That’s precisely what happened.

Roughly 13 weeks after Congress infused $2 billion more into the Clunkers program — and about 10 weeks after the program ended — the Department of Transportation finally unveiled the final figures surrounding the program, posting the details of all 677,000 transactions on its Website. The Associated Press undertook the unenviable task of crunching the data, to discover that the single most popular swap was that of an old Ford F-150 pickup for a new Ford F-150 pickup.

Owners of that pickup were 17 times more likely to buy a new F-150 than, say, a Toyota Prius. The new pickups’ EPA combined city/highway mileage ratings ranged from 15 mpg to 17 mpg, depending on the powertrain and other factors, up 1 mpg to 3 mpg over the old ones.

That’s not to say there wasn’t some environmental benefit to the program. Indeed, the average trade-in vehicle got 15.8 miles per gallon, while drive-away vehicles averaged 24.9 mpg. Still, how much better could those numbers have been if Congress had summoned the guts to pass a slightly different Clunkers bill — one that bumped up the mileage requirements to prevent drivers from trading clunkers for clunkers? As Sens. Dianne Feinstein (D-Calif.) and Susan Collins (R-Maine), the sponsors of the alternative bill, wrote in The Wall Street Journal in June, the original program was “expertly designed to provide Detroit one last windfall in selling off gas guzzlers currently sitting on dealer lots because they’re not a smart buy.”

Of course, in the end, both Feinstein and Collins voted for the $2 billion extension of that very windfall.

From The Associated Press:

General Motors Corp., presenting a dire outlook for the future, said Tuesday it may need $30 billion in total government financing to weather the economic downturn and would cut 47,000 jobs worldwide and shutter five more U.S. factories in a massive restructuring plan.

The automaker is already surviving on $13.4 billion in federal loans and said in a plan submitted to the Treasury Department that it would seek an additional $16.6 billion if economic conditions worsen, but it could achieve profitability in two years and fully repay its loans by 2017.

None of this would be terrible if the solution were as simple as retooling manufacturing plants to produce the cars that Americans want to buy, which is the oft-mentioned fix to Detroit’s ills.

But Americans, at the moment, don’t want to buy anything — not Hummers and not Priuses. Indeed, Toyota’s sales fell nearly 32 percent in January relative to the same month a year ago, and Honda didn’t fare much better, with January sales down nearly 28 percent from 2008.

The declines aren’t as large as those suffered by Big Three, but nor do they inspire much confidence that Detroit’s new long-term viability plans will spur some massive riot of new American car buyers.

Now the question everyone’s waiting to hear answered: WWOD? (What will Obama do?)

Fugetaboutit.

The Treasury Dept. announced last night that it will spend $6 billion from that fund to bail out GMAC, the flailing auto finance company whose reluctance to lend to riskier loan applicants has contributed significantly to the drop in car sales this year. (In the third quarter, GMAC issued 22 percent fewer loans worldwide than it did a year before, Dow Jones reports.)

The $6 billion — $5 billion of which yesterday went directly to purchase shares in the company — comes on top of the $17.4 billion that the Treasury agreed to provide to the Big Three from the Wall Street bailout earlier this month. GMAC, a majority of which is owned by Cerberus Capital Management, the private investment firm that owns Chrysler, said today that it will immediately relax its lending standards — from a minimum credit bureau score of 700 two months ago down to a score of 621. From a statement from GMAC President Bill Muir:

We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis. We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the U.S. [...]

[O]pening access to credit for those with CB scores of 621 or better will allow us to return to more normal levels of financing volume, and should help in efforts to stabilize the U.S. auto industry.

It’s not only the U.S. auto industry praying Muir is right. Everyone is struggling to sell cars — whether they be Hummers or Priuses — and a primary reason has been the credit freeze that’s made it tougher for consumers to finance new car purchases.

Analysts said Toyota’s downward revision, its second in two months, showed that the worst financial crisis since the Depression was threatening not just the Big Three but also even relatively healthy automakers in Japan, South Korea and Europe. Many other companies will also soon be reporting losses.

Worse, analysts said that they expected next year to be even more painful, amid forecasts that the global economy would continue to slide until at least the summer. This could cause a significant shakeout, driving smaller and weaker companies into the arms of a smaller number of bigger, richer players.

So for all that talk of “retooling factories” and “Chevy Volts” and “smaller, more fuel-efficient cars,” the message is clear: In this economy, folks aren’t buying any cars — not even Toyota Priuses — largely because they can’t access the credit to finance such a purchase.

The Bush bailout forces the Big Three to craft a plan to return the companies to profitability. Toyota’s news is indication that that task just got much tougher.

Aside from the comedy surrounding that development (the Bush administration’s original refusal to help the automakers was the only reason that Congress took up legislation to begin with), there’s now concern that the administration will manage Washington’s latest bailout attempt as poorly as it did the last. House Speaker Nancy Pelosi (D-Cal.) shot a letter to President Bush last week urging the White House to insist on certain conditions and concessions from the companies in return for the help:

The Administration must now require, as a condition of receiving those taxpayer funds, the same tough accountability and shared sacrifice by all parties –- executives, unions, suppliers, creditors, dealers, bondholders, and shareholders –- mandated in the bipartisan legislation passed by the House this week.

The New York Times reports this morning that the details of the deal are still being worked out, but Treasury Sec. Henry M. Paulson Jr. will take on the oversight responsibilities. GM has said it needs $10 billion to get it through March, while Chrysler would need $4 billion to survive the same stretch.

On CNBC earlier this week, Paulson said “failure by these companies at this time is not something any of us want to contemplate.”

There was no word how any of the bailout’s terms will address the larger reality that Amercans aren’t buying cars now from anyone.

Why is that bad news for the Big Three? Because there’s been this line of argument that Ford, General Motors and Chrysler would be performing splendidly right now if only they’d focused more resources on the production of gas-sippers instead of gas-guzzlers. While there’s certainly truth in that criticism, Toyota’s announcement indicates that auto companies are suffering across the board, regardless of what models they’re able to produce. Indeed, Prius sales in November dropped more than 48 percent relative to the same month a year ago.

So even if GM were shooting its plug-in Volt off the assembly line like Pez, it still wouldn’t solve the company’s troubles because the credit crunch and lack of consumer confidence means no one’s buying anyways. That’s a tough message for supporters of the Detroit bailout, who’ve been arguing that the Big Three will be fine if they just get some help retooling their factories to make higher mileage cars.

As David Cole, chairman of the Center for Automotive Research, said just a few minutes ago in what’s probably an understatement, “All automakers are in big trouble right now.”

General Motors production line. (Flickr: steelcityhobbies)

To hear Southern Republicans tell the story, the financial burdens facing Detroit’s automakers are self-made troubles to be settled by the laws of Adam-Smith capitalism.

“We don’t think it is the role of government to intervene,” Sen. Jim DeMint (R-S.C.) told the Fox Business Network last week. “We need to let the market and the laws work the way they are already in place.”

Illustration by: Matt Mahurin

Yet this argument — that the government has no business interfering in free markets — ignores an increasingly frequent tradition among Southern states, which have fronted billions in local taxpayer dollars in the past two decades to attract foreign auto plants. Those incentives, arriving in the form of tax breaks, training for new employees and even land, have enticed BMW to South Carolina, Mercedes to Alabama and Nissan to Tennessee. The result of the government subsidies has been the steady emergence of the South as an auto-manufacturing powerhouse. Some are dubbing it the “New Detroit” –  a region where real estate is cheap and the labor’s not unionized.

Not coincidentally, these Southern states are represented by the same coalition of GOP senators who led the fight against the recent Detroit bailout proposal. That legislation would have provided $14 billion in emergency bridge loans to General Motors and Chrysler, both of which say they lack the finances to survive the month. Rallying behind the animated opposition of GOP Sens. Bob Corker (Tenn.), Richard Shelby (Ala.), Mitch McConnell (Ky.) and South Carolina’s DeMint, Senate Republicans killed the legislation.

The White House has since stepped in to offer assistance from the $700 billion pot allocated earlier in the year for the Wall Street bailout so that the companies don’t go bankrupt during its tenure.

On Friday, the day following the Senate vote, Shelby told CNBC that if the Big Three had only managed their business operations as well as the foreign companies, known as transplants, they wouldn’t be scrambling now for a taxpayer-funded bailout.

“You look at the South,” Shelby said. “You take — not just Mercedes in my hometown — but BMW, Honda and all of them. These companies are flourishing with American workers made in America.”

But that flourishing didn’t come without significant taxpayer help. Shelby’s Alabama, for example, secured construction of a Mercedes-Benz plant in 1993 by offering $253 million in state and local tax breaks, worker training and land improvement. For Honda, the state’s sweetener surrounding a 1999 deal to build a mini-van plant was $158 million in similar perks, adding $90 million in enticements when the company expanded the plant three years later. A 2001 deal with Toyota left the company with $29 million in taxpayer gifts.

Alabama is hardly alone. Corker’s Tennessee recently lured Volkswagen to build a manufacturing plant in Chattanooga, offering the German automaker tax breaks, training and land preparation that could total $577 million. In 2005, the state inspired Nissan to relocate its headquarters from southern California by offering $197 million in incentives, including $20 million in utility savings.

In 1992, South Carolina snagged a BMW plant for $150 million in giveaways. In Mississippi in 2003, Nissan was lured with $363 million. In Georgia, a still-under-construction Kia plant received breaks estimated to be $415 million. The list goes on.

Supporters of these deals contend that the economic activity spurred by the arrival of the automakers is worth the up-front costs. Yet some experts say that, considering the ever-growing size of the incentive packages, there’s little evidence to support that claim.

“It’s exceedingly difficult to determine whether the returns warrant the original incentives,” said Matthew N. Murray, executive director of the University of Tennessee’s Center for Business and Economic Research. “It’s just hard to show that it’s going to produce enough tax revenue.”

Others wonder if the incentive packages don’t go too far to divert taxpayer dollars from vital state services. When Tennessee courted Nissan in 2005, for example, its $197 million gift came about the same time the state was cutting 170,000 low-income adults from its Medicaid rolls. A 1998 Time magazine report found that an Alabama elementary school adjacent to the Mercedes plant was home to 540 kids in a building designed to hold 290.

“The Mercedes-Benz plant illustrates a fundamental principle of corporate welfare,” the article read. “Everyone else pays for economic incentives — either with higher taxes, fewer services or both.”

Then there’s the question of whether there’s even a difference between using taxpayer dollars to bring a company to town (as many Southern states have done) and using taxpayer dollars to keep a company around (as the Detroit bailout aimed to do). Rep. Lynn Westmoreland (R), who represents the Georgia district soon to house the Kia plant, told The Atlanta Journal-Constitution last month that there is a distinction.

“I don’t think we were doing that because of bad business decisions Kia was making,” said Westmoreland, who voted against the Detroit bailout. “We did that to get them in here, to create the jobs, to create the taxes, to put economic development into the area.”

A great deal of focus has been placed on the United Auto Workers role in the financial troubles of the Big Three, but there are complicating factors that extend far beyond the union-versus-non-union debate. Much of the labor costs paid out by the Big Three, for example, go to cover health and retirement expenses — a tab that’s largely picked up by the governments of the foreign transplants.

“They [foreign governments] use taxpayer dollars to subsidize our competition,” Ron Gettelfinger, president of the United Auto Workers, said Friday after the Senate killed the Detroit bailout proposal. “It doesn’t help our industry.”

The age of the companies also plays an enormous role. General Motors, for example, has four times as many retirees as it does workers, placing a disproportionate burden on the company to meet its health and pension promises. “It’s much easier for the transplants because they’re much younger companies,” said Gary N. Chaison, a labor professor at Clark University in Worcester, Mass.

Not that the automakers don’t bear much of the blame for their current troubles. For years, the Big Three fought higher mileage standards while focusing production on gas-guzzling trucks and sport utility vehicles — models that fell from public favor when gas prices leapt over the summer.

