By on June 9, 2009

That’s the question motivating an alternative plan for the government’s “investment” in GM drafted by Sen. Lamar Alexander. Under Alexander’s plan, the Treasury secretary would be required to distribute the government’s GM and Chrysler stock to the 120m or so Americans who submitted tax returns for 2008. “This is the fastest way to get the stock out of the hands of Washington and back into the hands of the American people who paid for it,” said Alexander. The proposal, which Alexander plans on attaching to the current tobacco regulation bill would:

• Prohibit the Treasury from using any more TARP funds to bailout GM or Chrysler.
• So long as the government holds stock in these companies, require that the Secretary of the Treasury and his designee have a fiduciary responsibility to the American taxpayer to maximize the return on that investment.
• Not later than one year after each company emerges from bankruptcy, require that the Treasury distribute its common stock holdings in that company evenly to every American who paid taxes on April 15.

Get the latest TTAC e-Newsletter!

Recommended

33 Comments on “Bailout Watch 553: If We’re Going to Own GM Shouldn’t We Actually Own GM?...”


  • avatar
    N85523

    That doesn’t sound too far fetched in the realm of logic, but in the realm of Congress, giving back to tax-payers is a foreign concept.

  • avatar
    long126mike

    Hey, Lamar, where’s my shares of Iraq Oil Inc? I paid for it, now give me my money.

  • avatar
    Hippo

    While each taxpayer would get very little, at least the plan has a basic fairness to it, and limits the losses to what already has been incurred.

    The UAW gets nothing.

    Actually it would be a elegant way to put them in Ch7. What are they going to do with no further subsidies? Work for the same wages everyone else in a non protected category does?

  • avatar
    Samuel L. Bronkowitz

    It wouldn’t increase the likelihood that we’d get our money back, but I like it even as a symbolic gesture.

    Then again maybe this is just a way to saddle us with a tax liability on the off chance that Government Motors ever has a stock price greater than $0.00 or declares a dividend.

  • avatar
    Redbarchetta

    Wouldn’t it cost more to print all those shares than GM is actually worth.

    Seriously though, no chance of this happening, they might as well have not done the DIP financing and just let them be liquidated, it’s going to happen eventually but only after they suck away more money. Anyone with half a brain(GM management not included) knows GM is going to need more money, probably before the end of this year. If their is no chance of them getting more funds then they die a quick death, not quick enough for me.

    I don’t really want any shares of this sunken Titanic. I have already lost enough money owning their product, not really interested in owning a loser stock.

  • avatar
    Cicero

    Alexander’s plan just exposes the outrage of what has happened. The federal government takes my money in taxes and pours it into a moribund, non-competitive business that I would never have invested in of my own volition. Then the government magnanimously sends me some stock of that same piece-of-shit company, like its doing me some kind of favor. I then get to sit on the stock as its value goes to zero.

    Um, thanks but no thanks. The operator of the massive Ponzi scheme known as Social Security is hardly the entity that I want making my investment decisions. But then, nobody asked me.

  • avatar
    OldandSlow

    Woo woo, tobacco legislation and regulating the auto bailout in the same piece of legislation makes perfect sense. Next we’ll see highway projects tacked on to education bills.

    It’s political theater and not much else.

  • avatar
    superbadd75

    Well, not that this’ll happen, but Senator Alexander is either pandering, or he truly is a representative of his people. Glad to see that they exist. Maybe.

  • avatar
    RetardedSparks

    Hmmmm…interesting.
    So, your share would be proportional to the amount of tax you paid? If I’m a Wall Street fat cat I might own a decent chunk. Certainly the 1% of Americans who pay the majority of taxes (or whatever, I forget the amount) should end up owning any upside, right? (Otherwise, if it were one share per person, that would be a huge potential “redistribution of wealth” that reeks of outright Communism.)
    And, let’s say all those shares increase in value – the government now gets 40% of that money back in taxes. Over time, they’d get their TARP money back, citizens would have an asset with some value, the bankers would make out better than everyone else…

    I dunno, this has win-win-win written all over it!!

  • avatar
    carlisimo

    I thought the point of making the UAW a shareholder was to give them an incentive to not run GM into the ground.

  • avatar
    tparkit

    Sen. Alexander’s proposal is not wealth distribution. That’s because there is no wealth at GM to distribute, and there never will be. The company is essentially worthless – hence the bailout billions.

    Even if its shares are distributed to American citizens, we should still boycott in order to force the company to close its doors. Not only would this end infusions of our money, but it would also prevent Washington from using GM as a pipeline for social engineering, envirofascism, and work programs aimed at keeping UAW members fat and happy.

  • avatar
    ttacfan

    We are talking about distributing to the public shares of a government-owned company. It would be interesting to see if this was ever done before and what was the outcome.

    I happened to live through the similar process on a much larger scale – privatization of the entire government-owned economy of Ukraine, country of 52M people at that time. It was desided that a single share would be distributed to every person in the country. Each government-owned enterprize would be re-organized into a company, where good perecentage would belong to the employees (40% or so – sounds familiar?) and rest would be available for purchase for those shares. The process took 4 years or so to implement. During that time any assets of many enterprizes eligible for privatization were pumped into new private shell companies. After the shares were distributed, the only buyers were managers of the remaining enterprizes who wanted to get the employees+management portion of the equity to over 51%.

