8 bailout questions answered

CNN viewers asked us about the proposed rescue of the auto industry. Here's what you need to know.

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Give the money to us instead of them
Why doesn't the government just give us all a large amount of money, and we can buy their cars, and that should help out the car companies? --John

Given the amount of money needed to keep the Big Three automakers afloat, it's a lot more efficient to simply lend them the money rather than to spur sales through an incentive program.

American consumers also don't like to be told what to buy. A rebate program would have to specify that they purchase a vehicle from General Motors, Ford or Chrysler, limiting their choices to the Big Three. Consumers and foreign-based manufacturers would likely pressure the program to open up to at least all cars made in the United States.

Also keep in mind that the government isn't giving money to the automakers - it's lending it to them, with the intention of getting it back in a few years. Rebates are not loans, and consumers could not be expected to pay them back.



NEXT: Bankruptcy and employees' retirement
Last updated December 26 2008: 8:55 AM ET
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