debtor-in-possession loans. GM, for instance, requires parts to continue manufacture and to get these parts it needs credit. But it is precisely this credit that has evaporated with the collapse of our financial institutions. Were GM to declare bankruptcy tomorrow, the likelihood is that it would not be a benign Chapter 11, but the deadly Chapter 7: total liquidation. In this circumstance, GM would be unable to secure loans to continue production, sell all of its assets, distribute them among the creditors and quietly cease to exist.

Congress (and the American people, by extension) must decide whether they are prepared to see the destruction of GM and the loss of hundreds of thousands of jobs in order to see a few executives punished.

Providing assistance will not necessarily entail a blank check, as many believe. Indeed, the taxpayer, through the blurry lens of Congress, would have significant leverage in the transaction. GM and Ford are in no position to negotiate; Congress might attach any number of stipulations to a cash injection. At a minimum, these should include a freeze on executive pay packages, a top-down reorganization of management and a wholesale investment into fuel efficiency research.

It is becoming clear the market alone cannot solve our energy crisis. Fuel efficiency has not been a higher priority this decade because until recently it was not profitable to make it one. Congress must make fuel-efficiency the price of GM’s survival. In the process it might fire the executives responsible, insulate thousands of jobs from loss and avert a panic on the order of the Lehman Brothers collapse.

Pavan Vangipuram is a State News columnist and chemical engineering senior. Reach him at vangipu1@msu.edu.