Fact
Check: It’s dead, too. When GM faced bankruptcy, it faced it for one
reason: the United Auto Workers had contracts that put GM on the ropes. Instead
of allowing GM to go through the normal bankruptcy process, though, President
Obama tossed $100 billion at the problem -- $50 billion in straight grants
through TARP, a waiver of $45.4 billion in taxes, $360 million in stimulus, and
a huge tax credit for buyers of the God-please-don’t-spontaneously-combust
Chevy Volt. Meanwhile, he also forced GM bondholders to take pennies on the
dollar while awarding UAW a far higher share of their holdings.
Where did the taxpayers end up? We’re going to lose well
north of $42 billion on the auto bailouts,
and much more when you include tax breaks and credits. GM’s such a disaster
area that it premiered on the market at $33 per share in 2010. It now trades at
just under $23 per share.
But didn’t it save jobs? Of course not. While Biden and
Obama claim that they saved some 1.5 million jobs, as National Review points out:
This
preposterous figure is based on the assumption that if GM and Chrysler had gone
into normal bankruptcy proceedings, the entire enterprise of automobile
manufacturing in the United States would have collapsed — not only at GM and
Chrysler but at Ford and foreign transplants such as Toyota and Honda. Not only
that, the Democrats’ argument goes, but practically every parts maker,
supplier, warehousing agency, and services firm dedicated to the car industry
would have collapsed, too. In fact, it is unlikely that even GM or Chrysler would
have stopped production during bankruptcy: The assembly lines would have
continued rolling, interest and debt payments would have been cut, and — here’s
the problem — union contracts would have been renegotiated. Far from having
saved 1.5 million jobs, it is not clear that the GM bailout saved any — only
that it preserved the UAW’s unsustainable arrangement.
Actually, the GM bailout didn’t even save the 250,000 jobs
Bill Clinton cited in his speech at the Democratic National Convention. While
the auto industry has added about 236,000 jobs, almost none are at GM. The
companies who are best off are the ones who never got bailed out. In April
2009, Obama’s own advisors told him this – they
said that job losses would be only 10 to 20 percent of the bankrupt companies.
Obama himself summarily laid off 100,000 people
at GM and Chrysler dealerships during the auto bailouts.
Isn’t GM number one in sales? No, it isn’t. Its sales
increases lag behind Toyota, Volkswagon, Porsche, and even Kia. The vaunted
Chevy Volt, a disastrous automobile creation that the Obama administration
touted as its great breakthrough, has turned out to be more Yugo than SUV –
each one produced costs the taxpayers some $49,000, and their manufacture has
started and stopped more often than Obama’s sputtering economic “recovery.” And
overall, GM is only number one if you count the 1.2 million vehicles created by
China’s Wuling, in which GM is a small stakeholder, and ignore every company in
which Volkswagon owns a majority. GM has smaller revenue than both Toyota and
Volkswagon. GM’s current market share is 18
percent; in 2011, it was 20 percent. It’s headed the wrong direction.
Even GM’s sales are false. Over 90 percent of its car loans are of
the subprime variety,
meaning many folks won’t pay them back. In order for GM not to go bankrupt, it’s going to need another cash infusion or a dramatic change in circumstances – to break even for the taxpayer, the stock needs to trade at $53 per share.
meaning many folks won’t pay them back. In order for GM not to go bankrupt, it’s going to need another cash infusion or a dramatic change in circumstances – to break even for the taxpayer, the stock needs to trade at $53 per share.
GM is dead, thanks in large measure to the GM bailouts that
prevented GM from truly reorganizing, instead dooming it to a long crawl into
the abyss. So while Barack Obama runs around the country guzzling beer with
average Joes, getting hugged as though he hasn’t left America with the smallest
workforce participation in 30 years, let’s remember: his big bumper sticker
accomplishments have been miserable failures on a more general level. Source
