As you've probably heard by now, President Bush announced this morning that he wasn't going to let the domestic auto industry collapse. At least not on his watch. And while it'll probably take a day or two to sort out the details, and what they mean, here's the gist of it:

Bush is authorizing the Treasury Department to loan Chrysler and General Motors $17.4 billion. (Ford has said it doesn't need money right now.) The money will come from the Wall Street rescue fund, or what's left of it, and it comes with a number of strings attached.

The companies must provide taxpayers with equity, limit executive compensation, and reduce their debt burden by two-thirds by offering creditors equity. The companies must also demonstrate financial viability, in part by renegotiating labor contracts so that, by the end of 2009, overall compensation costs are competitive with foreign-owned U.S. factories--i.e., the transplants owned by Honda, Toyoyta, etc. 

All of this has to happen by March 31. If either company cannot meet the conditions by then, the loans can be recalled, all but certainly forcing that company into bankruptcy. 

If the deadline and provision about labor costs sound familiar, that's because it's nearly identical to the demands, made by Republcian Tennessee Senator Bob Corker, that scuttled negotiations on Capitol Hill last week. The United Auto Workers said a 2009 timetable for achieving compensation parity was too quick--that they needed until 2011. Not surprisingly, the UAW said today it was disappointed Bush insisted upon the same conditions.

But while that may be the UAW's public line, I have to believe they're actually breathing a huge sigh of relief. The reason is this clause in the White House release, which comes right after the part specifying all the numerical targets the companies must hit to show viability:

These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.

Translation: The companies don't actually have to hit all of the targets exactly. They just have to show they are becoming financially viable. And it will be up the Obama administration to make that determination.

I don't think that lets either management or the unions off the hook completely. If neither makes serious progress towards restructuring and Obama decides to keep propping them with more money, it will create a political backlash. But this does offer some wiggle room, which seems fair and judicious. 

For one thing, properly setting conditions for restructuring is not something to be done in haste. Last week, when the bailout was moving through Congress, I was actually getting a little queasy because it was all happening so quickly. It wasn't clear anybody had spent the time to really think through what criteria for restructuring mattered most, let alone how to measure them. Now Obama and the new Congress will get that chance.  

Also keep in mind that the companies were, as I've written, already in the process of undertaking major restructuring. They are operating with a new labor agreement that should achieve cost parity by 2011--i.e., one to two years after the deadline Corker was demanding. They've modified their manufacturing to incorporate some of the "lean production" methods made famous by Toyota. The process is incomplete and uneven, but their best factories--not to mention their best cars--match or exceed those of foreign rivals.

It's not clear to me that speeding up this process actually stands a better chance of making the companies more viable. In business, expediting change sometimes means sacrificing long-term gain for short-term savings. In fact, this is actually something the American industry has probably done too frequently--and a major reason why I, following the cues of people who follow this more closely than I do, have preferred the companies stay out of Chapter 11.

Remember, too, that restructuring inevitably entails downsizing, since the U.S. auto industry really is too big. Pretty much everybody I know thinks Chrysler will still end up disappearing, either as part of some merger or its own bankruptcy filing. And while GM should be able to make it, it has to eliminate some brands, which will mean closing factories and severing dealerships.

All of that will cost jobs--far fewer than might be lost in a total industry collapse, but still quite a lot. (Chrysler alone has some 50,000 jobs in the U.S., about one-third salaried and two-thirds hourly workers.) Slowing down the process of shedding jobs might, if nothing else, ease the burden on unemployment offices and other state agencies already struggling to keep up with current needs.

The worst-case scenario is that, come March, the companies are in equally bad shape--or worse. They could then go under, failing to pay back the loans fully. In normal times, obviously, you wouldn't want to take that risk.

But, as both Bush and Obama have said repeatedly, these aren't normal times. The economy is in crisis. The prospect of somewhere between a few hundred thousand and three million newly unemployed--on top of all the people who've already lost jobs--is downright frightening. That alone justifies this intervention.

And if turns out this bailout functions as nothing more than a thinly veiled jobs program for a few months, well, that's not the end of the world, either. As it is, policy-makers can't find enough good ways to inject money quickly into the economy.

On a conference call earlier today, I heard the Michigan's Levin brothers--Congressman Sandy and Senator Carl--praising Bush for his action. "We want to give credit to the president," Sen. Levin said. "We're glad he stepped up."

Based on what I've read and heard, that sounds right to me. Bush did the right thing. You might even say he acted presidential.

--Jonathan Cohn