The third option is to take advantage of the nation's hunger for post-partisanship with a commitment to build a new type of social contract that would allow businesses to compete in a market less encumbered with the pressures of balancing benefits with their cost. Workers would be able to jump from one firm to another—confident that their retirement saving would roll over, their healthcare coverage would remain, and their efforts to save for their child's education would no longer be tied to their employer's continued profitability.
For years, conservatives have worried that a new social contract would amount to government intrusion in the free market, and progressives have harbored fears that market pressure could do nothing but further strip benefits from families already struggling to get by. The auto bailout should make clear that the status quo does not satisfy either constituency: Automakers are being shielded from the market, and the American workforce is settling for fewer benefits with less security.
No matter how we approach the Big Three's problems in the short term, Washington should take heed of the long-term implications. The social contract Detroit has maintained may not work in a global economy. But failure to construct an alternative will not only leave workers out in the cold, it will stifle the invisible hand that has powered American entrepreneurialism for generations.