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The auto bailouts have shaped up to be President Obama’s paramount achievement in office. At least that’s what Obama has been claiming at campaign stops throught the Midwest over the past few months, and what his cheerleaders in the punditocracy have declared. Take for example E.J. Dionne, writing this past September.
Have you noticed that one of the Obama administration’s most successful programs is also its most “socialist” initiative?
…[T]he bailed-out companies have come back, as Dick Cheney might say, big time. In August, GM announced that its second-quarter profits had nearly doubled, to $2.5 billion. To put that in context, in April 2010, GM reported losses of $4.3 billion. Revenue at GM rose 19 percent, to $39.4 billion.
In a sluggish economy, the auto industry is providing us with good news. And this good news was brought to you in part by the government of the United States of America, paid for by taxpayers just like you and me.
We taxpayers will reap rewards, too.
The problem with this narrative, of course, is that there’s no data to support it. In fact, the numbers tell a very different story. Reason’s Shikha Dalmia crunches the numbers.
The Treasury Department yesterday revised its loss estimate for the Government Motors bailout from $14.33 billion to $23.6 billion, thanks to the company’s sinking stock price. GM’s Sept. 30 closing price, on which the new estimate is based, was $20.18, about $13 less than its December IPO price and $35 less than what is needed for taxpayers to break even.
The $23.6 billion represents a 25 percent loss on the feds $60 billion direct “investment” in GM. But that’s not all that taxpayers are on the hook for. As I explained previously, Uncle Sam’s special GM bankruptcy package allowed the company to write off $45 billion in previous losses going forward. This could work out to as much as $15 billion in tax savings that GM wouldn’t have had had it gone through a normal bankruptcy. Why? Because after bankruptcy, the tax liabilities of companies increase since they have no more losses to write off.
This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion.
$38.6 billion is bigger than all of the thuggish loans and no-bid contracts and bailouts that Denise Moss outlined here yesterday by a factor of more than 18. And yet, somehow Obama is not made to feel shame over this disgraceful waste of taxpayer dollars, but is instead permitted to celebrate it as the hallmark of his administration!