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Tuesday, August 14, 2012

Treasury Report: Auto Bailout Cost Taxpayers $3.4 Billion More Than Previously Estimated

By Susan Duclos

Math certainly doesn't seem to be the Obama administration's strong suit since estimates on Obamacare, the stimulus package, and now the auto bailouts, keeps increasing the totals that taxpayers are responsible for.

Via Detroit News:

The Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That's 15 percent higher than its previous forecast.

In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update.

The report may still underestimate the losses. The report covers predicted losses through May 31, when GM's stock price was $22.20 a share.

On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.

The government still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout.

The steep decline in GM's stock price has indefinitely delayed the Treasury's sale of its remaining 26 percent stake in GM. No sale will take place before the November election.

On top of the rising costs of Obamacare, the stimulus and the auto bailouts, let us not forget all the wasted taxpayer money that went towards Obama's gambling problem, with over 20 of the solar/green related companies he gambled taxpayer money on, failing and/or going bankrupt.

Obama has cost the taxpayers so much money that they cannot afford, he gives a whole new meaning to the term "spends  like a drunken sailor"

[Update] Heritage shows that the auto bailout taxpayers losses actually went straight into Union's pockets.

The government bailout of General Motors (GM) and Chrysler between 2008 and 2009 will cost taxpayers approximately $23 billion. President Barack Obama emphatically defends his decision to subsidize the automakers, arguing it was necessary to prevent massive job losses. Even if one accepts this premise, the government should—and could—have executed the bailout more efficiently, with no cost to taxpayers, had the Administration required the United Auto Workers (UAW) to accept standard bankruptcy concessions. Instead, the Obama Administration gave special treatment to the UAW above and beyond what other creditors and unions received:
  • Legally, the UAW’s claims had the same status as those of other unsecured creditors, but the UAW recovered a much greater proportion of the debts that General Motors and Chrysler owed the union.
  • Bankruptcy typically brings uncompetitive wages down to competitive levels. However, existing UAW members did not take pay cuts at General Motors.
  • The Administration could have kept the automakers running without subsidizing the UAW’s above-market pay and benefits.
  • Subsidizing UAW compensation cost $26.5 billion—more than the government spends each year on foreign aid.
  • The cost of subsidizing UAW pay and benefits accounts for the entire net taxpayer losses—$23 billion—in the bailout.
UAW members at General Motors and Chrysler are among the most highly paid workers in America. High salaries are good, but they must be earned. The taxpayer losses came from the special treatment that President Obama bestowed on the UAW. The auto bailout was actually a UAW bailout.