By on April 26, 2010

Last week’s announcement that had Chrysler turned a Q1 profit and GM had “repaid” taxpayer loans brought a flurry of political posturing about the success or lack thereof of the auto bailout. With Republicans laying into the auto bailout from several angles, President Obama dedicated his weekly address to a defense of industry assistance. Obama still frames the bailout as an unpleasant necessity, but argues that last week’s news means the chances that taxpayers will recoup their “investment” are improving. And apparently the Treasury agrees. According to the Detroit News, Treasury has revised its estimate of auto bailout losses (not counting GMAC) downwards, from $30.6b to $28b. Progress, sure, but hardly a sign that taxpayers can expect full payback from its state-owned automakers.

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42 Comments on “Auto Bailout “Progress” Defined: “Only” $28b in TARP Losses...”


  • avatar
    lilpoindexter

    I like Obama as much as i like chrysler, which means not at all. They should both go away.

  • avatar
    undrgnd40

    we should have just paid off the suppliers and let the automakers dissolve. at least we wouldn’t have to see anymore commercials about how “we paid back our debt already, way ahead of schedule.”

    • 0 avatar
      ttacfan

      With so much love toward Obama I suggest you do a menatl exercise. Imagine him letting two icons of American industrial power go buncrupt in first two or three weeks in office. Pretty bad image, especially contrasting to his predecessor who was busy for 4 months saving economy by shoveling money onto financial crisis .

    • 0 avatar

      As much as I don’t like our Puppet-in-Chief, Obama isn’t solely to blame here. This ridiculousness began with Dubya, who should have had the stones to say “you got yourself into this mess, get yourself out of it or go away.”

      And if wishes were horses beggars would ride…

    • 0 avatar
      undrgnd40

      yes, “W” should have said that. but here we are… i have a scary thought. what would Palin do?

  • avatar
    undrgnd40

    i don’t hate obama, i hate GM.

  • avatar
    troonbop

    ‘Pretty bad image”

    So these billions were wasted to polish obozo’s image? Okay, now I feel better about avoiding that whole “buncrupt” thing. Obozo or Bush, that much intervention is a mistake

  • avatar
    undrgnd40

    @ttacfan: don’t worry, i didn’t take it personally. i know what you mean about the blame the president and forget about it mentality.

  • avatar
    Sinistermisterman

    Option 1 – Don’t bail out the auto industry and watch it cave in completely whilst every political opponent takes pot shots at you for having ‘abandoned working/tax paying Americans.’
    Option 2 – Do bail out the auto industry and have political opponents take pot shots at you for ‘wasting Americans tax dollars’ on bailing out crippled companies.

    It’s a no win situation regardless of what you do.

    • 0 avatar
      undrgnd40

      maybe if the blue collar middle class hadn’t been sold out they wouldn’t be left high and dry. it really is bad either way.

    • 0 avatar
      lilpoindexter

      Option 1 – no cost to taxpayer
      Option 2 – Billions in taxpayer expense

      IF, you are suggesting they both had the same outcome, then wouldn’t it have made sense to go with the cheaper option?

    • 0 avatar
      porschespeed

      There are two kinds of choices as POTUS – bad and worse.

      The good Presidents have made more of the former and few of the latter. They have all been, well, imperfect, to couch it nicely.

    • 0 avatar
      carlisimo

      lilpoindexter, I wouldn’t say “no cost” if GM and Chrysler had gone under and its employees had gone unemployed for months of years. The lost taxes, unemployment insurance, and the economic fallout in the region would’ve been plenty expensive. No, I’m not sure about any of that, but there’s about as much of a case for it as there is against it.

      That said, I wouldn’t have bailed out Chrysler.

    • 0 avatar
      CamaroKid

      Both options had HUGE costs to the tax payer.

      It is easy to argue that the cost of supporting all of the unemployed on food stamps, medicaid, and welfare would be NOTHING compared to the cost to save GM and Chrysler. You can bet that someone in the Bush Whitehouse did this very calculation.

