Congressional Democrats and the Bush administration are finalizing details of a taxpayer rescue of the American automobile industry. While a New York Times report calls Republican support for the bill in “serious doubt,” there’s too much momentum for it not to pass, although perhaps in a paired down form. But passage would be unfortunate because it represents a waste of government resources that could have spurred next-gen technology.

The New York Times and Wall Street Journal have pieced together a rough picture of the emerging bill, entitled the Auto Industry Financing and Restructuring Act. They report that the U.S. government is looking to issue $15 billion worth of loans to automakers in return for expansive federal oversight and warrants for stock equivalent to at least 20% of those loans. A so-called auto czar, handpicked by the president, would have vast powers in steering the direction of this new program.

The $15 billion falls short of the $34 billion Chrysler, Ford and General Motors have asked for to survive the economic downturn. But more money could come later.

Funding for the auto bailout was initially supposed to come from the $700 billion set aside to buy toxic assets under the Troubled Asset Relief Program, or TARP. But now it appears that thinking has shifted. Instead, under the emerging deal, the loans will be financed out of the Energy Independence and Security Act of 2007.

Congress set aside $25 billion under that act for automakers and automobile part manufacturers to build more energy efficient vehicles. The Advanced Technology Vehicles Manufacturing Loan Program was supposed to help these companies retool older facilities and build new ones that could make the next generation of fuel-efficient vehicles.

These vehicles “must provide meaningful improvement in fuel economy performance,” according to the Department of Energy, which is charged with administering the program. Loans also could have gone toward upgrading plants in the U.S. owned by foreign firms.

Now it appears this worthwhile program has been undermined. Instead of casting the net wide and focusing on advanced technology, the money will now go to prop up the status quo of the Big 3 automakers. Part manufacturers, U.S. owned or not, and foreign auto firms in the U.S. are out.

Supporters of the bill will say that in return for the loans, the Big 3 are supposed to set forth a plan for long-term sustainability and international competitiveness. But I say if they truly had a plan that was sustainable, they’d find willing partners elsewhere. There’s a credit crunch, but there’s still capital looking for good deals. The problem is that this isn’t a good deal.

For some reason, there are a handful of industries that have successfully marketed themselves as American to the bone. To work in these special industries means you’re more patriotic, more integral to our prosperity. When the special do well, America does well. When they hurt, America hurts.

But this pattern is true of any U.S.-based industry. Why should we favor one over others? Print media, which employs people in every city in every state of the union, is suffering in a big way. Where’s the government bailout? Manufacturing jobs across the board are hurting—why pick out the auto industry?

More importantly, there are companies out there waiting to take the place of our Big 3, if indeed they fail. Dozens of electric car startups are on the rise. Sure, it may be a decade or more before they are of any credible size, but they are the future of the industry. Some of that $25 billion should have gone toward them—or gone to the Big 3 to help them adopt those emerging technologies. It could have before this latest plan.

And before those electric car startups turn into the next Ford, we have foreign automakers continuing to expand production in the U.S. So far they tend to favor the Southern states for their facilities, but a failure of one or more of Detroit’s behemoths might pry open room for a Toyota plant in Michigan.

Toyota already has plants in California, Alabama, Indiana, Kentucky, West Virginia, Texas, and Mississippi. The Japanese company’s annual U.S. spending on parts, goods and services with suppliers totals more than $28 billion.

Another successful Japanese automaker, Nissan, has three plants in the U.S., in Tennessee and Mississippi. Together, these plants have a production capacity of more than 1 million cars per year.

So I say let the Big 3 succeed or fail in the open market. Otherwise, we’re just hurting ourselves.