“None of us want to see them go down,” McConnell, the Senate Minority Leader, said last week, “but very few of us had anything to do with the dilemma that they’ve created for themselves.”

Still, there’s plenty of blame to go around. Consumers purchased those large vehicles, thus creating the demand. And contrary to McConnell’s statement, many observers argue that Congress had a responsibility to nudge the industry toward better fuel economy years ago. A 1990 vote to increase mileage standards to 40 miles-per-gallon came three votes shy of Senate passage.

McConnell voted against it. Shelby, a Democrat at the time, did too.

The sun sets on a General Motors plant. (Flickr: serhio)

After Senate Republicans dashed the Big Three automakers’ hopes for a congressional bailout last week, General Motors decided it was time to begin seriously exploring a Plan B. Company executives turned to the biggest name in corporate bankruptcy.

Harvey Miller, who has worked on mega-cases like Lehman Bros., Enron and WorldCom, is now advising GM on whether to file for Chapter 11 protection.

While the White House has suggested that financial help may be on the way, perhaps in the form of an $8-billion bridge loan, the Detroit automakers still have no guarantee of a federal lifeline.

Illustration by: Matt Mahurin

If GM does file for bankruptcy protection, Miller’s prowess is sure to be needed. The case would be unprecedented and no doubt controversial. GM owns physical assets worth about $160 billion, it directly employs 90,000 Americans and is an integral part of the U.S. economy.

No bankruptcy case has ever dealt with all the serious factors GM could face — from workers to assets.

Taken as a whole, the bankruptcy could be a Goliath, costing the company millions in legal fees. In a series of interviews with bankruptcy experts, including those who support GM filing for Chapter 11, all say a successful trip through bankruptcy court would not be free from pain. These bankruptcy authorities say any outcome could easily involve significant layoffs; cuts in workers’ wages and benefits; and deep wounds that would reverberate throughout related industries.

To avoid liquidation, the company would have to pare its operations. Such a process, with all its complexities — thanks to the auto giant’s vast and complex interconnections with suppliers, dealers and unions, coupled with its network of physical assets like assembly plants — could take years. The psychological effects on the American psyche could cut deep.

“These [auto] companies are so big,” said Robert Lawless, a bankruptcy law professor at the University of Illinois at Champaign Urbana. “You’d hate to throw around the word ‘unique,’ just like with Enron and Lehman Bros. … but I think the same thing would be true if an automobile company goes.”

GM CEO Rick Wagoner has worked to stave off a bankruptcy filing, citing fears that the company’s core problem, selling too few cars, would only get worse after filing for Chapter 11.

Aside from a home, a car is the most expensive purchase Americans make in their lives. It is not considered a casual purchase, like a domestic airline ticket or a household item. So the car company would need to take serious steps to reassure potential buyers that it can outlast the car.

When Hyundai Motor Co. teetered in 2000, for example, it instituted a 10-year warranty to prop up consumer confidence. GM might also be forced to slash sticker prices.

Wagoner has also alluded to the costs of filing for Chapter 11. Top-flight bankruptcy lawyers command hundreds of dollars an hour in fees. The specialist lawyers handling Enron, one of the biggest bankruptcy cases in history, were paid $688 million for their work. GM’s bankruptcy would likely be more complicated, which means comparable or even higher fees.

Supporters of a government-backed bailout as an alternative to bankruptcy point to the costs taxpayers and government would incur from a bankruptcy filing. According to a study by Anderson Economic Group, a business advisory firm, if all three automakers sought protection from creditors, states and the federal government would lose $70 billion in taxes in the first two years of bankruptcy. The study assumes 1.8 million jobs lost in the first year.

“When you consider [a government loan] is a self-financing-type loan,” said David Cole, chairman of the non-profit Center for Automotive Research, “the taxes the [Big Three] pay by working is more than adequate to cover any required bridge [loan]. Forgetting about politics and philosophy — this is really a self-financing type of activity.”

The glimmer of hope for GM that emerged from the White House on Friday was that government officials would use some of the $700 billion in bailout funds allocated for Wall Street to tide over GM and Chrysler until the next Congress and the Obama administration. Ford says it has enough cash to survive.

