Megan Mcardle has the lowdown on why the bailouts are all about the unions:
Chrysler is a good company caught in a bad situation. Chrysler has been a bad headache for years. Daimler bought it for $36 billion in 1998, and actually paid $650 million to have Cerebrus take the company off their hands in 2007.
The hedge funds benefited from the government money, so they're getting more than they would have otherwise. As far as I know, Chrysler has burned basically all the cash they got from the government, which is why they're in bankruptcy. They haven't bought exciting new assets the secureds can liquidate; they've just produced more cars that can't be sold at a profit, put more wear and tear on machinery, etc. The deal they made with Fiat doesn't put any cash into the company.
The administration isn't kowtowing to the unions; it's trying to prevent massive job loss. Chrysler employs about 60,000 people. This is a rounding error in the number of jobs that have been lost since this recession began.
To put it another way, we could have taken the $8 billion or so we gave to Chrysler and given every one of the company's employees $133,000 to start their own War on Poverty, while still providing much of their pensions through the PBGC. Of cours, the new Chrysler is going to cut many of those jobs, so the cost of actual jobs saved will probably top $200K per. For as long as the company lasts. Which most analysts do not expect to be long, given that their super secret surprise scheme for turning everything around is to have Chrysler sell retooled Fiats to a country with one-seventh the population density and almost twice the birthrate of Italy.
Good points all. Here is Business Insider.