GM Bailout Will Cost Taxpayers as Much as $12 Billion

“Government Motors” no more. The federal government is calling in its loans to General Motors, which received a taxpayer-funded injection of almost $50 billion at the height of the financial meltdown in 2008.

The auto bailout cost taxpayers a bundle, but it helped Obama win reelection. Photo: ##http://www.usnews.com/news/blogs/rick-newman/2012/12/19/its-official-taxpayers-will-lose-big-on-the-gm-bailout##U.S. News and World Report##

Over the next 12 to 15 months, President Obama says the world’s largest automaker, which has been turning a healthy profit since 2010, must buy back its remaining 500 million shares from the government. But, unlike the bank bailouts, the government rescue of GM won’t result in a payout for its taxpaying saviors.

The federal government will receive only the going share prices, currently about $27, for its investment — about half of the purchase price of roughly $54 a share. US News and World Report estimates the bailout of GM will cost taxpayers between $10 and $12 billion.

So, chalk up another big subsidy for driving. Taxpayers also lost $1.3 billion on the bailout of Chrysler. And then there was the $3 billion Cash for Clunkers program — another stimulus-era subsidy for the auto industry.

There’s a fair argument to be made that the economic fallout from the dissolution of General Motors — which employs 202,000 people worldwide — during the lowest point of the worst recession in generations would have been disastrous. But the $10-$12 billion bailout is another indication of the high cost of America’s auto dependence.

Remember, this wasn’t the first time U.S. taxpayers bailed out the domestic auto industry. In 1980, Chrysler — reeling from the U.S. oil embargo — received $1.5 billion from the government. It will be interesting to see whether the American auto industry, when it faces the next collapse in demand for its product, will again be the beneficiary of a taxpayer-financed insurance policy against financial collapse.

  • Neil17

    Why wouldn’t GM be forced to pay the government back from the profits they are now making, until the U.S. taxpayers are made ‘whole’?? 

  • Irvin Dawid

    this ‘bail-out’ was one of the smartest moves by Obama – keeping GM (and Chrysler) alive meant auto-workers and all the other related workers in the related fields, be they auto dealers, parts suppliers, etc, went back to work – or were never laid off in the first place.  Yes, U.S. took a hit – but what would the hit have been in unemployment checks, to say nothing of the 2012 presidential election, had Obama pulled a Romney?

  • Irvin Dawid

    one more thing – cash for clunkers was a boom to anyone who wants to breathe clean air – getting gross polluters off the road are programs that air districts throughout CA run – from what I’ve read, the biggest problem with the clunkers program was the reimbursement to the auto dealers.  This was a subsidy that made a lot of cents from an energy and air quality perspective.

  • Irvin – was it actually a net improvement?  How many years of cleaner running does it take to make up for the manufacture of a new car?

  • Irvin – was it actually a net improvement?  How many years of cleaner running does it take to make up for the manufacture of a new car?

  • Anonymous

    “But, unlike the bank bailouts, the government rescue of GM won’t result in a payout for its taxpaying saviors*”

    *calculation does not include loss of wages due to higher unemployment, economic losses from difficulty of obtaining credit, and government revenues lost due to higher unemployment, lower economic activity, and higher safety net spending

    Add that stuff in and the financial bailouts don’t look so good. Also, there’s definitely some value in maintaining a US industrial base capable of manufacturing things like buses and rail cars.

  • sillyrabbits

    This nation is one brain dead hole…one Trillion for “oil freedom” and your whinning about saving jobs for US workers?? Remember the billions for AGI or dear Goldman/Sachs..Cars suck but as much as you love your fantasia bike fetish most people drive…worry abourt that

  • BuyUSA

    The bailout of GM cost taxpayers of USA between $10 and $12 billion, so they design a new car that is featured by NASCAR and build in Elizabeth, Australia. The CEO, CFO and the board of directors should be held accountable to pay back every single US dollar.

  • BuyUSA

    The bailout of GM cost taxpayers of USA between $10 and $12 billion, so they design a new car that is featured by NASCAR and build in Elizabeth, Australia. The CEO, CFO and the board of directors should be held accountable to pay back every single US dollar.

  • BuyUSA

    The bailout of GM cost taxpayers of USA between $10 and $12 billion, so they design a new car that is featured by NASCAR and build in Elizabeth, Australia. The CEO, CFO and the board of directors should be held accountable to pay back every single US dollar.

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