President Bush this morning announced an auto bailout plan that will have the federal government provide over $13 billion dollars in loans to the US Big Three. The companies will be required to restructure, but will have one year to make adjustments in labor costs. From the Washington Post:

The troubled U.S. auto industry will receive emergency loans of $13.4 billion from the federal government in return for an extensive restructuring of its outstanding debt and labor costs over the coming year, according to administration officials.

Funds for the loans will come from the Troubled Asset Relief Program initially set up to aid the financial industry. An additional four billion will be available in February.

But the money will come with some extensive strings attached. Though the White House will not appoint a “car czar” to oversee the industry going forward, the companies will have to restructure their wage agreements so that they are competitive with foreign automakers by the end of next year. In addition, by March 31 of this year the companies will have to show they are financially viable and able to repay the government — a requirement that may, for example, force them to renegotiate outstanding debt and other agreements.

If the automakers are able to inflict the necessary medicine on their operations this deal will be in the best interests of the country. If they cannot manage to make their operations as lean as possible then we will have only bought them some time.