Eight billion? The taxpayer invested 80 billion of TARP money into GM and Chrysler, most of that to GM. How does $8 billion pay that off? It doesnt. What it bought us is 61% ownership in the new GM and a block of stock for the UAW. Previous shareholders and bondholders got virtually nothing. So what is that stock worth? General Motors recently reported a LOSS of over $4 billion dollars, not a great return on the tens of billions taxpayers invested in the car companies (not voluntarily, no sane private investor would have invested which is why government had to). With profits like this,the share price will surely fail to rise to the historically high levels needed to insure a return of taxpayer money. The problem could get even worse long term. The GAO has reported that the pension funds (for 900,000 workers) are underfunded by $17 billion. Payments of about $15 billion have to be made in the next few years to the pension funds. Hard to make these payments with no earnings. The company continues to liquidate itself, this time losing taxpayer money. The governments clear preference for unions in all these dealings suggests that more taxpayer money will ride to the rescue in the years to come. If the company was doing something of value (to us) and doing it well (making money), we might be happy to see the debts being repaid out of earnings. But thats not happening and may never happen. William Dunkelberg is Economics Professor, Temple University. GM is running TV ads claiming that they have repaid their government TARP loan of $8 billion and change early.
Using the TARP fund for automakers (GM and Chrysler), unfortunately started by President Bush with $15B "loan" and progressing to Obama's full government takeover, was economically insane and morally hazardous and wrong.
They should have been forced into pre-packaged bankruptcy, with bondholders taking over most assets and wiping out union contracts and liabilities. Now U.S. government / taxpayers "own" these liabilities, most of which are UAW retirement pension and health care plans.
Government Motors is nothing else than a very expensive taxpayer-funded public works program to "save or create" union jobs and benefits.
GREAT INFO ON GOVNMT MOTOS!
As much as it pains me to say it knowing GM-er's that are good people and great engineers, Professor Dunkelberg is right. I hate to say it, but this business model can't fly unless Glenn Beck is right and the Fedzilla absorbs the GM pension.
All the liberals around the country don't get it that @ 61% ownership and 15% (or more?) UAW ownership even with an IPO what are you getting?
Plant, Equipment, Intellectual Property and Employee Intangibles yes, But you still get all the legacy debt, i.e. the Pensions and the "VEBA", the pension was never turned "off" in the bankruptcy.
Ford has turned their VEBA liabilitity into long term notes and for all intensive purposes it has been put to bed.
When I hear all the business wonk and wonkets say GM will kick their but when the go public I say, ya show me... They didn't make any money per this article and still have the VEBA and Pension hanging over our heads as unwilling tangenital shareholders...