The federal government soon may subsidize the merger of General Motors and Chrysler in the hope that combining these corporate clunkers might keep them out of the junkyard of bankruptcy.

Given the stakes — 315,000 jobs and benefits for hundreds of thousands of retirees — the easy reaction is, "Why not?" After all, the government will spend perhaps $1 trillion propping up the financial industry and, possibly, homeowners. What's a few billion for auto companies after a spending spree like that?

The answer is that the banking bailout is necessary to prevent a cascading collapse of the credit system, which would push the core economy much deeper into recession and cost perhaps millions of jobs. It's worth investing $1 trillion to stop that, and the financial rescue has a good chance of success.

By contrast, it simply could be too late to save the auto industry.

Only seven weeks ago, this page gave qualified support to a multi-billion-dollar government loan proposal for automakers. We argued that the loans might create enough breathing room for the companies to design small cars and retool manufacturing plants.

What a difference seven weeks make. The financial panic and deepening recession mean that fewer people can afford to buy new cars, and lenders are cutting back on car loans to those who can.

GM's North American sales fell 19 percent in the third quarter — and that was mostly before the banking meltdown. The company lost $18 billion in the first half of the year and is burning through $1 billion in cash every month. Chrysler, a much smaller company, lost $1 billion in the first half of the year. Both companies could well run out of money within 12 months.

The two firms want a $5 billion government loan to help finance their merger. The money would help cover the cost of closing plants, dismissing workers and integrating the two companies. Analysts expect 40,000 jobs to be lost in the process, but at least the workers would receive severance. Many dealerships would be forced to close.

The merged company then would join Ford back at the public trough, looking for at least $25 billion in loan guarantees to redesign vehicles and retool plants.

But the GM-Chrysler combo, which is getting the nickname "Government Motors," might fail anyway. GM and Chrysler have overlapping product lines, too many brands, too many large vehicles, too much capacity and too many retirees getting checks and medical benefits. Come 2010, the automakers must start paying $40 billion toward a fund they created in cooperation with auto unions, relieving the companies of responsibility for employee health care benefits.

Bankruptcy would be a human and economic tragedy. The companies probably would shred labor contracts, lay off workers without severance and end retiree health benefits. Workers might strike. Wages might be slashed. Auto parts suppliers and their workers would suffer, too.

About one in 12 American jobs is linked in some fashion to the auto industry. St. Louis would share the pain. GM and Chrysler have big plants here, and an autoworker can earn $80,000 in a good year.

Bankruptcy also would scare away customers, making recovery more difficult. The government's Pension Benefit Guarantee Corp. would have to bail out the automakers' pension funds.

GM and Chrysler probably would emerge from bankruptcy as much smaller companies making smaller cars and with fewer employees earning less money, but with a better chance of surviving.

Bankruptcy isn't pretty, and if a $5 billion loan would prevent it, the government ought to fork over the cash. But before the government acts, it must know that it's getting into a high-risk bet against heavy odds.

REPRINTED FROM THE ST. LOUIS POST-DISPATCH.

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