Posted on 11/18/2010 6:18:35 AM PST by alg1921
Study says auto bailout saved 1.4 million jobs By Ed Brayton 11/18/10 7:15 AM
A new study by the Center for Automotive Research in Ann Arbor concludes that the bailout of General Motors and Chrysler in 2009, with $85 billion in taxpayer money going to the two companies to help them survive the restructuring process of managed bankruptcies, saved 1.4 million jobs. The Detroit News reports:
Most of the jobs — 1.14 million — were saved in 2009, during the low-point of the industry’s severe downturn. But another 314,400 were saved in 2010, the Center said Wednesday.
“The government intervention prevented additional personal income losses totaling $71.9 billion for 2009 and $24.6 billion for 2010,” the center said in a statement.
“The net impact to the federal government—in terms of changes in transfer payments, social security receipts and personal income taxes—was $21.6 billion in 2009 and $7 billion in 2010.”
But that is merely the tip of the iceberg. The cost to state and local governments for the sudden increase in Medicaid, unemployment benefits, loss of property taxes and other consequences of allowing the two companies to fail would have been even higher.
Add in the $29 billion cost of taking over the pensions of the two companies by the federal Pension Benefit Guaranty Corporation and the effect of another wave of foreclosures that would have been triggered and the bailout was a bargain.
Welcome to FR yesterday.
Wow - that’s a lot of Dem/union votes.
No it isn’t...all it did was preserve UNIONS.....
The car makers weren’t going to close their doors....they were going to cancel union CONTRACTS. The ONLY people that would have been without a job was the UNION bigwigs.....
What a scam.
What crock. GM should have been allowed to File a Chapter 11 and be reorganized into a new car manufacturer with lower union wages and union benefit costs. Instead of the US Taxpayer paying for the bailout (actually China because it was borrowed) and the retired bond holders losing all their money, the vendors & stockholders would have had to absorb much of the loss, maybe getting 25 cents or less on the dollar for vendors and stockholders nothing. A new GM arising out of the Chapter 11 ashes would have been stronger and a lower wage & benefit cost structure. This taxpayer bailout was done for one reason: UNIONS and the money they give to Democrats and Obama. You seem to forget so quickly that Obama totally ignored the law when he eliminated the bond holders from the equation and told them to pound sand.
Our country and our economy having these more than 1.4 million people working and spending money during this recession, and not having their homes at risk of foreclosure, demonstrates that the Auto Bailout was a good thing.
It is good to prop up worthless companies that the customer has given up on? GM and Chrysler would have had 0 problems if they had made products people wanted and sold them at prices people were willing to pay. If the US car buying public had given up on these companies then why should the US taxpayer be expected to pay their bills.
Many here have relatives that lost eveyrthing they had in GM bonds because Obama made them worthless in the manner he bailed out the Unions.
Those bonds represented a retirement nest egg for most of those people.
THEY are now financially devastated.
You don’t care do you.
alg1921 Since Nov 17, 2010
Welcome to Free Republic, you Statist troll.
I suspect that today will be your last day here.
IBTZ
This one didn’t even try very hard, posting this drivel.
GM stock going on sale shortly. Soon to be had for very cheap.
If they'd have gone into Chapter 11 all the jobs would still be there ... but at wage levels that would make GM / Chrysler competitive without Fedzilla sticking its hand into my pocket yet again.
Welcome aboard grasshopper ... strap in for a serious learning curve if you're up to it.
With the discount being subsidized by our children and grandchildren.
They should have gone bankrupt. Then I would cheer their return. A Pox on them!!
At best, the bailout preserved 1.4 Million jobs at inefficient companies and prevented them from being created at efficient comapnies. In fact, the bailout destroyed jobs because it prevented the marketplace from reallocating the resources away from inept producers such as GM and Chrysler to more efficient producers (whether it be of automobiles or any other product or service).
Someone would’ve bought GM if it had gone bankrupt.
the bailout cost us taxpayers out of pocket.
IF the auto industry was not bailed out, would the demand for cars at the time simply stopped? NO!
Would those car companies simply cease to exist? Again, no!
More than likely, somebody would have bought the companies at firesale prices, and the companies would have continued on and would have been reorganized under the new owner/s.
And even if, lets say Chrysler would have gone down, the demand for cars would have been the same, and buyers would have gone someplace else for their cars.
Its not the existence of car companies themselves that employs people, its the demand for the products they sell.
Technically, when the government "bailed out"/stole the auto industry, they didn't save the incomes of 1.4 million. They took income away from others, and gave it to the failed companies unions.
And doing thus, technically took away money that the others MIGHT have spent on cars, or housing, or whatever. In essence still costing the jobs they were "supposed" to save.
Since the government spent money it didn't have. It just deferred the job losses to a later time, when the borrowed money will have to be paid back.
Assuming you haven’t been zotted (and you shouldn’t, you only posted twaddle, you didn’t try to defend it yet), you have got to feel a bit clarified about the situation, who you cited and their utter lack of independent authority, how people here respond to having smoke blown up their tailpipes and what you should do to improve your infant standing.
That said, feel the love yet? :)
There are a lot of thriving companies that have gone bankrupt in the past. GM could have been one of them. I will never buy another GM product again. They are OBAMA MOTORS. Remember that when you shop for a car.
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