As you know, I was completely against the bank bailouts…and completely against the auto bailouts. The bailouters are now doing laps claiming because of them, the auto companies were saved. Let’s see…write off near $40 billion…hand over tens of billions…give a gift of $18 billion as a tax credit (taxpayer dollars) that normally they should not receive. These bailouters are not selling cars. They are not building cars. They are not buying cars. These companies were always making money minus their legacy and debt costs. It doesn’t take an Einstein to realize when you wipe out all those debt costs, you have a profitable company. This should have been done in regular bankruptcy court where bond holders would not have been ripped off…and the unions not given a gift. The game of winners and losers continues. (Read the following!)
President Obama appeared at a United Auto Workers tent revival meeting Tuesday, and he made several notable claims. Critics of the Detroit bailout of 2008-09 are motivated, apparently, by their antipathy to American workers. The alternative to a government rescue was letting the entire auto industry “die.” But one particular claim stood out. Mr. Obama said the bailouts succeeded not “because of anything the government did.”
The lacuna in this account is the $81.8 billion that taxpayers surrendered to General Motors and Chrysler, and we detailed the many other costs in a February 25 editorial “Halftime in Detroit.” As it happens, however, we missed one big thing the government did that deserves more attention: GM’s tax gift courtesy of the U.S. Treasury.