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.