      Its funny that the Republicans are saying the auto bailout was a terrible thing… It was W who bailed out EVERYTHING in site in the fall of 2008 including the automakers. Are they hoping that no one can remember the fall of 2008?

    • 0 avatar
      psarhjinian

      Option 1 – no cost to taxpayer

      Let’s chop tens, if not hundreds, of thousands of people off the wage rolls in the middle of the worst economic crisis since the depression and see what the loss of spending power does to the economy.

      Yeah, no cost to the taxpayer. Sure.

      I’m a socialist, and I don’t particularly like the idea of the government investing in industry without taking an active role in it’s guidance**. I really don’t like the idea of wealth transfer from the poor to the rich.

      But despite that, I also don’t like the idea of wrecking the economy out of ideology, and I recognize that Americans don’t have the stones for “real” nationalization of industry, so this is the best I could have hoped for.

      What I object to is GM’s protrayal of this and, moreso, the media’s limp-wristed “coverage” of it.

      ** And no, this isn’t “nationalization” in the way actual socialists (eg, not the Democratic party, no matter what Idiot Right*** says) would champion, it’s corporate welfare. There is a big difference. If you want to see actual socialism, Renault would be a better example.
      *** By “Idiot Right” I don’t mean, e.g., Milton Freeman. There’s an Idiot Left, too, by the way.

    • 0 avatar
      porschespeed

      @psarhjinian & CamaroKid,

      While I agree in the ‘damned if you do and damned if you don’t’ nature of the decision in terms of real politik, I do really wonder what would have happened had we actually allowed the economy to hit the reset button.

      At some point we’re going to have to deal with 40 years of (basically) unrestrained Federal deficts, unfunded mandates, wars of misadventure, and wealth distribution that hasn’t been this lopsided since the 20′s.

      The fact that we took another handful of Oxycodones makes us feel better for a while. However, sometime very soon we have to stop playing the game and take some time out to address the cause of the pain.

      While it would have been very painful in the near-term to allow Snake Pliskin to turn out the lights, history indicates that it only hurts worse for longer the more you put it off.

  • avatar
    bmoredlj

    $28 billion? Sounds like a lot but even if you assume only half of the nation (150 million people) pays taxes, you’re talking $186 per taxpayer. It’s a couple speeding tickets. I am by no means a wealthy man, but I can live with that. Perhaps I’m overly charitable…

    • 0 avatar
      guyincognito

      Of course when you start to look at things that way it becomes increasingly easy to justify other similar expenditures. Then, you know, a billion here, a billion there, pretty soon you’re talking about real money.

    • 0 avatar
      undrgnd40

      that sets a bad precedent. and besides that a lot of people don’t actually pay any taxes to the federal government because of their income level or credits, etc. so it rests upon a much smaller segment of people to pull the weight.

    • 0 avatar
      joshsfolder

      Using the census projections for 2010 (www.census.gov/prod/1/pop/p25-1129.pdf), there will be 114.8 million households in the US. Only 53%, or 60.8 million, of them actually pay taxes (AP http://www.google.com/hostednews/ap/article/ALeqM5jh1dk77muG6W-nTBNRf_BOt8ssPQD9EUC4FO0). That puts the number close to $460 per tax paying household.

  • avatar
    jkross22

    bmor,

    It’s 28B as it is being announced today. That number will change as every estimate from every government agency will as it underestimates costs to make it sound more digestable (The prescription drug bill wound up costing more than DOUBLE the estimate). This isn’t a D or R problem. This is what happens when politicians care more for their careers than the people they supposedly represent.

    Bush didn’t cause the Katrina mess and O didn’t cause the meltdown, but their respective reactions to these problems leave a tremendous amount to be desired. Same can be said of Congress.

    • 0 avatar
      undrgnd40

      you made an important and often overlooked fact, it takes an entire elected body to work for or against us.

