Treasury: Auto Bailout Will Cost $3.4 Billion More
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.