The major problem is that of health care costs. I saw a news article from a few months back in which US automakers were building a plant in Canada. Why? They can't afford US health care costs. (This is what they said, of course reality is more complex).
But wait, aren't taxes higher? Of course they are. But health care is simply more efficient. Every first world economy except the US have single payer (government) health care which costs 2-3 times less per person. And when it is 1/6 of the total economy, this is a big deal.
It really doesn't matter if the US bails out the car makers. The only thing that matters long term is that the US moves to a more efficient system of health care.
Since the only existing examples are Europe-style, and health care is very, very important, that is the only responsible way to go. Although there are debates as to whether Canada-style, English-style or German-style health care is best, compared to how much money the US is paying right now to cover so few people, it really doesn't much matter.
Fix health care and US industries can compete.
Edit: removed spurious comments
Edited, Dec 8th 2008 11:26am by yossarian