Govt to lose $14B of auto bailout funds

[ProfJohn]

Just incase anyone wanted the truth on how much the bailout of GM and Chrysler cost us.

$14 billion makes the bailout of automotive companies almost as expensive as the bailout of the entire banking industry via TARP. ($19 billion is the latest figure there)

But hey at least the automotive industry is paying back that money, to Democrats in the form of $27 million in campaign donations over the past 20 years. And $4.9 million to help get Obama elected in the first place. And in return Obama gave them 55% of Chrysler. Sounds like a good deal for the UAW.

http://news.yahoo.com/s/ap/20110601/ap_on_re_us/us_obama_autos_2

The Obama administration said Wednesday that the government will lose about $14 billion in taxpayer funds from the bailout of the U.S. auto industry.
In a report from the president's National Economic Council, officials said that figure is down from the 60 percent the Treasury Department originally estimated the government would lose following its $80 billion bailout of Chrysler and General Motors in 2009.
The report's release coincides with the administration's efforts to tout the bailout's role in the revitalization of the U.S. auto industry after last week's announcement that Chrysler is repaying $5.9 billion in U.S. loans and a $1.7 billion loan from the Canadian government. Those payments cover most of the federal bailout money that saved the company after it nearly ran out of cash in and went through a government-led bankruptcy.
GM previously announced that it had repaid a little more than half of the $50 billion it received in federal aid.
Treasury Secretary Timothy Geithner said U.S. auto companies are now at the forefront of a comeback in American manufacturing.
"We cannot guarantee their success, and at some point they may stumble. But we've given them a better shot," Geithner wrote in an opinion piece in Wednesday's edition of The Washington Post.
"While we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner," he wrote.
Obama will visit a Chrysler plant in Ohio Friday to tout highlight the company's success.
GM and Chrysler were on the verge of collapse in the final days of the Bush administration after Congress failed to approve an emergency loan package. The Bush administration gave the companies $17.4 billion in loans and required them to develop a restructuring plan by mid-February 2009.
Obama's administration pumped billions more into the carmakers later that spring but won concessions from industry stakeholders, allowing it to push GM and Chrysler through bankruptcy court in the summer of 2009.

 

[classy]

But that is far cheaper than losing easily 100K+ jobs. All 3 appear to be successful again on a road that seems to lead to solid futures. So we have saved an entire industry from collapse. So it was not a bad giveaway. And during that time period a lot of people got some great deals on much needed new cars. Its easy to look at the number and ignore all the other stuff.

 

[Possessed Freak]

But that is far cheaper than losing easily 100K+ jobs. All 3 appear to be successful again on a road that seems to lead to solid futures. So we have saved an entire industry from collapse. So it was not a bad giveaway. And during that time period a lot of people got some great deals on much needed new cars. Its easy to look at the number and ignore all the other stuff.

But that is not the capitalist way. The industry *should* have failed and come out as a leaner meaner more competitive self.

 

[EagleKeeper]

But that is far cheaper than losing easily 100K+ jobs. All 3 appear to be successful again on a road that seems to lead to solid futures. So we have saved an entire industry from collapse. So it was not a bad giveaway. And during that time period a lot of people got some great deals on much needed new cars. Its easy to look at the number and ignore all the other stuff.

Most of those jobs would not have been lost. Other companies/investors would have stepped in and claimed the carcasses. As an example - who is owning Chrysler at the present time.

What would have been lost is the strength of the unions and the high priced contract/pensions and executive positions.

Some model lines would have been tossed (as was already done), more efficient manufacturing methods would have been accelerated.

as the efficiency kicks in; jobs would have to be rearranged and attrition take care of those "lost" jobs. Now days, attrition has to be replaced with new blood according to the union.s

 

[Zebo]

lulz 14B in a 2 trillion dollar deficit economy...talk about a storm in a teapot.

Not to mention it would have cost way more with govt picking up their pensions, the welfare of those who didnt find jobs etc.. what a fool.

 

[Genx87]

But that is not the capitalist way. The industry *should* have failed and come out as a leaner meaner more competitive self.

What is wrong with that? Artifically propping up an inefficient mess only prolongs the pain.

It isnt like Chrysler hasnt been through this before right?

