Taxpayers May Face Losses from Auto Bailout; Warren

"Taxpayers may not recover all of the bailout money awarded to the auto sector, said Elizabeth Warren, chair of the Congressional Oversight Panel in charge of the Troubled Assets Relief Program [TARP].

“When Treasury wants to get tough, it knows how to do so,” she said. “And it did it in the case of the auto industry. Whether that ultimately will be enough to get all of the money for the American taxpayers, I don’t know"

While we are here.

Are we on the wrong page…?

A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.
A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.

So, the average “Cash for Clunkers” transaction will reduce US gasoline consumption by 320 gallons per year.

They claim 700,000 vehicles – so that’s 224 million gallons / year.
That equates to a bit over 5 million barrels of oil.
5 million barrels of oil is about ¼ of one day’s US consumption.
And, 5 million barrels of oil costs about $350 million dollars at $70/bbl.
So, we all contributed to spending $3 billion to save $350 million.

How good a deal was that???

They’ll probably do a great job with health care though!!

So, we all contributed to spending $3 billion to save $350 million.

How good a deal was that???”

NObama only read books by Ayers and other Socialists.

He never read anything close to an accounting book.
He and his minions have never run a business.

They are “Community Organizers”—which is a set of code words for radical jerks with no experience and no brains except to cause mischief.

I equate Nobama with the holligan who sprays graffitti all over the place : He sure al heck isn’t an ‘artist’, and he does NOT even have the talent it took the for the painter of the original building to do his job.

But he sure gets alot of attention from the Left about what a wonderful exhibit of ‘cultural expression’ that graffitti is.

It is all the Emperor’s new clothes on large doses of steroids. It is all BS.

So, we all contributed to spending $3 billion to save $350 million.

How good a deal was that???”

NObama only read books by Ayers and other Socialists.

He never read anything close to an accounting book.
He and his minions have never run a business.

They are “Community Organizers”—which is a set of code words for radical jerks with no experience and no brains except to cause mischief.

But he sure gets alot of attention from the Left about what a wonderful exhibit of ‘cultural expression’ that graffitti is.

It is all the Emperor’s new clothes on large doses of steroids. It is all BS.

Taxpayers face heavy losses on auto bailout

Excerpt

WASHINGTON — Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

"I think they drove a very hard bargain," said Elizabeth Warren, the panel's chairwoman and a law professor at Harvard University, referring to the Obama administration's Treasury Department. "But it may not be enough."

The prospect of recovering the government's assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM's case by next year.

The shares "will have to appreciate sharply" for taxpayers to get their money back, the report said.

For example, GM's market value would have to reach $67.6 billion, the report said, a "highly optimistic" estimate and more than the $57.2 billion GM was worth at the height of its share value in April 2008. And in the case of Chrysler, about $5.4 billion of the $14.3 billion provided to the company is "highly unlikely" to ever be repaid, the panel said.

Treasury Department officials have acknowledged that most of the $23 billion provided by the Bush administration is likely to be lost. But Meg Reilly, a department spokeswoman, said there is a "reasonably high probability of the return of most or all of the government funding" that was provided to assist GM and Chrysler with their restructurings.

Administration officials have previously said they want to maximize taxpayers' return on the investment but want to dispose of the government's ownership interests as soon as practicable.

"We are not trying to be Warren Buffett here. We are not trying to squeeze every last dollar out," Steve Rattner, who led the administration's auto task force, said before his departure in July. "We do want to do well for the taxpayers but the most important thing is to get the government out of the car business."

Greg Martin, a spokesman for the new GM, said the company is "confident that we will repay our nation's support because we are a company with less debt, a stronger balance sheet, a winning product portfolio and the right size to match today's market realities."

That’s $3 billion one time vs. $350 million per year. That’s still probably a bad deal long term, but it’s not as bad as spending $10 to get $1.

The huge hole in this argument is that the cost is not a one-time or a one year cost. The whole cost involves lots of moving parts. First, the reduction in the number of used cars available will be a multi-year cost that like this BS is born by the tax payer (Less money in the economy). Second, this is being payed for with borrowed money. Our grand children will still being paying for in their working lives. Then, we see that the $4,500 is taxed in the price of the car, Taxed as income on next year’s taxes and taxed as income to the dealer. All of the above take more money out of the economy. The long term cost of this is so astronomical as to make it grounds for impeachment.

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