Politics, Society

Auto Industry Bailout to Cost U.S. Taxpayers $14 Billion

Remember when we were told the bailout of the auto companies was just like a loan and we might even make money on it. Well, the President’s National Economic Council has announced that it will cost $14 billion. That is $14 billion out of the original $80 billion bailout.

Of the companies, Chrysler appears to be paying back most of the loans. GM, on the other hand, has announced that it has repaid a little more than half of the $50 billion it received in federal aid.

It appears that the bailouts will be a focus of the President’s reelection campaign. I am not sure how well this will go over. Not only did the bailouts cost $13 billion but they are often associated with the bailouts of the banks and investors (which are extremely unpopular). When combined with the emphasis on immigration, this appears an extremely high-risk strategy of the White House in the selection of issues. What do you think?

Source: Yahoo

30 thoughts on “Auto Industry Bailout to Cost U.S. Taxpayers $14 Billion”

  1. I’d love to eventually see Feingold as President.

    On the GM bailout issue…to have not bailed them out would have been a disaster and the fact that they more less rid themselves of the former top execs is ok by me.

  3. I just read Nile Gardiner’s piece in The Telegraph, the article cited by Carl Swenson. His analysis is fundamentally flawed. First, to call Pres. Obama the most “left-wing” president in American history is flat-out wrong. Second, the president’s inability to push through much of his legislative agenda will rightly be blamed on Republican recalcitrance. No sentient being will deny that the president has routinely, and wrongly in my view, capitulated to Republican demands.

    The loans to the auto industry will be viewed as a smart decision by most voters based on the results. The bank bailout will not be, but that program was a Bush product, and the banks were not required to do anything in return.

    Finally, we must look at the Republican presidential line-up, as depressing a task as that may be. By the time the candidates have limped out of Iowa, they will have fallen all over themselves mouthing right-wing bromides that appeal to no more than 20% of the population. The Iowa primary alone will provide plenty of cannon fodder for Democratic advertising assaults against the eventual Republican nominee.

  4. Swarthmore mom
    1, June 2, 2011 at 11:41 am
    Carl Swenson, Obama might well be headed for electoral disaster. Americans might ultimately decide to go with the republicans and give up their medicare.

    =====================================

    Sneaky … I like it! 🙂

  5. SwM,

    We are in a great position. Teabagger candidates who won governorships in 2010 have pushed millions of otherwise conservative voters into our arms. I see, email, and talk to them every day. (Pushing the OSAA [Obama Saved American Auto]works very well in these states where millions of people are financially tied to the Auto Industry and to Unions)

    OGO (Obama Got Osama)has given us many of the national defense folk who usually vote republican … they’ll vote once for Obama as a reward … then they’ll go back.

    I don’t think Republicans want to push the immigrant button for exactly the reason you mention but they are going to have to do it in order to keep the teabaggers on their side.

    However, Ryan’s Medicare Plan lost a lot of ’em and I don’t think they’ll be coming back. They won’t vote for Obama … they’ll just stay home.

  6. Carl Swenson, Obama might well be headed for electoral disaster. Americans might ultimately decide to go with the republicans and give up their medicare.

  8. Blouise, Colorado and New Mexico are important states for the democrats. A strongly xenophobic nominee like Palin could push hispanic turnout.

  9. Immigration is a teabagger issue … it turns ’em on, lights ’em up … quite frankly:

    During these last few months I have been all over this state and other states where the battle against the teabaggers’ policies has been joined. Nobody talks about immigration … they don’t give a hoot and see it as an issue only those goonie-birds in Arizona care about. If the republicans go for an immigration nut it will only be to keep their teabaggers on board.

  10. GM is slated to create/retain up to 40,000 jobs in Michigan within the next 2-4 years … this is in the pipeline.

    Unlike the banks and Wall Street, GM forced their top management out after accepting the funds and totally reorganized from the top down. Further, unlike the banks and Wall Street, the UAW also entered the spirit of reorganization and accepted arbitration for their next contract.