 

[Slick5150]

Most of those jobs would not have been lost.

Completely incorrect. In fact, the job losses would have been significantly higher than those directly employed by GM/Chrysler. The parts suppliers would have been killed by either company going under. I have a family member that owns a supplier to both GM and Toyota. He said if GM went under, he either has to triple his price to Toyota, or go out of business, with the latter being more likely. So parts become scarcer and more expensive, car prices go up, and a lot more people go out of work.

And that doesn't even include the secondary job losses. The small businesses that operate solely based off employees at auto plants. Restaurants, stores, bars, etc... That's a lot more jobs lost right there.

It amazes me to see people's desperation to show that the auto bailout was somehow a terrible idea, especially since it wasn't even a Democrat that did it. Bush started the bailout process, and rightfully so. Obama continued it, and rightfully so.

 

[rudder]

Most of those jobs would not have been lost. Other companies/investors would have stepped in and claimed the carcasses. As an example - who is owning Chrysler at the present time.

What would have been lost is the strength of the unions and the high priced contract/pensions and executive positions.

Those high priced pensions will kill GM (or cost taxpayers more). They have $27 billion of unfunded pension liabilities.

 

[alphatarget1]

Completely incorrect. In fact, the job losses would have been significantly higher than those directly employed by GM/Chrysler. The parts suppliers would have been killed by either company going under. I have a family member that owns a supplier to both GM and Toyota. He said if GM went under, he either has to triple his price to Toyota, or go out of business, with the latter being more likely. So parts become scarcer and more expensive, car prices go up, and a lot more people go out of work.

And that doesn't even include the secondary job losses. The small businesses that operate solely based off employees at auto plants. Restaurants, stores, bars, etc... That's a lot more jobs lost right there.

It amazes me to see people's desperation to show that the auto bailout was somehow a terrible idea, especially since it wasn't even a Democrat that did it. Bush started the bailout process, and rightfully so. Obama continued it, and rightfully so.

Would it be cheaper and more effective if the government had backstopped the supplier instead of bailed out GM and Chrysler?

Chrysler still makes crappy cars that not very many people want to buy... And their pension obligations would've been dumped onto the government's hands if they had gone under, from my understanding.

 

[Fear No Evil]

lulz 14B in a 2 trillion dollar deficit economy...talk about a storm in a teapot.

Not to mention it would have cost way more with govt picking up their pensions, the welfare of those who didnt find jobs etc.. what a fool.

I thought the Democrats were saying the Republicans were going to basically shut down the country when they proposed like 20 billion in 'cuts'? Its funny when 14b is a fucking joke when its thrown at the unions, but when the Republicans suggest a relatively minor cut the lefties of this country go absolutely bat shit insane over it. Make up your mind.

 

[CPA]

The best story out of the auto bailout was when GM "paid" back their $5B loan with other bailout money. I still get a chuckle out of that accounting trick.

 

[CPA]

lulz 14B in a 2 trillion dollar deficit economy...talk about a storm in a teapot.

Not to mention it would have cost way more with govt picking up their pensions, the welfare of those who didnt find jobs etc.. what a fool.

lol, as if the pensions were magically fixed with the bailout.

 

[Ape]

But that is not the capitalist way. The industry *should* have failed and come out as a leaner meaner more competitive self.

You hit the nail on the head!

/thread

 

[ProfJohn]

Completely incorrect. In fact, the job losses would have been significantly higher than those directly employed by GM/Chrysler. The parts suppliers would have been killed by either company going under. I have a family member that owns a supplier to both GM and Toyota. He said if GM went under, he either has to triple his price to Toyota, or go out of business, with the latter being more likely. So parts become scarcer and more expensive, car prices go up, and a lot more people go out of work.

That is a false argument because it assumes that once GM and Chrysler shut down their portion of the car market would have disappeared with them, which is wrong.

If they had both completely shut down the other car makers would have increased their share of the business and in turn would have need more parts to support their new business.


Also, the main objection to the bailouts isn't the fact that we did them, but the fact that we did them in a political manner that favored the unions over secured bond holders and the like.

 

[Vette73]

Oh PJ and you BS spin. I guess you forgot that Bush was the one to give them the free money, it was Obama that made them give concessions for help.


