Christmas is coming early for Detroit: President Bush has announced $17.4 billion in loans to keep General Motors and Chrysler running.

Yet the gift could not come soon enough. Both automakers were burning cash at a rate that could have pushed them into bankruptcy early in the New Year. Both Chrysler and General Motors are idling plants to try to preserve cash.

The loans consist of $13.4 billion immediately and an additional $4 billion in February. The money would come from the roughly $15 billion remaining from the TARP program that was passed to stabilize financial institutions. General Motors has said it needs $8 billion to run until February, while Chrysler has said it needs $7 billion to survive through March 31.

The White House has been pressured to step in after the Senate failed to act on a lifeline for the automakers.

The loans would mean that there will be no immediate bankruptcies of the companies, a prospect the White House itself raised on Thursday. The comments by White House spokeswoman Dana Perino seemed to be a case of the stick coming before the carrot.

"There's an orderly way to do bankruptcies that provides for more of a soft landing," she said on Thursday. "I think that's what we would be talking about. That would be one of the options."

The carrot has a number of conditions, however. The loans will have a clawback provision that will allow the government to reclaim the funds if certain conditions are not met. Most important, the companies must show that they are financially viable by March 31.

One looming flash point is a condition that the companies seek a deal with the United Auto Workers union to cut wages and benefits so they are “competitive” with those of the U.S. workers of foreign auto makers like Toyota Motor.  It was a deadlock over this condition that fatally stalled the rescue bill in the Senate. 

The other conditions are more predictable: limits on executive compensation and perks. And the government will get stock warrants.

"Allowing the auto companies to collapse is not a responsible course of action," President Bush said today.

On Thursday, the president had said the administration was worried about a possible "disorderly" collapse of the auto industry. The fear is that a bankruptcy other than a prepackaged filing by one of the Big Three could set off a devastating chain reaction. One bankruptcy could drag in others, resulting in failures throughout the network of suppliers, dealers, and others whose businesses depend on Detroit. More than 4 million jobs could evaporate as a result, further depressing an economy that lost a half-million jobs last month.

The markets and consumers should be relieved now that the uncertainty over the short-term survival of G.M. and Chrysler has lifted. But the loans are just a bridge to the very hard decisions that the Obama administration and the companies will have to make soon. Many have argued that the only way for the companies to become financially viable is through a negotiated bankruptcy filing, with financing in place and concessions obtained from unions and suppliers.

Still, there is no evidence that the auto business in general will improve at all in the coming months. Every automaker has been roiled by the global slump in sales. So even getting a cost structure to be closer to that of Toyota's is no guarantee of financial viability in this market.

That grim reality was underscored earlier today as Japanese newspapers reported that Toyota Motor was expected to report its first annual operating loss since its first year as a business, in 1937.

The loans mean that essentially all of the first half of the $700 billion TARP has been dispensed. As a result, Treasury Secretary Hank Paulson says that he will go to Congress to seek release of the second $350 billion in funds.

"I will discuss that process with the congressional leadership and the President-elect's transition team in the near future," Paulson said.