Treasury: Auto Bailout Will Cost $3.4 Billion More

Bush_Obama

The U.S. Treasury increased the estimated cost of Detroit’s auto bailout by $3.4 billion to $25.1 billion, a report to Congress shows. Since 2008, the Bush and Obama administrations have spent some $85 billion on loans to GM, Chrysler and their finance arms and suppliers. A year ago, the Treasury sold its shares in Chrysler for a $1.3 billion loss. But the U.S. government still owns 500 million shares of GM, which it would need to sell at $53 apiece to recoup its $49.5 billion rescue amount, according to the Detroit News. On Monday, GM shares closed at $20.47 per share.

The projected losses are far less than the Obama administration’s initial $44 billion estimate, but they still amount to about $80 per American. That’s nothing to sneeze at, but many large employers receive federal incentives to keep jobs in the U.S. A 2008 estimate by Chattanooga, Tenn.’s Times Free Press put Tennessee residents on the hook for $64 apiece in tax incentives over 20 years to bring Volkswagen in to set up shop in the state. But it also added 3,000 direct jobs — to say nothing of indirect employment — as VW invested $1 billion in the facility. By contrast, GM, Ford and Chrysler directly employ 181,000 Americans and invest billions into the U.S. economy. A poll last spring said 45% of Americans thought the bailouts helped the economy, while 29% said it hurt the economy.

"The auto industry rescue helped save more than 1 million jobs throughout our nation's industrial heartland and is expected to cost far less than many had feared during the height of the crisis," Treasury spokesman Matt Anderson told the Detroit News.

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Comments 

sheth

Alabama just gave Airbus a few hundred million in incentives to build a plant down there. Public money and/or tax credits are offered for manufacturers all the time. Also, I believe a big chunk of that loss is related to GMAC/ALLY and I dont think there was ever much of a chance of coming close to breaking even on that bailout.

Lance

IMO there is a difference between offering tax breaks and incentives to entice a company that has a choice to invest in an area, versus bailing out a company who's only real choice was bankruptcy and shut down.

Taxpayer money used to cover for the incompetence of a corporation is completely different than using it to lure a successful, solvent concern to your region. One creates new jobs, the other saves jobs that in many cases should have gone the way of the dodo bird. Especially the layers and layers of expensive management that GM was, and still is, known for.

How many small businesses went out of business during the recession because they did not get a bailout like GM did? A bailout that was paid for by the taxes these small businesses paid over the years and GM did not because of "book losses" to avoid paying corporate taxes.

GM doesn't need apologists, it needs tough love.

Highdesertcat

Yeah, we're not done with the auto bail out yet.

This is an endless money pit, a bottomless hole, until we can dump GM on China like we dumped Chrysler on Fiat/Italy for a paltry $1.3B.

crashtest

It's a matter of choices. We currently spend more than the next 15 largest military powers spend combined at the cost of $1.8 BILLION Dollars per day, fighting unending pointless wars and supporting a bloated military. We had no problem bailing out the too-big-to-fail banksters with billions. We'll soon be extending tax-breaks to 1%ers (the so-called job creators).......yes the government does spend a lot of money

Highdesertcat

No, the problem is that not enough people in North America and around the globe are willing to buy GM products.

GM may sell a lot of product but it still isn't enough to make GM break even.

That's why GM stock has tanked and is hovering around $20. The people with money have lost confidence in GM.

The solution is simple. All we need is for every American to rush out and buy a GM product to replace whatever it is they're driving now.

Problem with that is, Americans are unwilling to do so. That's why GM died. Not enough happy campers.

I've owned GM products and I don't want them again. Why would I expect other people to want to buy GM products if I don't?

It is a matter of national policy now to keep GM going, no matter what the cost to the taxpayers. And that's why the auto bailout will cost us more and more each year.

No, we're not done with GM yet. But we are done with Chrysler. Chrysler is no longer our concern.

Card13

We could spend the money to bail out the auto industry or the money could have gone to unemployment checks for millions of Americans. Which do you prefer? At least the brink of destruction forced these companies to step up their game. Look at how much Chrysler has improved, it's visible in their products and their finances.

WTF

So much political BS being thrown about. Take it somewhere else.

Frederick

The NY Times did an excellent job documenting how the GM bailout was Obama rewarding the Unions,with our tax-payer dollars, for their support. I've never voted in my life and have never had interest in politics but I can't wait to vote in November.

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