    Gm has also restructured their sales for volume. My neighbor just bought a fully loaded 2011 Equinox Crossover SUV and payed exactly the same price as he paid for his Saturn VUE SUV back in 2006.

    Plus, the trickle down to businesses associated with the American Auto industry has been huge.

    SwM, RAM, MetroCowboy, and rcampbell are all correct in their individual postings.

    “Obama got Osama” and “Obama saved American Auto” will be the two waves he rides to victory in 2012.

  13. MetroCowboy,

    Yep. …chump change in this ‘brave new world’…

  14. What I’m reading is that $66 billion of the original $80 has been paid back and the gov’t still owns an asset of $14 billion in GM stock. I don’t see any indication or intent of GM to default on loans or that the stock can’t ultimately be sold at our cost if not a profit. At GM’s current stock price, doubling it isn’t a huge stretch as the economy improves.

    One must also balance the cost of the loans, even if never fully repaid, against the alternative costs to taxpayers of having tens of thousands MORE umemployed people, many more home forecolsures and business failures as more local economies would have collapsed.

    I would submit, however, that the US “punishing” Toyota had far more to do directly with Toyota’s own actions than with any crossover or residual effect of the auto bailout or its stake in GM. The actions against Toyota were, in my view, completely justified with the government acting rightly as the American people’s representative in opposing corporate greed, secrecy and manipulation.

    It’s pretty obvious that the GOP’s opposition to the auto industry bailouts had little to do with the dollars spent and more to do with their blatant attempts to break the UAW. That course of action would have aided the non-union auto plants in several southern states.

    Mitch McConnell of KY, Sen. Shelby of AL and Lamar Alexander of TN lead the fight against helping GM and Chrysler after having spent years lobbying for and getting state and federal tax breaks for NON-US auto makers in their states. They were perfectly willing to crash the US auto industry and sacrifice the jobs, homes and businesses US families to help non-US auto makers. Since the UAW contracts have always been used as the guideline for even non-union wages in the south, had the GOP been successful in breaking the UAW, that guideline would be gone and then the non-union American workers would see their own wages, benefits and future in jeopardy.

    .

  15. 14 billion lost to save 100’s of thousands hell maybe millions of American families jobs, seems cheap to me after 100’s and 100’s of billions for wars that we can’t win and the lives of so many idealist men and women in our military who have died for WHAT?

  16. If you think adding millions more men and women to the ranks of the unemployed and further devastating communities all over the nation would have been a good idea, then whatever the final cost of the auto bailout turns out to be will be too much.

    If you think, as I do, that keeping GM and Chrysler workers employed and the myriad of supplier companies from going bankrupt plus protecting an industry that arguably has a major role to play in national security, then the cost seems relatively low, even at $14 billion.

    This was one of the few actual jobs programs the Obama Administration put into place in response to the Great Recession, and it seems to be working just fine.

  17. Saving union jobs in the Midwest is a very good use of bailout money. Tea Party members in Wisconsin, Michigan and Ohio won’t vote for Obama, but they were not going to in any case. I think immigration as an issue could also work if the republicans nominate one of their xenophobic candidates. Since most of them are, the chance is very likely.

  19. The loans aside, our government is also a GM stockholder and will be underwater until the stock price doubles and government successfully sells it. That may never happen.

    Government also has an incentive to use regulatory power to punish rivals, as we saw with Toyota.

  20. According to a recent report by Mark Modica, published by the nonprofit National Legal and Policy Center, some Chevrolet dealers are selling Volts to other dealers and claiming the maximum $7,500 green-vehicle federal tax credit for themselves.

    As second-hand owners, the dealers who bought the Volts then sell them used to private buyers, who no longer qualify for the credit. The credit is offered as an incentive to purchasers of alternative-powertrain vehicles like the purely electric Nissan Leaf and the Volt, a plug-in hybrid.

    http://wheels.blogs.nytimes.com/2011/06/02/over-g-m-s-objections-dealers-sell-used-chevy-volts-without-7500-tax-credit/

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