We haven’t saved the company, we’ve lost more money than the entire company is worth, and we’re still counting. We could have closed the company and just written checks to employees and shareholders and we’d be better off than we are now. Or, better yet, allowed the lawful restructuring of an orderly bankruptcy which would have left a viable entity.
General Motors shares are plumbing new post-bankruptcy lows, having lost nearly half their value since 2010. (See chart here.) Taxpayers’ losses on the GM bailout are now about $35 billion — to save a company that is worth less than $30 billion. The amount of forgone Treasury revenue thanks to sweetheart tax breaks written into the law to subsidize GM already cost twice what Treasury’s stake in GM is worth: More than $18 billion in tax breaks to prop up a $9 billion stake in the company.
This is not “investing.” This is welfare. It is also self-interested politics on the part of the Obama administration. Bailouts and government favors (and the Japanese tsunami) allowed GM to claim record profits in 2011 — upon which it paid no taxes — but it is plain that without continued government succor it is an economically non-viable enterprise. It is a pretend car company.
If the Obama administration wants to pay UAW members to engage in non-productive activity, the White House might as well have them dig ditches and fill them up rather than run a potemkin automotive concern. Or the president could just pay them to campaign for him. Hey . . .
It is a pretend car company in more than one sense: it’s a healthcare company for retirees that happens to lose money making unpopular cars with our tax dollars… which they only get because they’re a campaign organization for the democrats.