Economy & Budget

President Obama’s General Motors hypocrisy

President Obama's General Motors hypocrisy

The Wall Street Journal reports today that General Motors executives have asked the Treasury Department to sell its stake in the giant automaker. The administration has refused.

Oddly enough, today we also learned that the Obama administration is launching a complaint at the World Trade Organization over China’s allegedly unfair subsidizing of its auto industry. The United States will charge the Chinese government with subsidizing auto and auto parts producers from 2009 and 2011 to the tune of $1 billion. (Protectionism, it seems, always becomes a vital component of economic policy when a candidate is campaigning in Ohio.)

Remember, when President Barack Obama pursues nationalization, he’s making a gutsy call and “saving” the American auto industry. Democrats brought up the bailout 150 times during the Democratic National Convention.  It was such a gutsy call, in fact, that U.S. taxpayers, who rescued the heavily unionized automaker, now own around 26.5 percent of the company.

Yet back in June of 2009, President Barack Obama claimed taxpayers were only “reluctant shareholders” after the government took its stake in General Motors. “What we are not doing — what I have no interest in doing — is running G.M.”

He went on:

“They, and not the government, will call the shots and make the decisions about how to turn this company around. The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions.”

If General Motors believes it needs to extricate itself from government to be successful, why would reluctant shareholders stand in the way?

GM executives reportedly feel the company is tainted by the stigma of bailouts.  It has also reportedly struggles to institute pay caps imposed by Washington during the bailout, as they undermine the company’s ability to recruit top candidates. Pay caps might be wonderful for populist messaging, but they make no sense in the real world. Moreover, this entire situation is another example of why government shouldn’t own companies: Even when it’s not involved, it is.

So why won’t the Treasury Department sell the remaining shares? Well … November.

If the Treasury sold its stake, it would have to admit, despite all its big talk of  success , that the venture cost taxpayers a bunch of money.

As I write GM’s shares stand at around $24. If the U.S. sold it shares today it would lose another $15 billion on the bailout. GM stock would need to reach $53 a share for the U.S. to break even. The Wall Street Journal reported that the Treasury Department will start thinking about unloading shares when it hits the $30s. Well, G.M.’s 52-week high is $27.68 and its value has been halved in the past two years.

And for those who believe that the Treasury Department is really waiting for a more favorable stock price; you’re probably going to be waiting a long time.  With demand in Europe and China weakening, Moody’s Investors Service recently lowered its growth forecast for global auto sales next year.

Moreover, the Treasury Department itself estimates that government will lose more than $25 billion — 15 percent higher than its previous forecast. So why wouldn’t it move now?

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  • AgTrotter

    “If theU.S. sold it shares today it would lose another $15 billion on the bailout. GM stock would need to reach $53 a share for theU.S. to break even. ”

    For the sanity-challenged liberals out there, let me state this as simply as I possibly can.

    When the Man-Child states that he saved GM and they have paid us back, he is lying!

  • Cordstreet

    Oh the irony…….

  • SeeTheLight

    Obama complain???? come on… really?

  • fiveradios

    Ag, you’re right of course…this whole thing just reeks.

  • dataphat

    China please excuse our residing president as he and other liberals (according to new studies) have an “incurable mental disorder” we will be back in January to repair any damages , if our Lord and Savior so chooses.
    Thank you,

  • Joe Deshotel

    Because shareholders, reluctant or not, don’t want to share potentially profitable assets. We saved GM and local and state govt. from extra welfare and unemployment costs. As long as we own less than half I have no problem with some longterm phased-out ownership.

  • Jack J. Smith

    Obama is over his head

  • MikeCumpston

    If Obama is criticizing the Chinese, it’s because they have told him to go ahead to help with his re-election.

  • TraderJo

    The Donald had been trying to make the point about the Chinese shenannigans for years, and it only took the Romney campaign to point out the problem in a campaign ad for Obumble to “complain.”

    Gutsy? Not from THIS Prez. All show in an attempt to get re-elected. Period.

  • Citizen60

    It’s china’s fault….

