Will Fiscal Crisis Crush Ailing U.S. Auto Biz?

Congress passed legislation earlier this month to provide U.S. automakers $25 billion in low-cost loans to upgrade older production facilities, a move that Bragman said represents just "a drop in the bucket."

GM and Ford, meanwhile, each say they're taking their own steps to return to profitability. Both automakers have touted their new fuel-efficient models and are seeking to cut costs.

In June, GM announced that it would close manufacturing plants in Moraine, Ohio; Janesville, Wis.; Oshawa, Ontario; and Toluca, Mexico. ABC News affiliate WZZM reported Monday that the company is also closing a stamping plant in Wyoming, Mich.

Meyerand said GM is trying to raise money by selling its closed facilities as well as its Hummer brand.

Ford has said it would convert three of its North American truck and sport utility vehicle plants to small-car production. Ford also offered buyouts to 54,000 hourly workers earlier this year and laid off hundreds of white-collar workers during the summer.

An Auto Bailout?

If the efforts don't work, and if the companies look likely to fall into bankruptcy, Bragman said he expected the government would step in with some sort of assistance.

A "massive number" of American jobs are dependent on the country's auto industry, he said.

To let the companies go under, Bragman said, "would be far more expensive than to try to help" with a bailout.

There is a precedent for a government auto bailout. In 1980, the federal government backed $1.5 billion in loans for Chrysler, helping the company, which was the world's No. 9 auto seller last year, avoid bankruptcy.

But repeating the Chrysler bailout would be a bad idea, said Barry L. Ritholtz, CEO of Fusion IQ, an institutional research firm, and the author of "Bailout Nation: How Easy Money Corrupted Wall Street and Shook the World Economy."

It was the Chrysler bailout, he said, that cemented the expensive union contracts that would cripple American automakers later on.

"What normally happens when an industry has a horrific contract … eventually they collapse. And that collapse forces the whole industry to realign," Ritholz said.

The Chrysler collapse, he said, never happened, "so instead, here it is, 30 years later and GM is carrying a $3,000, $4,000 cost on every car that Toyota and Honda doesn't have."

With reports from ABC News' Scott Mayerowitz and Rana Senol.