I’ll give you a hint. It’s not the 10 billion Obama claims it is. It’s not 20 billion. Or thirty billion. It’s nearly 50 billion dollars because most of the costs were hidden from taxpayers. We spent 49 billion dollars to bail out a car manufacturer with a 28 billion dollar market cap. In other words, we spent 49 billion to save a company worth 28 billion. (The current market cap is 57 billion dollars)
These days Obama brags a lot about how he saved GM and Chrysler. Now, he may have dumped tons of money on them but how much will we really get paid back for that 49 billion we gave to GM while it’s market cap was only 28 billion? Was it worth it? Could it have been done better? Most people have no idea what went into the entire GM deal, but read this column and you will have some valuable ammunition the next time a liberal tells you how Obama saved GM.
The first thing you should know is that Obama and his gang keep bragging that GM will repay the loan in full. Not even close. If you have invested in Amalgamated Smoke and Mirrors, you are about to become rich. The total given to GM was 49 billion.
The first thing we heard from GM was how they paid back the loans they got from Canada with interest years ahead of schedule. That is true as far as it goes. They paid back the Canadian loan with money loaned to them by the US taxpayer. At the same time, they repaid part of their first loan from the taxpayers………..with money from a second loan from the taxpayers. We actually made a payment to ourselves. Also GM was not subjected to the same TARP tax imposed on American financial companies. This cost the taxpayers about 4.3 billion dollars.
And remember when Obama bragged about GM making 3.2 billion in the following quarter after bankruptcy? There is more to that story too. GM had bought Delphi, a supplier of their parts for 2.2 billion. Obama then agreed for the taxpayers to take over the 6.2 billion in pensions for retired Delphi workers. That brings the total cost to 10.5 billion dollars. So far. GM then sold its Delphi stake for 3.8 billion for a 1.6 billion dollar profit, meaning they only made about 1.6 billion in car sales.
Now on to the bankruptcy proceedings. Obama extorted a deal from GM bondholders who were owed 27.2 billion dollars. Their settlement gave them 10% of GM or about 3.6 billion. The other 23.6 billion could be written off by the bondholders. The average effective corporate tax rate 26% means taxpayers lost another 6.136 billion. Total cost to date 16.636 billion dollars. To add insult to injury, the UAW got a 40% stake in GM or about 14.4 billion dollars. This was to compensate them for what GM owed them except normally, the bankruptcy would have wiped out the debt. Obama changed the rules. And we ain’t done yet folks.
When a company loses money they are allowed to write of the loss in future years. However if a company declares bankruptcy they are no longer eligible for that write off. Enter Obama who changed the rules for GM. They can now save 14 billion in taxes. That loss falls entirely on the US taxpayer. Total to date 30.636 billion.
Now on to the Chevy Volt. We did not subsidize the volt, however Obama did give the battery maker money to build a factory. GM had the choice of hiring a US battery maker or a Korean one. They chose the Korean company. Nice thank you for the US taxpayers, huh? Obama gave them 2.4 billion from the stimulus. Hell, I could build firebombs for a hell of a lot less. Some empty ketchup bottles, a buck worth of gas and an old rag and viola! Total cost to date 33.036 billion.
Last but not least how much did we lose on our 50% stake? We have already sold some at a loss and we must sell the remainder at 55 dollars a share to break even. The current price of GM stock is 22 dollars a share. That means if we were to sell our 500 million shares, we would lose 16.5 billion dollars. That makes a grand total of 49.536 billion. 536 million more than we gave them.
And how did GM show their appreciation? The decided to build a brand new 540 million dollar engine plant that would hire 500 workers……in Mexico. Then they packed up some of their parts plants and moved them to China. Don’t you just want to give Obama a big hug?