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There isn't any mechanism in existing law for giving new money priority over old money outside of bankruptcy, other than secured credit, and I don't think there are any significant unencumbered assets at GM or Chrysler.  Therefore, even if these are "secured" loans, there really can't be priority from security unless existing secured creditors can be convinced to give up their liens (and what fool would do that?).  

If the loans aren't secured, there isn't any way to give them priority under existing law, and this deal doesn't change the law.  Absent a subordination agreement (and there isn't one here), if the government lends unsecured, it is on equal priority with all other unsecured creditors outside of bankruptcy, and equal priority with all general unsecured creditors in bankruptcy.  Note that this is very different from the bank bailout deals where the government took preferred stock.  Companies can issue preferred that has a priority senior to common.  But there's no ability to do this with debt.  At best, GM or Chrysler could issue senior notes (and that depends on the notes they have already issued), but these would only have priority over other bondholders, not over other general unsecured creditors.  If you want to give priority to new money, the only way to do it currently is in bankruptcy.

Now if the government is unsecured, it means that this deal is really dangerous for taxpayers.  If the government calls the loans, it will precipitate a bankruptcy.  If the government hasn't been repaid, the government will just be another old unsecured creditor, and will have the awkward position of having to vote on a reorg plan.  If the government is repaid within 90 days of the bankruptcy filing, then the government will be holding a preferential payment that can be clawed back, leaving the government just another old unsecured creditor.  In an automaker bankruptcy, the unsecureds will get cents on the dollar. That's a pretty bad deal for taxpayers. Let's hope that no one calls the government's threat and that these loans don't have to be called.