Bailout Watch 575: White House Predicts $30b Loss On Auto Bailout
In a NY Times Op-Ed a few weeks back, I laid into the Obama administration for allowing GM to pretend that its $6.7b planned payback is even in the ballpark of what it owes the taxpayers. “If tens of billions in lost tax dollars is simply the inescapable price of preventing a systemic economic collapse, the White House should tell us so,” I wrote. Well, it appears that the White House agrees. Sort of. In an interview with the Detroit News, Gene Sperling, the senior counsel to Treasury Secretary Tim Geithner admitted
The real news is the projected loss [from the $82b+ auto sector bailout] came down to $30 billion from $44 billion
Well, halle-frickin-lujah. Now show us how we’re really going to get $50b out of GM and Chrysler.
Though Obama added a few rhetorical flourishes to highlight the “necessary sacrifices” angle to the auto bailout in a speech this week, the problem has never really been the governments. Don’t get it twisted, the White House’s admission was the right thing to do politically and morally, but the auto bailout is almost the least of its worries on the fiscal policy front. Indeed, the pure political implications of the bailout are likely to be minimal in comparison to the commercial implications. As I concluded in the NYT Op-Ed:
Afterward, while our government contemplates its runaway deficit and getting rid of its 8 percent of Chrysler’s equity, perhaps we’ll get an admission that General Motors still owes the American people. Without one, the relationship between the public and the automaker, and the Obama administration as well, may never be the same.
The relationship in real danger here isn’t the one between Obama and the American people. It’s the one between GM and Chrysler and the American people. Obama can always blame Bush or raise the “disorderly liquidation” counterfactual. For GM and Chrysler, outstanding debt is a lingering reminder of their unprecedented failure. In a brutally competitive industry, where firms will use a single MPG advantage to lay into rivals, a $30b outstanding welfare bill will follow the bailout babies like a dark cloud. Making good on every penny of their public support isn’t merely a question of political principle, it’s a matter of survival.
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- Zipper69 At the heart of GM’s resistance to improving the safety of its fuel systems was a cost benefit analysis done by Edward Ivey which concluded that it was not cost effective for GM to spend more than $2.20 per vehicle to prevent a fire death. When deposed about his cost benefit analysis, Mr. Ivey was asked whether he could identify a more hazardous location for the fuel tank on a GM pickup than outside the frame. Mr. Ivey responded, “Well yes…You could put in on the front bumper.”
- 28-Cars-Later I'll offer this, offer a registration for limited use and exempt it from all inspection. The Commonwealth of GFY for the most part is Dante's Inferno for the auto enthusiast however they oddly will allow an antique registration with limited use and complete exemption from their administrative stupidity but it must be 25 years old (which ironically are the cars which probably should be inspected). Given the dystopia being built around us, it should be fairly simply to set a mileage limitation and enforce a mileage check then bin the rest of it if one agrees to the terms of the registration. For the most part odometer data started being stored in the ECU after OBDII, so it should be plug and play to do such a thing - this is literally what they are doing now for their emissions chicanery.
- Probert For around $15 you can have a professional check important safety areas - seems like a bargain. It pointed to a rear brake problem on my motorcycle. It has probably saved a lot of lives. But, like going to a dentist, no-one could say it is something they look forward to. (Well maybe a few - it takes all kinds...)
- VoGhost ICE is so dangerous.
- Akear Back as early as 2014 Ford was building some pretty decent vehicles. The Ford Fusion was getting good reviews and selling around 300,000 annually. The Mark MKZ was also the top selling US luxury car at the time. My Ford Fusion is approaching the 200,000 mile mark, while current Fords blow gaskets at 40,000 miles.
TARP funds weren't created from pixie dust. We are all paying, and will continue to pay the price for a dollar that has less and less value. This is the kind of mentality that is in place at the Big Three unfortunately (especially GM apparently). At least Ford didn't go on the dole as did GM and Chrysler.
The sad part is that I coulda run GM or Chrysler down the tubes for 1/2 the salary . It would have been a decent gig whilst I was getting back on my feet from being laid off by the phone company. Wanna buy a bridge?