  • Gary Thonpson

    Instead of buying GM bonds that would have had to be paid in full, The Obama administration apparently pegged the loan to the stock market. This will cost American taxpayers billions of dollars.

  • cntrlfrk

    What is even more ironic about this, is that, I believe is one of the main goals of Obama, to expand the Public-Private Partnership in business. It’s already been done in many industries, whether it’s Health Care, Energy, Communications, Transportation, Finance etc….

    Obama seems set on modeling our entire Energy Sector after the Ethanol Industry, creating something that is not profitable on it’s own without government subsidies. A huge power shift. Plus, Obama knows he can’t accomplish this if the economy is thriving…..


  • JiminGA

    Obama and his team cannot possibly hope to win a trade war with China, and fighting with China will only raise prices in the US. Nobody wins a trade war, but consumers always lose. Obama is only trying to steal Romney’s thunder about their currency manipulation, something the Fed has been doing for many years.

  • alericKong

    No one was saved except the Former ACORN lawyer’s union thug murderers.

    Wait I forgot, I’m talking to people who literally applaud Obama when he sneezes and wipes his nose.

  • Bobby Miller

    And he should be careful if he walks in the rain, he might drown as he has his head back looking down his nose at the rest of us peons!

  • David Driver

    Let China do what China wants to do “in” China. ANY government (including our own), who subsidizes failure, will not succeed.

    Let China fail.

    Take a look at our own subsidising; Look at GM. At the price GM is trading, it cannot even pay the interest on what it owes the American People.

    Subsidizing failure, does not create success. It simply makes failure (and btw: even the “prospect of future failure”) and the rewards for taking risks that are more prone to fail, more attractive. Why? Because you can put the cost for failure on everyone else.

    And that quite simiply, is a fraud!

  • moremonkeybusiness

    I assume in the background Obama is telling the Chinese not to worry about his comments during the campaign and to just wait until after the election is over.

  • America’s Native Son

    who knocked down the Japanese diplomat last week, seems like a hit.

  • Jon

    So obama is a hypocrite about GM and China? Is there ANYTHING he is not hypocritical about….anything?

  • Dominic

    Wow you hate everyone .The rest of your friends are surrounding our US embassys around the world.

  • Joe Fliel

    Oddly enough, just today we also learned that the Obama administration is launching a complaint at the World Trade Organization over China’s allegedly unfair backing of its auto industry.”

    Hmm. Is that a fact? Pot, meet kettle. More nonsense from the empty suit in the empty chair who has an empty head and continues to make empty promises.

  • John

    Perhaps this was due to the video too? Let us pile on the maker of the video (if you call it that?) “Innocence of the Muslims” or the reliable standby, namely those mean republicans in Congress who won’t play nice with the O’ ster!

  • Bob Coulton

    If the media reported just a tenth of his lies, no make one hundreth of his lies he wouldn’t stand a chance at re-election. All those people who work for a living wouldn’t vote for him (the leeches will always be a different story).

  • Kevin Alexander

    Obama’s missiong is to bankrupt our entire nation and that is one thing he is doing a great job of !

  • cmdr-buzz-corey

    And Hussein Obama’s union (organized crime) buddy thugs got richer at the taxpayer’s expense.

  • plebian3

    President Bari Malik Shabazz signed “Free Trade” agreements with Colombia, Panama, and the coup de gras, South Korea not too many months back, but he’s nothing if not Three-Faced. Face it, our Con-gress and Chief Executives have basically been about the process of boarding up America’s manufacturing base since Humidor Man first put his signature to NAFTA. What’s really gratifying is that GM is using our tax dollars to build manufacturing plants in China. What ought we to do about it, send every member of Con-gress, the Administration, and GM’s Board of Directors and Executive VP’s to Afghanistan and embed them with EOD units, live in that dustbowl, and find out what constipation is really all about after consuming a few MRE’s.

  • IdgaradLyracant

    Stop calling Obama incompetent. He’s a very competent and has been one of the most successful Presidents ever. You just made the mistake of assuming helping this nation was his goal…

  • Phillip Smith

    Fascism is socialism with only the appearance of private property. I prefer the term “statism” as it covers all of the fancy names of tyranny.

