The appropriateness of federal fiscal bailouts of financial institutions and now major U.S. automobile manufacturers is triggering a highly divisive debate with all kinds of finger pointing.

Are such bailouts merely a matter of throwing good money after bad? Will bailouts rescue companies with bad management? Who is at fault? What role did a handful of congressmen play in the collapse of the housing market? How much of the debate is political grandstanding? And how many congressmen are saying what they are saying merely to strengthen their position for the next time they ask voters to return them to office?

Politics is at the root of, or at least one of the major factors in, the current automaker bailout debate. From the outset, the cost of U.S.-manufactured cars produced by the “Big Three” companies in older traditional plants in Michigan, Missouri and other northern states has been one of the major issues. Cars produced by foreign-owned companies at plants in the southern states are considerably less expensive.

In past years, union officials and managers of the Big Three companies agreed to union compensation that paid workers in the northern plants much more than is being paid to workers in southern plants. They also created the so-called “legacy costs,” pension and health benefits paid to retirees and their dependents. Likewise, Congress, to please voters and environmentalists, imposed numerous requirements on the traditional U.S. automobiles that had not been required of foreign-manufactured cars.

Union leaders have been asked to OK a reduction in pay for workers in the northern auto plants, but they refused to budge.

Many in the U.S. Senate refused to support the bailout last week unless the United Auto Workers agreed to a rollback of Detroit compensation packages. The result was no bailout was approved. Some senators who voted against the plan were accused of being unpatriotic because they were more interested in helping foreign automakers in their home southern states than in helping U.S.-owned plants in Michigan and other northern states.

Many Democrats were quick to place the blame on President Bush and his fellow Republicans in Congress for the failure of the bailout scheme. Democrats want the bailout approved before their man, President-elect Obama, moves into the White House and has the auto bailout hung around his neck. For sure, he would support what UAW leaders want because they were a huge source of money and votes for his successful election campaign.

It’s too bad the bailout debate cannot be based on what is best for this country and for American taxpayers and what offers the best solution to a very serious problem, a solution that doesn’t create an environment that encourages all entities facing serious financial problems — automakers, as well as state, municipalities and others — to claim a right to be bailed out.

And what about this country sliding from a capitalist system to a European system of socialism? What does this portend for the country and its citizens in future generations?