I'm genuinely confused as to how this went unchallenged. Even if the bankruptcy of G.M. resulted in pennies on the dollar, those pennies still belonged to the share and debt holders, rather than their being arbitrarily wiped out by the government in order to benefit the union.
Were there/Are there any lawsuits to address this?
(But in any case, the union is hardly the only beneficiary of keeping GM afloat; it's not zero-sum.)
Regarding societal benefit of the bailout, even with imminent domain, the government has to give the owners fair compensation. It can't simply step in and disregard rule of law and pick and choose its preferred winners.
Keeping GM afloat in no way excuses the preferential treatment. The unions hardly took a haircut at all compared to the bondholders:
http://online.wsj.com/news/articles/SB1000142405270230376810...