Remember how President Obama trumpeted the wise investment he compelled us all to make in General Motors? “Today, one of the toughest tales of the recession took another big step toward becoming a success story,” he said last November, on the occasion of GM’s initial public offering. “We are finally being able to see some of these tough decisions that we made, in the midst of crisis, pay off… American taxpayers are now positioned to recover more than my administration invested in GM.”
Flash forward six months, and once again fraudulent Obama rhetoric shatters against the cold stone of reality. GM is a model investment for the Obama years, all right. It’s going to cost us a fortune.
As the Wall Street Journal reports today, “The U.S. government plans to sell a significant share of its remaining stake in General Motors Co. this summer despite the disappointing performance of the auto maker’s stock,” adding that “a sale within the next several months would almost certainly mean U.S. taxpayers will take a loss on their $50 billion rescue of the Detroit auto maker in 2009.”
How much of a loss? Well, GM stock closed at $29.97 a share on Monday, “hitting a new low since its $33-a-share November initial public offering.” That means “taxpayers would lose more than $11 billion on the rescue if the government dumped the rest of its stake now.”
Why on Earth would Barack Obama throw away $11 billion of our money, after touting General Motors as such a fantastic investment only half a year ago? Because “the Obama administration would like to sever its last ties to the auto maker,” avoiding “a potentially controversial sale in the 2012 presidential election year.”
In other words, this is a political decision, just as the taxpayer bailout of GM was. It has little to do with economic reality or business acumen. The bailout was an act of ideology overriding market forces. The stock dump is an act of political necessity overriding ideology.
Getting rid of the stock now might be the best way to mitigate even worse taxpayer losses. Rising gas prices are hurting the truck sales GM relies upon. Its fuel-efficient alternative is the Chevy Volt – a car nobody wants to buy, developed at monstrous expense, and sold with huge taxpayer subsidies, which has developed an unpleasant habit of bursting into flames when it’s not even plugged in.
Once again, we see that America’s highest economic priority is keeping Barack Obama far, far away from huge piles of our money, and the boardrooms of our corporations. We’re about to lose $11 billion on a $50 billion “investment.” A few more Obama “success stories” like that, and we’re finished.