You know things are crazy when a partial takeover of the American auto industry by labor unions and the government is, at best, the day's third biggest story.

But even with swine flu and Arlen Specter grabbing the headlines, it'd be a mistake to ignore what's happening in Detroit.

It looks like the government is close to reaching a deal with Chrysler's creditors, under which they'd write down most of the company's debt. With a deadline for restructuring just days away, that'd clear the way for a merger with Fiat and, possibly, keep the company out of bankruptcy court.

General Motors, meanwhile, has put forth a new, tougher restructuring plan of its own--one that would vastly reduce the company's size and workforce while also wiping away most of its debts.

The United Auto Workers has already signed off on the Chrysler deal, even though it would mean lost jobs, suspended cost-of-living increases, and reduced benefits. And in lieu of company contributions to the retiree health fund, the union would have to accept Chrysler stock.

The UAW hasn't yet agreed to the GM plan. But that seems likely, too.

Of course, the upshot of taking stock instead of financial contributions to the retiree health fund is that the UAW would become huge stockholders in the two companies. If both plans go through, the union would become the majority shareholder of Chrysler and a large minority shareholder of GM. (At least, that's my understanding based on media accounts and a few conversations.)

What would this new arrangement mean for the union--and the company's future? I put that question to Nelson Lichtenstein, the highly respected labor historian and author of a forthcoming book called The Retail Revolution:

In the 1950s, the UAW wanted profit sharing, but was resisted fiercely by the companies, since they were then healthy. But once the recessions got worse in the 1970s they agreed, in lieu of straight wage increases of course.

On the ownership side, ESOPs--Employee Stock Ownership Plans--were all the rage in the 1980s, but they were really just clever Wall Street ways of raising capital, and most unions, including the UAW, stayed away from them. Some parts plants may have had ESOPs out of desperation. In the  early 1980s, of course, Douglas Fraser and the Owen Bieber were on the Chrysler Board, a small slice of "ownership" proffered in compensation to the wage concessions the UAW offered in 1979-81.

The VEBA trust [for retirement health benefits] probably has various restrictions in place so that its trustees cannot actually exercise ownership rights at GM or Chrysler. And they would try to diversify the trusts as soon as possible.

This is really history as tragedy and farce. For years the UAW seeks to use its political and organizational power to win a kind of co-determination with the companies and fails; now with the whole edifice falling down the union is handed on a platter what would normally be de facto control of the companies, but it is, well, just a desperate gamble. It is unlikely to have much impact on company governance in the short and medium run, if only because the UAW has run out of ideas on that score.

By the way, are you wondering who becomes GM's majority stockholder under the company's proposed restructuring plan? Then go look in the mirror. The Treasury Department--and, by extension, the country's taxpayers--would end up owning more than half the company. More on that soon.

--Jonathan Cohn