One of President Obama’s favorite campaign trail boasts is that, because of his leadership, Osama bin Laden is dead, while the automobile industry is alive.
It may turn out that that is only half true. The bailed-out auto industry is struggling, and a new Treasury document says that we, as taxpayers, may be on the hook for more money than was originally forecast.
The Detroit News reports:
The Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That's 15 percent higher than its previous forecast.
In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update.
The report may still underestimate the losses. The report covers predicted losses through May 31, when GM's stock price was $22.20 a share.
On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.
The government still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout.
What this shows once again is the folly of letting government “invest” money. The $500 million the taxpayer lost on the failed green energy firm Solyndra is another example of how the federal government uses our money.
If GM had taken bankruptcy instead of a bailout, it could have been able to restructure and survive—or not survive—without wasting taxpayer money. It could also have eliminated union waste. Yes, some of this “waste” is union jobs. But it is not fair to ask the taxpayer, most of us not belonging to unions, to foot the bills for cushy union deals. If the economy were better, people laid off would be able to find new jobs faster (not to downplay the heartbreak of joblessness—but think also of the dealerships that were closed as part of the bailout).
Ed Morrissey of Hot Air explains why conservatives might do well not to gloat over this news:
There are a couple of problems with taking high-fives at this point, not the least of which is the massive loss taxpayers will take when the government finally unloads the stock. Obama says that both companies would have gone under without the bailout (started by George W. Bush, with the arm-twisting bankruptcy run by the Obama administration), but a greatly-reduced Chrysler ended up being sold off to Fiat anyway. Ford, meanwhile, didn’t take the bailout — and managed to do just fine. The only thing accomplished by the Obama administration was the protection of UAW contracts and the shift of liabilities tied to pensions and benefits from GM to taxpayers. Those kinds of liabilities could have been addressed in a normal bankruptcy without government intervention — but it would have turned out much worse for Obama’s allies in Big Labor.
If Obama wants to run for a second term on the basis of doing this for other industries, I can’t think of a better argument to vote against him.