Remember Our Taxpayer “Investment” in GM?

Remember when the Feds forced us to “invest” in the UAW, errr, I mean GM? Here’s the latest.

Treasury Admits What Everybody Already Knew: Taxpayer Losses On GM Bailout Are Going to be Massive – Hit & Run : Reason Magazine: Am I allowed to say, I told you so?

The Treasury Department yesterday revised its loss estimate for the Government Motors bailout from $14.33 billion to $23.6 billion, thanks to the company’s sinking stock price. GM’s Sept. 30 closing price, on which the new estimate is based, was $20.18, about $13 less than its December IPO price and $35 less than what is needed for taxpayers to break even.

The $23.6 billion represents a 25 percent loss on the feds $60 billion direct “investment” in GM. But that’s not all that taxpayers are on the hook for. As I explained previously, Uncle Sam’s special GM bankruptcy package allowed the company to write off $45 billion in previous losses going forward. This could work out to as much as $15 billion in tax savings that GM wouldn’t have had had it gone through a normal bankruptcy. Why? Because after bankruptcy, the tax liabilities of companies increase since they have no more losses to write off.

This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion. That’s even more that the $34 billion on the outside I had predicted in May.

Additional links:
We Saved The Auto Industry! Thanks For Nothin’
So Just How Is Chrysler Paying Back The Bailout Money?
How The Feds Twisted The Chrysler “Bankruptcy”
Milton Friedman on the GM Auto Bailout
Fisker Irony or Solyndra, Take Two
So Just How Is Chrysler Paying Back The Bailout Money?

  • Anonymous

    I remember reading/hearing about them giving all of their current employees a 10K signing bonus.  I don’t know if that ended up happening, but I am sure that is just one more example of why WE are in this mess….ugh.  Horrible.  I don’t always agree with the things my company does, but stories like this make me appreciate the fiscally conservative choices they make.  And hey – we are doing very well these days…huh.