Barack Obama used to be very proud of the gigantic bailout General Motors received. Here’s what he said one year ago, as reported by the Associated Press:
President Barack Obama on Thursday celebrated the return of a reborn General Motors to the U.S. stock market, saying it shows some of the “tough decisions that we made” during the financial crisis were beginning to pay off.
“American taxpayers are now positioned to recover more than my administration invested in GM, and that’s a good thing,” Obama said, speaking of his administration’s $50 million taxpayer-backed rescue of the venerable automaker.
The President took credit for creating or saving a million jobs, and indulged himself in a little touchdown shuffle:
With it’s first day of trading, the once near-death automaker “took another big step toward becoming a success story,” Obama said.
Obama said the revitalized GM proved that “doubters and naysayers” were wrong.
“We are finally beginning to see some of these tough decisions that we made in the midst of the crisis pay off,” the president said.
You don’t hear the Administration bragging about the GM bailout these days. There’s a very good reason for that: it’s a gigantic money sink whose cost to the taxpayer nearly doubled overnight when the Administration quietly released its latest loss estimate earlier this week, as reported by the Detroit News:
The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion in the face of General Motors Co.’s steep stock decline.
In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion.
The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. It no longer includes $5 billion it set aside to guarantee payments to auto suppliers in 2009.
(Emphasis mine.) Holy crap! Nine billion added onto an already horrific $14.33 billion loss? Poor Energy Secretary Steven Chu is getting worked over by Congress today for his role in losing a fraction of that amount. Why isn’t the GM disaster a bigger story? Is the media content to let Obama’s victory speech from 2010 ride as the official conclusion of the narrative?
The surge in taxpayer losses on General Motors are due to its awful stock prices, which needed to reach $50 per share for Mom and Pop America to get their money back:
The current estimate of losses is based on GM’s Sept. 30 closing price of $20.18, down one-third over the previous quarterly price.
GM’s stock closed Monday at $22.99, up 2 percent. The government won’t reassess the estimate of the costs until Dec. 30.
The government has recovered $23.2 billion of its $49.5 billion GM bailout, and cut its stake in the company from 61 percent to 26.5 percent. But it has been forced to put on hold the sale of its remaining 500 million shares of stock.
Hey, Occupy Wall Street, check this out! The new figures dribbled out by the Obama Administration mean we’re going to lose almost as much on GM as we lost on the banks!
The new estimate also hikes the overall cost of the $700 billion Troubled Asset Relief Program costs to taxpayers. TARP is the emergency program approved by Congress in late 2008 at the height of the financial crisis.
In total, the government used $425 billion to bailout banks, insurance companies and automakers, and provided $45 billion in housing program assistance.
The government now expects to lose $57.33 billion, including the full cost of the housing program, up from $36.7 billion. The new estimate means the government doesn’t believe it will make an overall profit on its bailouts.
Let’s see: $57.33 billion of total TARP losses, minus $23.6 million lost on GM, leaves only $33.73 million lost on all the banks, insurance companies, and housing programs put together. Maybe it’s time to Occupy General Motors! I’m sure the United Auto Workers will welcome the protesters with open arms. Haven’t the unions been loudly expressing their solidarity with the Occupy movement these days?
Less Government president Seton Motley puts it all in perspective:
“The Obama Administration yesterday acknowledged the reality we have long been pointing out – that General Motors stock is hopelessly below our break-even price. And that We the People will not – as the President once asserted – make money on the auto bailout.
“We the People knew the auto bailout was a fiscal disaster waiting to happen. Which is why We the People opposed it at its inception – and why we opposed the Obama Administration’s $30 billion increase therein.
“We were right – as we now we face a GM stock price train wreck-loss of about $15 billion.
“But we can be made whole – at least on the GM stock with which we are currently stuck. GM has $36.5 billion in cash on hand – the break-even buy-out price of our shares is $26.5 billion. GM should take their coin and purchase our stock – and get We the People once and for all out of the car business.”
What, you mean the fat cats and union bosses who own GM should use their huge cash reserve to pay back the taxpayers who bailed the company out and made it a gift to the diehard Democrat supporters at the UAW? What a radical notion! I’m sure President Obama will be along to explain why it’s a horrible idea. Doubtless the piles of money lost on his awful “investments” are due to the “laziness” of Americans, as the President has been saying on the campaign trail.