  • John Whalen

    Obozo MUST go!!! Wake up Sheeple!!!

  • JeddMcHead

    The ONLY thing about this administration that’s actually “transparent” is their hypocrisy.

  • snoopy

    So o,bummer is accusing china of financially supporting its auto industry illegally to gain an unfair advantage.HMMM!!!!!!!!!!!

  • napoleon_solo

    oh, please someone snuff me. I can’t take it. The guy who props up his auto industries with huge bailouts complains that another government is propping up theirs? Really?

  • ogacct

    GM doenst seem to understand. Instead of taking the bankruptcy route and allowing the market and stakeholders determine their fate, GM ALLOWED Obama to steal shareholders equity, bond holders promises and Delphi retirees pensions and give it to the UAW. Getting Obama out of GM will NOT improve their reputation. I will never buy another GM product.

  • tarajunky

    Let me point out the obvious. If we negotiated a “special deal” to buy millions of shares of GM stock at $53 per share, why can’t we negotiate a “special deal” to sell it back to GM at $53 per share?

    Why on earth should the taxpayers be on the hook for these losses. GM has the cash to make us whole. They’re so flush with cash they’re paying out “profit sharing” checks. Why won’t they they buy us out at the price paid, and why shouldn’t we expect and demand that?

  • IsOrvilleRight

    There he goes again- Blaming others. Step up to the plate Mr. Obama or get out of the box and let the next guy have a swing at it.

  • Leonard Webber

    GM sold the Hummer building contract to China. When’s the last time you saw a Hummer ?

  • IsOrvilleRight

    Let the private sector own GM that is the American way. Socialist and communist countries try the own and run companies. Get out of the way Mr. Obama.

  • IsOrvilleRight

    How about the unions give back to the public the shares of GM they got in Obama’s take over of GM.

  • picomanning

    Obama’s behavior is sick. Is he a psychopath? Seriously. Understand what a psychopath is and Obama fits the pattern. America’s greatest danger is our President. Obama is in no way bound by his previous statements. He is in no way uncomfortable with breaking promises. He is only intent on keeping his power regardless of who he crushes (while smiling of course) while on his way to a second term. America’s worst nightmare will be that second term.

  • Leonard Webber

    I wouldn’t buy anything that has UAW fingerprints on it, including a Ford. Their union dues go to democrats.
    I love my American made Toyota 4-Runner, made in a union free Southern right-to-work state !

  • tredglx

    No, that actually IS true. Ford – the automaker – did NOT take taxpayer money. Ford’s financial arm DID take money – under threat from 0bumble’s henchmen to take it or be taken over by the government.

    Facts. Inconvenient, but needed.

  • tredglx

    Let’s see how this round of sub-prime loans to sell GM’s garbage cars does for their bottom line. You weren’t aware of these loans? Why yes, GM is financing their rattle-traps with sub-prime loans to people that shouldn’t be getting loans to begin with.

  • Texas_Twister

    Americans have decided that Gov’t Motors is lousy. Obama can’t see this. I for one will never by another GM product new or used. As far as I’m concerned the company no longer exists.

  • Noone

    Obama should save the schools like he did with GM.Obama should buy up all the schools, throw out the kids, and make taxpayers pay teachers not to teach.

  • Noone

    He likes to refer to this as a late term abortion.

  • Twoiron

    After reading this article, I admit to even more bewilderment that nearly 53% of American voters in 2008 thought it was a good idea to put a man who knows absolutely nothing about business and commerce in the Oval Office. What were they fhinking and why, according to the polls, are 50% or so of American voters still sticking with their bad choice from 2008?

    It all makes me think I have greatly over-estimated the competence of the American public to select a person to run our country.

  • eewell

    The taxpayers did not consent to a bailout and the stock and bondholders as well as the taxpayers all got screwed.And accusing China of subsidizind their car industry is the pot calling the kettle black.Finally,since the government is holding on to the last third of GM stock;what happens when GM fails to meet the future CAFE standards? Is the government going to fine themselves?