    Long or short of it, most individual shares were sold to bundlers for $6-$8 a pop which valued economy of the country at less that $0.5B. I’m not economist, but I can do some calculations. The GDP of Ukraine was ~$200B in ’95. If you apply “rule of thumb” of company valuation (sales x 3), you get the value of all enterprizes around $600B. So, an average citizen recovered about 0.1% of his/her share of the economy in this enterprize.

    I understand that US laws are better developed, but I need some proof that the recovery rate in the Alexander’s GM plan would be better than 1%-3% for an average Joe or Jane, or Boris.

  • avatar
    jkross22

    This is symbolism… there is nothing to distribute. Doubtful there ever will be, but an interesting idea nonetheless.

    Mr. President, would you support this?

  • avatar
    RetardedSparks

    “We are talking about distributing to the public shares of a government-owned company”

    Actually, the government would be “selling” its shares to the public for consideration already paid – our tax dollars. So it would no longer be government-owned, it would be a public company. The only question regarding valuation of shares (of a company which, granted, would be worth zero to start) is the one-person-one-share, or one-tax-dollar-one-share conundrum.

    Would sure be interesting to see that first shareholder meeting to pick a new BOD! :)

  • avatar
    psarhjinian

    Assuming GM actually makes money, this isn’t a bad idea, but what they actually ought to do is just repay the loans.

    Nice idea, and it would make sense if the US government had a stake in many industries. But it doesn’t, and this is theatre. Not that I don’t think that the US ought to nationalize more industries and use this kind of system as a way to force accountability, but that’s not what’s happening here.

  • avatar
    long126mike

    the 1% of Americans who pay the majority of taxes (or whatever

    Yeah. Or whatever.

  • avatar
    long126mike

    Shorter Lamar:

    Waah! We lost and I’m not happy! Representative democracy is no good! Let’s tear up the Constitution!

    It’s political theater and not much else.

    Bingo.

    Notice how Lamar doesn’t extend this “principle” to all the financial firms we’ve plowed way more money into than the car companies. Gee, I wonder why that is? Hmm…

    http://www.opensecrets.org/politicians/industries.php?cycle=Career&cid=n00009888&type=I

  • avatar
    tced2

    Roughly half the wage earners pay no income tax. They may have to file a tax return but the tax owed is zero.

    This stock distribution would be for the “new GM”. The “old GM” stock is toast (worthless). That’s what happens in bankruptcy – the stock becomes worthless.

    I consider this to be a good idea. If you don’t want the shares, sell them.

    concerning the Iraq Oil Company,
    Distribute the shares of the oil company to the Iraqi people. We aren’t supposed to be “paid” for our work there.

  • avatar
    long126mike

    Roughly half the wage earners pay no income tax. They may have to file a tax return but the tax owed is zero.

    I realize that Rush and his echo chamber makes you believe that, but the first thing you have to realize that you’re speaking of FEDERAL INCOME taxes. The INTENT of such a talking point is to make people think that half the people in this country are free-riding goldbrickers who pay no taxes, when in fact from dollar one anyone earning any money pays FICA.

    What I like about this talking point is that it conveniently ignores ALL taxes, but when the discussion is about tax burdens as a whole, the talking points all of a sudden don’t speak solely about individual federal income taxes, THEN it’s all about whining about ALL taxes.

    It’s a crude sleight of hand, and plenty of people just digest it unthinkingly, but it’s trying to have it both ways.

    The great part is asking someone to substantiate the claim by asking them to directly linking to the PRIMARY evidence of that claim WITHOUT using the links given to them on Limbaugh et al’s websites. That’s the test of whether someone is actually saying something they know firsthand or are simply regurgitating propaganda.

    Of course, the whole framework is economically ridiculous. Apparently the destitute who can’t afford to feed themselves are somehow bad people because they don’t chip in a couple of bucks to the Federal income tax kitty.

    concerning the Iraq Oil Company,
    Distribute the shares of the oil company to the Iraqi people. We aren’t supposed to be “paid” for our work there.

    Yet another double standard and ignoring the huge benefits accrued to the world’s oil producers because of our military intervention which cost $2.7 trillion through the end of this fiscal year. Odd that people supposedly concerned with wasteful government spending don’t make a peep about that unfathomably large sum. Probably because Rushbo didn’t drill it into their heads.

    And, yes, I know – you don’t listen to Rush and don’t even like him and it must be the liberals who listen to him. I’ve heard that canned line a million times. You get your info from the right-wing echo chamber. Rush is just the primary source for most of these dumb memes.

  • avatar
    Lumbergh21

    How long did it take for the laughter from his fellow senators to die down? Would never happen, not in a million years. He feels safe in proposing it because he knows it will never happen, but it does make him look good (IMO) to the American taxpayer who has been dead set against the government bailouts of GM and Chrysler from the get go.

