The automobile industry plays an important role in the U.S. economy, and its failure would add to the nation's financial woes. But a $25 billion federal bailout of GM, Ford and Chrysler is not the right course for the industry or the taxpayers.

The automakers could seek bankruptcy protection, which would allow them to restructure their operations and reduce costs that have made them less competitive than foreign carmakers. There are many reasons that a bailout for U.S. automakers isn't wise. But even if it made sense, the financial status of the industry is at the point that $25 billion would be gone quickly, and GM, Ford and Chrysler would be back before Congress asking for more help.

The U.S. automakers must make fundamental changes in the way they operate. Their labor costs are too high, and they've been reluctant to move to fuel-efficient cars when compared with foreign competitors.

But before a bailout is even considered, there is much the automakers could do, including reducing dividends and limiting compensation and perks for executives. Labor unions would have to accept cuts in pay and benefits. That would help save jobs. Union members must realize that in a 21st-century economy, their compensation must be competitive if they are going to keep their jobs.

Democrats in Congress owe much of their political power to union support, but for once, the congressional leadership must lead. It's up to congressional Democrats and President-elect Barack Obama to deliver not a bailout check, but a reality check to the unions.

On Tuesday, Treasury Secretary Henry Paulson told Congress that the Bush administration opposes a bailout for the Big Three automakers. He said automakers must be helped in a way "that leads to long-term sustainable viability" of the industry. That means conducting business differently.

A bailout is not the answer for the struggling U.S. auto industry. The sooner the automakers and their unions accept that premise, the sooner they can work on making the industry viable again.