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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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Comments (7)
  1. More bailouts... We're do I sign up?

  2. @Daniel, right behind me...

  3. Only the Government could be happy about losing money.

  4. @Jim, look at it from a "glass half full" perspective: they're losing a lot less money than they thought they would.

  5. GM Invested $5B in capital improvements in America in 2010 & 2011 and provides $10's of Billions in taxable annual pay to employees as well as Suppliers and their employees. The bailout was a very good thing for America. Strong profits next quarter will drive stock price higher and reduce the taxpayer's losses even more.

  6. @Dan, my only hope is that GM, Ford and Chrysler ramp up hiring. Unemployment and underemployment are significantly worse than the numbers would have people believe, and the automakers represent the best shot we've got at putting Americans back to work.

  7. I'd much rather our government spend $16B on a bailout for an auto industry that actually creates something as opposed to hundreds of billions on bailouts for banks and investment firms that produce nothing but wealth for a priveleged few. $16B is a drop in the bucket compared to trillions of dollars for two unfunded George Bush wars that are major contributors to our current economic conditions. Other than the military-industrial complex, what Americans benefitted from those conflicts? Certainly not the thousands killed in action. How about we stop wasting money on military nation building, quit complaining about investment in America, and do more to stimulate our own economy - like the rest of the industrialized world?

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