    • 0 avatar
      Lumbergh21

      Bothof their reactions was to shovel money at it. Bush gets blamed for not shoveling fast enough, and Obama gets blamed for shoveling period. The amount of money spent (to use a charitable term) during Bush’s administration to rescue the economy is small beans compared to the amount of debt racked up so far during Obama’s administration. How many more years of this spending can the country take before we take on the appearance of a 3rd world nation? There is no such thing as too big to fail. Not for GM, and not for the USA. The difference is GM can’t start a war if it thinks that is the best way to boost demand in the manufacturing sector.

    • 0 avatar
      ruckover

      I truly do not understand the argument that Obama has increased the debt so much faster than Bush II. It is true if we just look at the numbers, but there are reasons behind the numbers. If I purchase a car and it needs a new engine, I will have to spend money to get it running. That does not mean that because I put more money into the car than the previous owner I am more fiscally irresponsible than the previous own. It means that I inherited problems that had to be fixed.

    • 0 avatar
      Angainor

      Ruckover, what branch of government is it that originates and passes all spending bills? Who was in control of that branch the years leading up to the shinola hitting the fan? You want to talk about how much Bush spent (and he spent a lot), do you think that under Obama, or Kerry, or Gore that the government would have spent a lot less? What exactly would they have done to prevent the real estate market bubble which has led to our current situation?

      The choice was between bad and worse and the country picked worse. This country is getting what it deserves.

  • avatar
    Cicero

    Ed Whitacre deserves to be sued for his fraudulent claim that GM has paid back the taxpayer money it got from the bailout. First, only a small percentage of the bailout money came in the form of a loan; second, the loan was paid back with TARP funds, not operating income, meaning that taxpayers are funding the “payoff” that Whitacre is crowing about. Some progress, GM.

    GM is just an arm of the Obama political propaganda machine now. Nothing it says should be trusted any more than Obama himself can be trusted.

    I am livid about the crap spewing from Whitacre’s yap and I will never, ever, consider a Government Motors vehicle for my next car.

    • 0 avatar
      mikey

      Cicerro,Rob Finfrock.undrgrd40,lilpoindexter…you guys all hate GM, fair enough. You also hate the fact that the governments bailed them out. We live in a democracy its your right to voice your opinion,and your vote.

      If GM was to pay every cent back with interest,you guys would stil hate GM,and you still wouldn’t buy the product….right?

      My question would be do you really want GM to fail? Or maybe you would love to see the taxpayers get some money back?

      Or maybe you are more content bashing the government or GM or both.

    • 0 avatar
      Cicero

      Mikey,

      I know you’ve got a GM background and I respect that. However, GM is lying. It knows that the bailout hangs around its neck like a stinking animal carcass in the eyes of an angry public but instead of making its case as to why that’s okay, it just lied. It tells us, “hey look, no more stinking dead animal!”

      GM earned its demise through decades of building crap, stupid marketing, horrendous union contracts and bad bets on fuel prices. So far, fine. Bankruptcy laws exist for that.

      But when my money (and my future grandkids’ money) was used to bail out a dying company that I would never have personally chosen to invest in, then I have a say in the matter. I hate it. And as GM spews bullcr*p trying to make itself and its masters in the Obama regime look good, I intend to badmouth it at every opportunity.

    • 0 avatar
      porschespeed

      mikey,

      I really don’t think anyone hates you personally, but, sure, half the world hated GM before the collapse. Doesn’t mean anyone wishes you ill.

      GM earned their bankruptcy years before they got the sweet deal of a faux BK and a big pile of taxpayer cash. The rest of the world (not working on the Street anyway) would have been handed their walking papers and the doors would have been shut. Until the auctioneers show up. They may have gotten some unemployment for a while.

      That’s been life for hundreds of thousands of Americans. So, when a relatively tiny little group of well-paid employees starts feeling entitled to taxpayer funding to maintain their lifestyle, the average citizen gets a bit pissed. More so when their company spent 30 years ignoring the need to change.

      Applies to manual laborers, or Wall Street bankers.

      We all know GM is doomed to a near-term suckling at the public teat, until the inevitable liquidation occurs. So yeah, I understand why people hate GM. It’s like hating Goldman.

