Bailout Watch 576: Feel the Burn

by Robert Farago

Published: August 1st, 2009

TTAC commentator Corky Boyd offers a timely analysis:

“The administration has loaned or agreed to loan a total of $65 billion to GM and Chrysler in exchange for 60 percent ownership of GM and an 8 percent stake in Chrysler.”

If the two produce 3.5 million vehicles for the year (and that’s on the high side), that’s over $17,000 per vehicle of subsidy. And that doesn’t include the $15 billion loan to GM the government forgave in the bankruptcy and the infusion Chrysler will need before the end of the year.

Last year brought the use of a new term in finance, “Cash Burn.” I guess it’s a take off on the aviation term of fuel burn. It’s a very casual term for billions of taxpayer dollars that have to be used to make up the “burn.”

Robert Farago

More by Robert Farago

Comments

Join the conversation

4 of 52 comments

Stuki on Aug 03, 2009

"No, we can get similar results for about half the cost as demonstrate in many places. Obviously that bothers some folks so much they can’t even bring themselves to admit it’s the topic of discussion even after it’s repeated to them numerous times." What is demonstrated in many places, is: Given that the cost of drug, machinery and procedure development are already being borne by Americans, one can achieve population wide statistically equal, or in some areas perhaps even better, results than America does by piggybacking on their research, and rationing access to it in a less willy nilly fashion. In all the countries being held up as "cheaper and better", drug prices are a lot lower than here. Unsustainably low for the costs incurred in their development, were it not for American patients paying substantially more (and popping pills like it was candy). Same goes for non drug technology. Top echelon US care providers bear the early development costs, because their patients have a choice of where to go, and demand the latest and greatest when it comes to their health, costs be damned. Then, once the technology is less exotic and cheaper, care providers more concerned with system wide cost / benefit, get in on the act. Take the US out of that equation, and costs everywhere else will either have to climb; or infinitely more likely, innovation will slow, as there will be less need for care providers to compete on (perceived) quality of care by nabbing up the latest and greatest gizmos. Not that I doubt we can get equal or even better results for half the price of what we are currently paying, but we won't do so by attempting to move closer to the Soviet model, however incrementally.

Like Reply
U mad scientist on Aug 03, 2009

So is the assumption that the drug price differential or research is a real large portion of health costs? I want to pin it down so it won't squirm into some other excuse next time. I love the attempts to weasel out of the clearly demonstrated inefficiencies in allocation through distraction. Too bad you're not talking to the usual crowd of other simpletons who can't tell the difference. Witness: but we won’t do so by attempting to move closer to the Soviet model, however incrementally Wait, shouldn't it be Al Qeada and the terrorists to jive with modern scare conventions?

Like Reply
Geeber on Aug 04, 2009
agenthex: Look at the original post. He was talking about highly-payed officials: ” forced to subsidize more and more bureaucrats and politicians collecting high public sector wages” I did read it, and your point only works if you believe that all bureaucrats are highly paid, or are somehow synonomous with high-level government employees. This is not the case. There are plenty of low- and mid-level bureaucrats in local, state and federal government. agenthex: Who the hell in government is getting high wages except those with some influence? The discussion was about BENEFITS and PENSIONS. Those are better in the public sector for low- and mid-level employees than for their counterparts in the private sector. Again, this has been proven repeatedly. agenthex: I’m pretty sure the “poor” will prefer the system where they get proper consistent care for most stuff short of highly expensive cancer treatment, vs. nothing or some strange patchwork at best. The poor, like everyone else, will expect the latest and greatest treatments, especially for serious diseases and conditions. They and their advocates will decry it as unfair if they can't get them under the public plan. agenthex: What does that have to do with total money spent? We spend much more for similar overall results. That money is conserved. Running a deficit "conserves" money? Did you used to work for GM with that ability to make words have new meanings? I would assume that "deficit" has the same meaning in France that it has it does over here. agenthex: It doesn’t magically go away because an employer spends it on your health package (or “free” emergency care) instead of paying a tax. You're comparing apples to oranges. It's entirely different if the employer spends dollars for health care - that are immediately paid - as compared to a government running up a big deficit for its health plan. That's like saying that I'm really in the same situation as my neighbor who is in the hole for $16,000 plus financing costs for a brand-new Kia, while I was able to buy a brand-new Accord outright for $26,000 with savings - because we are both ultimately purchasing transportation. agenthex: Not shit sherlock, and in the real world we care about effectiveness and value for what we spend. Your original point was that local committees of doctors, as opposed to insurance companies, were making those decisions, which should result in superior care, because the doctors' decisions won't be driven the almighty dollar. Well, as it turns out, decisions in both countries are being driven by cost concerns. agenthex: So why are the resultant metrics the same? Let’s see you try to figure out how they’re gaming their audience. Does it not bother you to carry the baggage for these low-life’s? So, the figures provided by your side are accurate, but the other side is providing figures to game the system? (Never mind that several of us have debunked the figures and metrics showing the supposed inferiority of the U.S. health system.) If you want to believe that, you go right ahead. In the meantime, I'll accept the figures as accurate. What bothers me are inaccuracies and half-truths being spouted by both sides in this debate, and quite, frankly, your side is spouting more than its fair share.

Like Reply
U mad scientist on Aug 04, 2009
I did read it, and your point only works if you believe that all bureaucrats are highly paid, or are somehow synonomous with high-level government employees. The original commenter was talking about highly paid officials. Trying to twist that is not going to work. -- The discussion was about BENEFITS and PENSIONS. Those are better in the public sector for low- and mid-level employees than for their counterparts in the private sector. Again, this has been proven repeatedly. His point was that they're highly paid (not really true), AND have great benefits. My point was that they're not highly paid at all, especially the high rank ones he was talking about. You can start from there. -- The poor, like everyone else, will expect the latest and greatest treatments, especially for serious diseases and conditions. That's just rich, and by rich I mean so ridiculous everyone points at it and laughs. So evidence from the world over means nothing, and winger talking points rule the day. Joy. -- Running a deficit “conserves” money? Did you used to work for GM with that ability to make words have new meanings? As a measure of the effectiveness of a system, people look at total expenses vs. results. How the accounting is done specifically is not the most relevant issue as that is generally more flexible in nature. In other words, people are paying for that healthcare somehow, and the primary objective is to get the best care for that money overall. You don't seem to understand this concept at all which is why you went to go on about "financing". If the french gov is in deficit for healthcare specifically, then they didn't tax/account properly for it. However even if they did, the overall cost to the employer/individual is still about half that of the US. An example in your case is that french gov is financing about $2k on that Kia, and the US is also getting the Kia for $26 straight up. -- Your original point was that local committees of doctors, as opposed to insurance companies, were making those decisions, which should result in superior care, because the doctors’ decisions won’t be driven the almighty dollar. Show everyone where I said that. I've been very clear from the very beginning that because of their supperior allocation of care, they get the same results for about half price, apparently something you still can't wrap around your head. -- So, the figures provided by your side are accurate, but the other side is providing figures to game the system? Absolutely. The US provides better "expensive" care due to the intricacies of the insurance/legal framework, and other countries provide better "basic" care. This is why overall life expectancies are similar (actually often better elsewhere, but we'll be generous and call it a draw). Of course wingers will never admit that places where we have an advantage like geriatrics are pretty much "government" care. -- What bothers me are inaccuracies and half-truths being spouted by both sides in this debate, and quite, frankly, your side is spouting more than its fair share. Again, the standard winger "both sides" assertion. It didn't work on evolution and it's not going to work now.

Like Reply