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Taxpayers Pick Up $15 Bilion Tab for General Motors

Add General Motors to the list of government failures taxpayers are continuing to fund. As though it weren't egregious enough that the government meddled in private industry in the most intrustive of fashions, the auto bailout that was supposed to save GM will cost taxpayers billions.  Wednesday, the Treasury announced they'll be selling 40% of the GM stock they hold or 200 million shares back to GM. 

Selling GM stock at a profit? No, the shares will be sold at a loss; a huge loss. Investor's Business Daily has the breakdown:

GM on Wednesday said it will buy back the 200 million share government stake for $5.5 billion, or $27.50 a share.

The break-even point on the government's total holdings was $53 a share. But now, with $20.9 billion in taxpayer funds left to pay off from 300 million shares, the break-even point has risen to $69.72 a share.

In other words, at current prices, taxpayers are sitting with a loss of 61%, or nearly $15 billion, on their investment.

The $15 billion doesn't even include the $26 billion that went to the United Auto Workers (UAW). This summer, Heritage explained how the UAW is exempt from bankruptcy restructuring:

More than $26 billion went out the door and into the UAW’s pockets. Let’s put that in perspective: The amount of the subsidy given directly to the UAW was bigger than the budget of the entire State Department. It was bigger than all U.S. foreign aid spending. It was 50 percent more than NASA’s budget.

Even with the exchange of shares, GM executives are still bound to federally imposed salary caps. None of the taxpayer money spent is helping GM, who holds a meager 16.5% of the car market these days. Government intervention in the free market is always at the expense of taxpayers and the Obama administration is rapidly becoming the perfect case study.  Once again, it's the taxpayer funding this administration's special interests and governmental expansion. 

TARP Facts

It is true that we are not likely to recover all of the TARP money from GM, however we have already recovered almost 100% of the $500+ million in TARP bail out funds. Right now we taxpayers are $14 billion shy of breaking even and it is likely we will recover all of that and likely more.

TARP (which was enacted by Bush and supported/expanded by Obama) saved our economy from collapse and did not end up being a loss for the taxpayers as claimed/implied above ("government failures taxpayers are continuing to fund" and "Government intervention in the free market is always at the expense of taxpayers"). The private sector and Wall Street along with lax regulation created the foreclosure mess. Those are facts.

I can only imagine what terrible things you would be saying about Obama if he had allowed all the banks and car makers to go bankrupt and our economy was decimated. Today's unemployment numbers would look great compared to what that would have brought.