But even if the White House does extend a temporary lifeline, bankruptcy could still be on the table. According to some bankruptcy experts, that wouldn’t be a terrible idea for the automakers.

John A. E. Pottow, a professor at University of Michigan School of Law, explained that under Chapter 11, auto companies would be given instant breathing room from creditors, while allowing them to act more swiftly in renegotiating union contracts, trimming operations and reaching agreements with creditors. That’s an “unhappy reality,” he said, but a necessary one.

Blood-letting, Pottow said, is not the mark of failure in bankruptcy. “Success doesn’t mean people won’t be fired and plants won’t be closed,” he said. “That’s something different than success in bankruptcy.”

Cuts would be imminent if GM filed for Chapter 11 protection. The question is how deep would they run.

GM employs some 90,000 workers directly, and is tightly entwined with industries that employ thousands more. Some analysts say that, including subsidiary industries, the Big Three employ roughly 3 million Americans. When other big companies restructured under bankruptcy, they have been forced to implement serious layoffs.

For example, when GM’s chief axle and brake supplier, Dana Holding Corp., filed for Chapter 11 protection in 2006 with assets of $7.9 billion, it ultimately fired 20 percent, or 9,000, of its 44,000 workers and closed eight plants.

Dana instituted a two-tier union contract, in which newer hires receive substantially fewer benefits than their predecessors. Pay is also tiered: longtime workers make $20 an hour; new workers $14.

Bankruptcy is also not a quick process. Dana finally emerged from bankruptcy in February, after two years under Chapter 11 protection.

Bankruptcy supporters say that the idea of government help doesn’t need to be left at the courthouse door. With liquidity drying up and credit markets tight, it would be difficult for the automakers to get the loans from the private sector that they would need to restructure. The government could be their lender.

“This sort of direct government intervention we haven’t seen since the Great Depression,” said Pottow. “It’s a brave new world.”

Critics of the bankruptcy option say that downsizing a GM on paper doesn’t easily translate into real life for an industry that props up a network of suppliers and car dealers. Cole of the Center for Automotive Research said the effects of a bankruptcy restructuring would be devastating for businesses already on the brink of collapse. Four of the country’s biggest auto-parts makers have filed for bankruptcy in the last five years alone. Significant cuts in their contracts could push them into insolvency as well.

“This is one of the differences between the theorists and the people who understand the industry,” Cole said.

In the meantime, GM is attempting to cut costs. The company announced Friday that it will temporarily shutter 20 North American factories. It plans to produce 250,000 fewer vehicles in the first quarter of 2009 compared to the same time last year.

For the automakers, the bankruptcy process, though complicated, could buy some time. If GM files this month, for example, it could keep operating until President-elect Barack Obama is sworn into office Jan. 20. Obama has repeatedly supported a bailout for the industry.

“If they file for bankruptcy,” Lawless said. “bankruptcy doesn’t give them a good business model. It gives them a breathing spell to try to get the company back into financial health.”

GM would need to pay for its daily operations, but pre-existing creditors would be put at bay, allowing the company to sit tight until a government bailout — or a perhaps a new business plan — comes their way.

PERINO: We’re going to weigh all options. I mentioned TARP, as that’s been something that you all have been asking about for weeks. And it’s just one of the options that’s out there, sure.

REPORTER: Can you describe the other options?

PERINO: No.

REPORTER: Is the Federal Reserve — cash from the Federal Reserve an option?

PERINO: I don’t know.

REPORTER: Will the decision be made this week? I mean, it’s Friday today. Or is next week –

PERINO: I don’t know.

It makes you think that the White House was the only player in this saga that didn’t prepare for the inevitability that the Detroit bailout would fail the Senate.

Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary — including use of the TARP program — to prevent a collapse of troubled automakers.

Senate Republicans last night killed a proposal — supported by the White House and congressional Democrats — to provide a $14 billion lifeline to Detroit’s automakers. It’s not clear what happens now, but one thing is certain: President George W. Bush, if he can’t rally his own party to support his proposals, is running this country only nominally.