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The political sun, moon and stars appear aligned for granting federal aid to General Motors and Chrysler this week after what seemed like deadlock. The keys to passage appear to be the very things that will make the bail-out a temporary plaster at best and a political boondoggle at worst. By trimming the package to $15bn from the Big Three’s request of $34bn (including Ford) and tapping a loan package already approved by Congress for other purposes, it has earned grudging support from the lame duck White House. It is not eager to see more big bankruptcies on its watch and the Obama administration will now be left with the painful choices when the current infusion runs out.

Public sentiment is against helping Detroit, but not to the degree it opposed the financial bail-out deal. Support from Congressional Democrats is solid and likely to translate into more substantial aid once their majority grows and a presidential veto threat vanishes next month. Unions have a lot to lose from a traditional auto bankruptcy and are reaping benefits from campaign donations that played a big role in the Democrats’ current dominance. Over the past two decades, half of the top 20 political donors were trade unions and they gave 95 per cent of their $278m in campaign cash to Democrats, with the United Auto Workers tilting 98 per cent Democrat.

The clumsy plan to assist Detroit now calls for a “car czar” who may do what a bankruptcy judge might have done in Chapter 11, though with less legal authority and more political interference. Provisions like warrants for government ownership or ending dividends are window-dressing given the worthlessness of automakers’ common equity without even more aid. Now the question is how big the bill will be and how many other ailing industries will come begging – parts makers for example. “Parp” anyone?

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