Taxpayers Get Bill For GM Bailout
Investors Business Daily Editorial
Washington has handed out $50 billion to General Motors and another $35 billion to Chrysler and GMAC to keep those companies in business. Taxpayers were told their money wouldn't end up lost in a rat hole.
A year ago at the Detroit Auto Show, then GM CEO and Chairman Ed Whitacre said he believed "the government's investment is well placed and I think they'll make a lot of money."
Steven Rattner, who headed the Presidential Task Force on the Auto Industry that managed the bailout, agreed with Whitacre that day. He said "recent progress at GM gives reason for optimism that it may be possible for taxpayers to get every penny back."
Then-House Speaker Nancy Pelosi attended the car show and expressed no concerns that taxpayers might be swindled.
A few months later, the administration stayed on talking point. Larry Summers, director of the White House National Economic Council at the time, said "There is a real prospect of (the Treasury Department) recovering most if not all of its investment" in GM.
By the time GM's IPO rolled around in November, President Obama himself was saying "American taxpayers are now positioned to recover more than my administration invested in GM."
But others weren't so sanguine. The Congressional Budget Office projected in 2009 that taxpayers would lose $40 billion on the auto bailouts. The CBO eventually lowered its estimate to $19 billion lost, which is progress but nothing to crow about.
While CBO could drop its estimate yet again, it's clear that taxpayers won't be breaking even on their "investment."
The Congressional Oversight Panel reported Thursday that by selling 45% of the stock it had in GM, Washington has "'locked in' a loss of billions of dollars and thus greatly reduced the likelihood that taxpayers will ever be repaid in full."
Bailout defenders had thought that GM's IPO would show critics that the government could make money on the bailout. But when "Treasury received a price of $33 per share," it sold "well below the $44.59 needed to be on track to recover fully taxpayers money."
That seems clear enough. But those justifying the bailout will ignore taxpayers' losses and focus instead on the panel's statement that the aided companies are "on the path to financial stability."
www.investors.com/NewsAndAnalysis/Article/559843/201101131842/Taxpayers-Get-Bill-For-GM-Bailout.htm
Jan. 13, 2011