"The Bush administration gave the companies $17.4 billion in loans and required them to develop a restructuring plan by mid-February 2009."

They, GM and Chry, should have gone straight to bankruptcy. But Bush did not allow that and lifted them up until they did have to go.

 

[Craig234]

As a correction to earlier discussion, more won't be repaid than earlier information I had. I think some of the commentators have not indicated some of the repaid amount.

But overall, it was still a great success as a program and a lot better than Republicans' wrong prediction, and their desire to greatly damage the economy by not doing it.

Hurting unions, helping red state politicians with foreign companies, etc.

 

[Zebo]

lol, as if the pensions were magically fixed with the bailout.

If you buy an American truck like real Americans drive, probably fixed

4-10K margin.

 

[ElFenix]

As a correction to earlier discussion, more won't be repaid than earlier information I had. I think some of the commentators have not indicated some of the repaid amount.

But overall, it was still a great success as a program and a lot better than Republicans' wrong prediction, and their desire to greatly damage the economy by not doing it.

Hurting unions, helping red state politicians with foreign companies, etc.

article from way back when

even if the republicans wanted them to go bankrupt, that's exactly what happened. and as for foreign companies, where do you think fiat is from?

 

[piasabird]

Would never buy a Fiat. That is a joke.

 

[wuliheron]

Oh PJ and you BS spin. I guess you forgot that Bush was the one to give them the free money, it was Obama that made them give concessions for help.

I think PJ is looking to get a job with Fox News or maybe a writer for Rush. Honesty and integrity are not PJ's strong points.

 

[HomerJS]

Just incase anyone wanted the truth on how much the bailout of GM and Chrysler cost us.

$14 billion makes the bailout of automotive companies almost as expensive as the bailout of the entire banking industry via TARP. ($19 billion is the latest figure there)

But hey at least the automotive industry is paying back that money, to Democrats in the form of $27 million in campaign donations over the past 20 years. And $4.9 million to help get Obama elected in the first place. And in return Obama gave them 55% of Chrysler. Sounds like a good deal for the UAW.

http://news.yahoo.com/s/ap/20110601/ap_on_re_us/us_obama_autos_2

I'm confused are you for or against bailouts?

 

[ProfJohn]

Bailouts done in the correct way are fine.

Government bailouts that involved union kickbacks and too much government interference are not.

Sadly the government was the only entity with enough money to save GM & Chrysler, but we should have done it in a way that respected bankruptcy laws and didn't favor unions over bond holders and that limited long term government involvement.

Of course the Democrats couldn't allow a straight up bankruptcy because it would have crushed the UAW and that would never have been allowed to happen. Thus we get the political motivated bailout instead of a total overhaul of these two car companies.

 

[waggy]

Also, the main objection to the bailouts isn't the fact that we did them, but the fact that we did them in a political manner that favored the unions over secured bond holders and the like.

that is my main complaint. how they went about it. it was not so much to save the company but the unions power. then they went about and screwed bond holders in a way that should be against the law.

all in all it was not done in a way i agreed with.

 

[Slick5150]

The fact that GM and Chrysler both emerged from the process as much stronger companies is a testament to the fact that the process worked. GM is producing some top class cars now and is finding ways to build them here, with American workers, at a competitive cost. I picked up a Chevy Cruze ECO a couple months ago and love it.

Chrysler still has a ways to go technology wise. The new Dodge Charger is a beautiful car, but its fuel economy blows compared to the competition.

Saved hundreds of thousands of jobs and reinvigorated American manufacturing. That's a job well done.

 

[Genx87]

The fact that GM and Chrysler both emerged from the process as much stronger companies is a testament to the fact that the process worked. GM is producing some top class cars now and is finding ways to build them here, with American workers, at a competitive cost. I picked up a Chevy Cruze ECO a couple months ago and love it.

Chrysler still has a ways to go technology wise. The new Dodge Charger is a beautiful car, but its fuel economy blows compared to the competition.

Saved hundreds of thousands of jobs and reinvigorated American manufacturing. That's a job well done.

Bankruptcy does that to all companies, regardless if they recieve govt welfare. And what crack are you smoking? Does anything look reinvigorated in this country? Much less the auto-industry?