Prices aside, you probably also don't want to introduce a dependency on china in your weapons supply chain. This I believe was also the primary reason for the GM bailout.

There's actually an entire non-big3 industry which manufacturers military hardware in the US. Your point about not wanting foreign dependencies is a good one though (see also strategic oil reserve).

http://www.npr.org/templates/story/story.php?storyId=9784361...

What does GM make that is important to military readiness?

I can think of the Hummer, but that wasn't GM https://en.wikipedia.org/wiki/AM_General .

Possibly the idea that a large number of subcontractors and suppliers would also have gone out of business.

I think it would be difficult to determine which rationales were sufficient to get enough votes for the bailout to pass, but the cost of creating a supply from scratch after a period of zero demand from GM might have been far more expensive to the aggregate economy than the bailout was. Therefore the cost was judged 'worth it' in spite of the implicit reward to GM for decades of mismanagement.

The bailout involved completely wiping out the equity of GM. The GM that exists now is a different company:

https://en.wikipedia.org/wiki/Motors_Liquidation_Company

The bailout can still have been a sweetheart deal for the creditors of the company, but it didn't do the old GM any good.

I tend to think the motivation of the bailout was to reduce disruption in the job market, I don't think there would have been much more than a short term disruption in the OEM business.

What about futures?