I would like to get some facts out, to combat the politically advantageous lies spouted by various people and groups on the subject of recent U.S. government meddling in the auto industry. I will be using approximate numbers, as the point here is to get the big picture across, not to figure your taxes. For instance: $23,164,467.93 may be rounded to $23 million, but not changed to $23 billion. Link to a reliable source is at the bottom of article, I have seen similar numbers from many sources. (Google is your friend.)
As of September 4th, 2012, the U.S. Treasury has lost approximately $27.2 billion on the bailout of General Motors. This total varies from day to day, according to the share price of the GM stock still owned by Treasury. The total cost goes up if GM stock goes down, and vice-versa. General Motors has employed between 68,000 and 77,000 people in the U.S. Since they came out of bankruptcy just over 3 years ago. For argument’s sake, I’ll call it 72,000 employees who’s jobs were saved by the bailouts.
The bailout of GM started in December of 2008, with an $884 million purchase of GMAC stock by Treasury, followed by a $13 billion loan. To put the size of this one loan into perspective, it would be Approximately $168,000 per current GM employee. (Imagine the small business up the street with 10 employees getting a $1.68 million below market rate loan from the federal government when they were in danger of bankruptcy.) GM would most likely not have existed for the Obama administration to ‘save’ were it not for this loan extended while Bush was still running the show.
Now lets go back to the $27 billion loss as of last week. The GM bailout process started just under 4 years ago, I’ll call it 3.7 years. 27 billion divided by 72,000 average employees = 375,000. Divide this by 3.7 years, and you get just over $100,000 per year, per job. This does not include salary or wages, as these come out of profits and expenses before the $27 billion figure is arrived at. So the U.S. taxpayers have been spending over $100,000 per year, per job to keep GM alive. I am pretty sure any group of 72,000 people given an extra $100,000 per year would create a similar economic impact as what has been realized with the GM employees.
Chrysler also received bailout funds starting in December of 2008. Chrysler went bankrupt and was reorganized through an alliance with Fiat. Treasury realized a $1.3 billion loss on it’s dealings with Chrysler, which will not be recovered.
Had GM or Chrysler not been given huge sums of our money, the losses incurred would have been taken by stockholders, who voluntarily bought shares of the companies, knowing that they risked losing money. Instead the losses have been forcibly put on the taxpayers.
Obama did not save GM, Chrysler, or the U.S. auto industry. Bush was not wholly responsible for TARP or the bailouts. Obama was not wholly responsible for TARP or the bailouts. Many Republicans and many Democrats in congress voted for TARP, and it was administered (funds given out) by the Bush administration and the Obama administration. The bankruptcy / reorganization of GM and Chrysler did happen during the Obama administration, but it is not a stretch to believe similar events would have occurred during a Republican administration. The whole process has not been a partisan issue, by any stretch of the imagination.
P.S.: Ally financial, formerly GMAC, has cost Treasury over $10 billion at this point.
- Zane Zodrow
Protest marks first civil disobedience by Sierra Club
Originally posted here: http://zanesworld1.wordpress.com/2012/09/11/who-saved-the-u-s-auto-industry/