DETROIT — The rapidly deteriorating finances of General Motors are forcing the federal government to decide whether to bail out the largest American automaker or face the prospect that it might go bankrupt.

GM said Friday that its cash cushion had been dwindling by more than $2 billion a month recently and that it could run short of money by mid-2009 unless it got emergency federal assistance.

It also said it had suspended merger talks with Chrysler to focus on its own increasingly urgent problems, brought on by higher gas prices, weakening economy and tight credit — a combination afflicting the entire auto industry but hurting GM the most.

The government faces a difficult choice. If it provides GM with a bailout, there is no guarantee the company will not need more money later to stay out of bankruptcy, particularly with the economy weakening.

But a bankruptcy by GM or any other automaker would have far-reaching consequences, given the millions of people employed by supplier companies, dealers and other small businesses that are dependent on the industry.

A bankruptcy filing by GM would also likely scare off many consumers, hurting any chances for a revival. “You can’t sell cars to people under those circumstances,” said Rick Wagoner, GM’s chief executive, in an interview on CNBC on Friday. President-elect Barack Obama signaled his intentions Friday to help the auto industry, calling it “the backbone of American manufacturing” during his news conference.

“I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis and succeed in producing fuel-efficient cars here in the United States of America,” he said.

Congress has already provided $25 billion in low-interest loans to help car companies build more fuel-efficient vehicles. But the Bush administration, thus far, has balked at providing any additional financing.