The cost of bailing out Barack Obama’s union supporters.
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.
It turns out investing in a costly company that struggles to compete against more cost-effective and less-unionized alternatives wasn’t the best business decision. Go figure.
Government Motors’ stock price has decline by a third from one quarter to the next. The government still owns about 500 million shares of stock in GM, or about a quarter of the entire company.
In other bailout news, remember how we were supposed to be making money on TARP? Funny story. Turns out…not so much.
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.
As for the costly auto bailouts, Barack Obama still insists, “The investment paid off.” Apparently because it saved jobs. But here’s the thing: The alternative to getting bailed out was Chapter 11 bankruptcy, that is reorganization rather than liquidation. Most jobs would have been saved anyway and without the $85 billion in costs to taxpayers. So we gained little at a steep price.