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GM, Chrysler Bailout Loans Could Cost Taxpayers Up To $16B

U.S. Capitol

U.S. Capitol

A report from the White House National Economic Council shows that the Obama administration expects to lose less than $16 billion on the bailout of General Motors, Chrysler, Ally Financial and Chrysler Financial.

Of the $80 billion invested, some $40 billion has been recovered to date, already an improvement over worst-case predictions that initially put potential losses at $48 billion. Even the $16 billion loss projected by the White House National Economic Council Report may be pessimistic, as the Treasury Department and The Congressional Budget Office both project losses of $14 billion.

The debate over the government bailout will likely last for years, but the White House cites reports showing that the bailout “saved the federal government tens of billions of dollars in direct and indirect costs, including transfer payments like unemployment insurance, foregone tax receipts, and costs to state and local governments.” The administration also points out how many industry jobs were saved, as well as how many new automotive sector jobs are being created in Michigan.

Their viewpoint was perhaps best summed up by Treasury Secretary Timothy Geithner, who wrote in a Washington Post op-ed piece, “We cannot guarantee their success, and at some point they may stumble. But we’ve given them a better shot. The choice to stop the American automobile industry from unraveling was the right one. While we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner.”

[The Detroit News]

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