  • avatar
    wsn

    It’s fair. Not matter how much or how little GM’s share would be worth, at least the “owners” decide for their own stake, instead of letting Chairman Obama do the decision making.

    But then, most stock holders would simply dump the stock ASAP and refusing to inject more cash, causing GM to go to C7 and Obama’s minions jobless. So, it won’t happen.

    Communism = Chairman tells you that the nation’s wealth is commonly owned, only it’s not.

  • avatar
    Luther

    Since the upper 50% pay 97% of all taxes…Just throw out the lower 50% and hand the shares over to the rightful owners…Not UAW or government “workers” since they are paid with stolen loot already.

  • avatar
    long126mike

    Since the upper 50% pay 97% of all taxes

    Knock down a zombie, and it pops right back up.

    You realize that a number of people earning in excess of $10 million per year pay no federal income taxes, right? Of course not. Rush, who is in that income group, fails to mention that little club of “freeloaders.”

  • avatar
    quasimondo

    I like his plan. It would make me feel proud to actually have a piece of ownership in General Motors.

  • avatar
    AG

    I guess what they’re saying is they want to give shares of New GM in lieu of cash for tax refunds. Frankly, the idea of 100 million+ people would receive an asset that most would be desperate to liquidate for cash almost immediately doesn’t sound like a good idea.

    Besides, why do the Republicans even bother to submit bills when they have literally no authority in Congress?

  • avatar
    nudave

    I have enough shit in my house already. I don’t need a stool sample from GM.

    Not in my safe deposit box, and certainly not in my driveway.

  • avatar
    PeteMoran

    Government + GM = money turned to …. dust.

  • avatar
    long126mike

    Not matter how much or how little GM’s share would be worth, at least the “owners” decide for their own stake, instead of letting Chairman Obama do the decision making.

    So many Constitution-haters here.

    Americans elect a president to represent their interests for them. That’s the president’s job.

    Should we start taking daily polls of the masses about which countries to nuke or not nuke? Maybe we should use direct democracy to pick out the rug in the Oval Office, too.

    If you feel compelled to shred the Constitution every time your guy loses the election, then you should probably look for another country to live in, because that’s how America works.

  • avatar
    "scarey"

    Long126- the Constitution was torn up years ago, when they instituted the income tax, went off the gold standard, stopped daclaring “wars” when they send our men and women off to fight, ruled on Marbury v Madison, and forgot what the 10th Amendment meant. Read it and see.

  • avatar
    folkdancer

    Prohibit the Treasury from using any more TARP funds to bailout GM or Chrysler.
    So long as the government holds stock in these companies, require that the Secretary of the Treasury and his designee have a fiduciary responsibility to the American taxpayer to maximize the return on that investment.

    GM and Chrysler are going to need a lot more tax money. NOTE: I am not saying they should get more I am just saying they are going to need more. So if we don’t give them any more they will have to file Chapter 7 and disappear.

    Didn’t GM go bankrupt partly because they played games with their finances to “show” Wall Street they were maximizing quarterly returns? It will be a very long time before either company earns any profit so how long does Alexander expect to wait for any returns, maximum or otherwise? And what sort of junk would they have to produce for maximum returns?

    This is nonsense legislation.

  • avatar
    long126mike

    the Constitution was torn up years ago, when they instituted the income tax, went off the gold standard, stopped daclaring “wars” when they send our men and women off to fight, ruled on Marbury v Madison, and forgot what the 10th Amendment meant. Read it and see.

    OK, Lyndon.

  • avatar
    Kurt.

    Eventhough in another thread, I am at odds with long126mike, I agree with him here. I think he is a little short with scary though. There are issues a foot that directly address scary’s concerns and when you group them together (as he does in his post – without the link I might add), it makes him sound like a conspiracy theorist at best or looney at worst. I think neither is case.

    But I’ve said it before, once the GOV takes my money (in taxes for services rendered – whether I want or use them or not), it is the governments money. If they want to buy a car maker – and if it is legal for them to do so, I can only give my unsolicited advice (don’t).

    Would I take the stock? (I paid my share of taxes.) Yep, sure would. Do I think theres a snowballs chance in hell of it passing? Nope.*

    *(Caveate – see other thread where long126mike takes offense to my post. The process of amending a bill could allow it to slip through with only the Presidential pen in the way.)

  • avatar
    Airhen

    I like it, A LOT!

    But good luck considering the leftists democrats are running the show in DC. They want to keep their new found power, no matter the lives it destroys or the billions in debt that our children and grandchildren will be stuck with.


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Davekaybsc: Not quite sure on that interior. I don’t think it does the “retro future” thing as well...
  • 80Cadillac: That is a terrible-looking car, for Cadillac or any other brand.
  • HotPotato: I always thought the Fiat Strada was a great-looking car. Wouldn’t mind a “last and best of...
  • HotPotato: Many of these manufacturers aren’t putting out “cars” so much as glorified golf carts....
  • RHD: And the buyer’s wife, Rhea, finds out from her distraught husband what happened to his new Nissan when he...

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Timothy Cain, Canada
  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States
  • Moderators

  • Adam Tonge, United States
  • Corey Lewis, United States