  • Ann Anderson

    Ah, you see the Obama light, a bright false-positive is always in his mouth!
    In other words, he always says what he does not mean and does what he does not say.

  • GarandFan

    George Kaiser was a prime investor and frequent visitor to the White House. Kaiser was the one who got Michelle her first “job” at $100k at the hospital in Chicago. Her job….get the indigent from showing up at the ER by encouraging them to go to “neighborhood clinics”. Senator Obama got the hospital a $1 million grant to further enhance this “diversion program”. Suddenly Michelle’s salary went to $300K per year. Kaiser also had a hand in changing the terms of the taxpayer funding to Solyndra, wherein “investors” like Kaiser and his buddies got paid back first in case of bankruptcy…..which BTW was a violation of Federal Law. Not that Barry fears the law. It’s name is “Holder” and he’s in Barry’s pocket.

  • A_Proud_Infidel

    How about the Chevy Volt? I hear they’ve got a new ad campaign for them, they’re going to be called “Chariots of Fire”! After all, they blaze like a Ford Pinto without even getting hit!

  • A_Proud_Infidel

    The MSM is to B. Hussein Øbama like a hooker to her pimp!!

  • studi30

    The best selling car in China is the GM,Chinese made Buick. Talk about outsourcing(China selling auto parts made by GM China to the US).

  • nervouscat

    I’m thinking of selling my shares of GM at a loss this year. I bought mine after the IPO nearly two years ago. Hopeless cause – I should have sold earlier and cut my losses. I’m sure the US Treasury feels the same way, but now they are forced to hold their shares. If Romney wins, that will change with a new Treasury secretary.

  • nervouscat

    Don’t forget – the Canadian government owns 9% of GM too!

  • Tom

    If I understand this, the assumption that was made by the Government, our own U S Government headed by President Obama that the deals made to save both Chrysler and GM with the BAIL OUTS is or was too complicated for Joe Citizen and you had to be basically a ROCKET SCIENTIST to understand what was happening then and now?
    In my book then and now I still refer to OBAMA as an arrogant putzsche, a good old fashioned Jewish word for a jerk.

  • Jay S. Ostler Ecv

    GM gave back their TARP Money and opted this sell out. First of all, the bailout was Bushes plan inherited by Obama.Secondly, how does GM’s failure become Obamas fault? Had they taken the money and then went out of business, would that have been Obamas fault too? So, is it financial karma we’re talking about? Because the government owns 26% of GM, this is why GM stock is plummeting? It seems to me that because of the buyout, GM’s doors have likely been open for 3 1/2 years longer than had they not sold stock to the Treasury Dept. Had they, like so many others have, taken the TARP Funding, then our government would have eaten 30 Billion, instead of only being down 15. They were offered a 29 billion dollar loan, chose not to take it and now they don’t want to play anymore? Buy the stock back at what we paid for it then?

  • AgTrotter

    So, the $13.4MM that the Bush administration gave to GM has been paid back. But, the $30MM bankruptcy infusion in June 2009 has not, and we likely will lose most of it.

    So, exactly how did the Man-Child save GM?

  • Big Goober

    From Politico,
    “Early press reports following Solyndra’s bankruptcy announcement disclosed that hundreds of thousands of dollars were contributed by shareholders and executives of Solyndra to the Obama 2008 campaign. One of the company’s largest investors, George B. Kaiser of Tulsa, reportedly contributed $53,500 personally and bundled large amounts more for Obama in 2008. Kaiser is a billionaire with banking and oil and gas interests thatrank him among the wealthiest people in the world.”

    It’s smells really bad for Oblabla. It’s funny how leftist hate the oil companies but after Obama STEALS from the American people for solar energy you don’t see Code Pink protesting the graft and corruption. This administration makes Richard Nixon look like a Boyscout!

  • Big Goober

    Yeah Ben, he is the (POT)US after all. Although I think P.O.S. is more appropriate.

  • A_Proud_Infidel

    Indeed, but what really sickens me is how the Mainstream Media covers and whitewashes things like that over for B. Hussein Øbama, they’re like hookers covering for their pimp!