So what's the deal, then? Well, the deal is simple: HEALTH CARE. General Motors turned into a health care provider that sold cars. There is more health care than steel in a GM car, on a dollars and cents basis. The cost of providing health coverage for 1.1 million GM workers, retirees and dependents is over $10 billion per year. So we can say to GM, "okay, you can go bankrupt". But then 1.1 million people lose their health care coverage. Hundreds of thousands lose their pensions. Probably half a million Americans who are paid directly or indirectly by General Motors lose their jobs, as the failure reverberates through GM's suppliers, most of whom themselves would end up going bankrupt.
So while there's something to say about the notion "GM should not survive", this isn't the time. A down economy such as we have now simply can't take that sort of hit without going further into the hole. In the long term, we need to fix the health care system to take that burden off of GM's back and then do something about GM's management, which has not done a good job of thinking long-term over the past thirty years. But in the short term, unless something is done quickly GM is dead. And we get another half a million people without jobs on the street, and 1.1 million people with no health care. That's called "economic death spiral", folks. And no matter how much you detest GM, we can afford that even less than a bailout of GM.
-- Badtux the Economics Penguin