So now we are giving billions of dollars to the automotive industry. With this money they will come up with some new efficient car designs and do all the navel-gazing they need to become strong companies once again. Soon people will leap at the chance to buy a new GM car.
An alternative plan:
$1000 tax rebate for buying a new car
$3000 tax rebate for buying a car that gets over 40 mpg
$10,000 tax rebate for buying a plug-in electric car.
Why this plan? As it stands there is no short-term incentive to build cars people want and no long-term incentive to build efficient cars. They can spend it on whatever they want, build a few crappy electric cars, sell SUV's when gas prices are low and go into bankruptcy the next time prices rise. With my plan they would have to convince a lender that they have an efficient product people want. If the lender sees a good product and knows that the tax rebates create a strong market then it will loan the automaker enough to retool the factories.
This still doesn't help with overproduction. Before oil prices spiked and the economy tanked there was an overabundance of vehicles, because the market is only so big. Maybe the automakers should encourage people to drive crazily to increase crashes to increase demand.