  • avatar
    Geo. Levecque

    I seem to think that General Motors lied to all of us on both sides of the Border, a lot of people really believed they (GM) had huge sales, what a disappointment eh? GM has been lying over many years, we are suckers for sure!

  • avatar
    undrgnd40

    @mikey: i actually vote by going to the polls in november because it’s something i take seriously and also by not buying general motors vehicles. i’ll spell it out very clearly for you. if i wanted gm to have my money, i’d buy their cars. period.

  • avatar
    wsn

    I am not 100% again bailout of GM. But there wasn’t a bailout of GM. It was only a bailout of the UAW.

    The bailout of GM, done properly, should be something like this:

    1) Offer $50B loan to Ford to take over GM/Chrysler
    2) Ask Alan Mulally to do whatever he wants with GM/Chrysler, with one condition: 80% of the jobs must be preserved.

    Simple as that.

    • 0 avatar
      CamaroKid

      One small problem In the fall of 2008 everyone was couning the days until Ford also decalred Chapter 11. Go back and read the news reports… everyone agreed that Ford was on the edge too… Its share price was what? $1.75?

      If you had given GM and Chrysler to Ford we would now have three failed car manufactures instead of only two.

    • 0 avatar
      wsn

      1) Not everyone. Otherwise, Ford would go through C11. Alan Mulally clearly stated that Ford was fine.

      2) Ford will of course fail with added GM/Chrysler as is. But Ford can turn it around with $50B bailout cash at hand.

  • avatar

    mikey, you need to print this message out, tape it to your bathroom mirror, and ponder it each morning until the reality of it finally sinks in:

    I WILL NEVER SEE A DIME OF BAILOUT MONEY, EVEN IF GOVERNMENT MOTORS SOMEHOW PAYS BACK* ALL MONEY TAKEN FROM TAXPAYERS. (* “Pays back” copyright 2010, Grandpa Whitless)

    Our government used some $60 billion of our money to prop up two miserable, non-competitive, failing companies (okay, 1.3 with Chrysler) that the market had determined should disappear, or at least be ripped apart through the standard bankruptcy process. The feds stole that money right out from under us — no election, no national referendum — and used it as an affront to one of the principles this country was founded on: free enterprise.

    That offends me, just out-and-out offends me. Yeah, the feds did the same with AIG, too… but in this case, I can do something to hopefully tip the scales. I can refuse to buy another Government Motors product, and encourage others to do the same. I’m happy to see I’m not alone there, either.

    So yes, let me go on record here:

    All things being equal… yes, I want Government Motors to die. I want UAW members at unemployment offices by the thousands, dragging their false senses of entitlement with them. I want Detroit to implode on itself, its shattered remains an eternal monument to the inevitable outcome of the rampant greed, myopia and largesse shown by the Big 3 over the past 50 years.

    Why? Because the important lessons are most often the most painful ones to learn… and if this country is going to last, while holding true to its own principles, we need to start learning those lessons now.

  • avatar
    Happy_Endings

    I thought I saw Whitacre say that GM had paid back all their loans with interest, 5 years ahead of schedule. Here, the President is saying our chances of recouping the money are improving. Since there is more than a little difference of opinion, one person is lying more. And for once, I don’t think it’s the politician.

  • avatar
    Telegraph Road

    President Obama says, “The rapid dissolution of these companies – followed by the certain failure of many auto parts makers, car dealers, and other smaller businesses – would have dealt a crippling blow to our already suffering economy. The best estimates are that more than one million American workers could have lost their jobs.”

    Now $28 billion is what percent of the U.S. GDP of $12 trillion? President Obama is getting my vote in 2012.

  • avatar
    geeber

    The acid test is what happens in the coming years. I’m not convinced that GM – let alone Chrysler – is really out of the woods yet.

    If GM and Chrysler still need more money, will the government have the fortitude to say, “Enough is enough, we bailed you out to prevent a bad situation from getting worse, but now you have to face the music?”


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