Friday, May 27, 2022
Hawai'i Free Press

Current Articles | Archives

Friday, November 25, 2011
Taxpayer Losses on GM Bailout Are Going to Be Massive
By NCPA @ 3:13 AM :: 5981 Views :: Maui County, Education K-12, National News, Ethics

Taxpayer Losses on GM Bailout Are Going to Be Massive

From NCPA

Last week the Treasury Department revised its loss estimate for the General Motors (GM) bailout from $14.33 billion to $23.6 billion, thanks to the company's sinking stock price. GM's September 30 closing price, on which the new estimate is based, was $20.18, about $13 less than its December IPO price and $35 less than what is needed for taxpayers to break even, says Shikha Dalmia, a senior analyst at the Reason Foundation.

  • The $23.6 billion represents a 25 percent loss on the federal government's $60 billion direct "investment" in GM.
  • But that's not all that taxpayers are on the hook for.
  • As explained previously, Uncle Sam's special GM bankruptcy package allowed the company to write off $45 billion in previous losses going forward.

This could work out to as much as $15 billion in tax savings that GM wouldn't have had had it gone through a normal bankruptcy. Why? Because after bankruptcy, the tax liabilities of companies increase since they have no more losses to write off. This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion.

Although GM will never make taxpayers whole, taxpayer losses could be mitigated if GM's stock price rises before the Treasury sells its remaining equity, something it was supposed to do by year-end but has postponed under the circumstances.

GM actually has been doing quite well in North America and China with profit margins of 10 percent, among the best in the industry. The company's big weak spot right now is Europe for two reasons: One, thanks to political pressure and labor resistance, it hasn't been able to address its bloated cost structure there. Two, Europe's economy is imploding, weakening car sales.

All of this shows why forcing taxpayers to wager their hard-earned dollars on a risky venture was exactly the wrong thing to do.

Source: Shikha Dalmia, "Treasury Admits What Everybody Already Knew: Taxpayer Losses on GM Bailout Are Going to Be Massive," Reason Magazine Blog, November 17, 2011.

Related:

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Life Alliance

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT