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General Motors

Obama s $25 Billion Government Motors Lemon

Posted 08/14/2012 05:40 PM ET

As the Obama campaign continues to tout the GM bailout as an

industrial policy success, the Treasury Department continues to revise

upward the staggering losses inflicted on U.S. taxpayers.

On the day Government Motors, aka GM, announced it was recalling at

least 38,000 of its vehicles — Impalas used by police nationwide and in

Canada — due to a crash risk, a new Treasury report said it now

expects to lose $25 billion on the bailout, $3.3 billion more than forecast


As the Detroit News reported, this loss was based on GM s stock price

at the time of the report, which was 15% higher than the previous report.

Because the stock price has fallen since then, the latest report likely

understates taxpayers real losses.

The monthly report sent to Congress last Friday covers predicted losses

through May 31, when GM s stock price was $22.20 a share.

On Tuesday, GM fell $0.26, or 1.3%, to $20.21.

At that price, the government would lose another $995 million on its GM

bailout. The report notes the government still has 500 million shares of

GM and needs to sell those shares at $53 each for the government to

break even on the bailout.

Worse yet, the entire financial loss suffered by taxpayers is the result of

a massive and planned redistribution of wealth from them to the auto unions that form a key part of Obama s base and re-election drive.

In its analysis, the Heritage Foundation says all the taxpayer losses occurred because the administration manipulated bankruptcy law to

shelter the United Auto Workers compensation.

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We estimate that the administration redistributed $26.5 billion more to the UAW than it would have received had it been treated as it

usually would in bankruptcy proceedings. Thus, the entire loss to the taxpayers from the auto bailout comes from the funds diverted to the

UAW, Heritage reckons.

On the jobs front, the auto bailout did less than nothing. Neil Barofsky, special inspector general for the $787 billion Troubled Asset Relief

Program, reported to Congress that the forced closure of auto dealers, which hurt parts suppliers, was unnecessary and political.

Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses

and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls, Barofsky said in a 45-page report.

Deciding which dealers were closed was determined by political, not business, reasons, with race and gender a key factor, the Barofsky

report said. Some GM dealerships were retained because they were recently appointed, were key wholesale parts dealers or were minorityor



Not even the push to force consumers into heavily subsidized electric cars like the Chevy Volt has helped.

As political consultant Karl Rove noted, GM employed roughly 252,000 workers in 2008. Now it has 207,000, with 131,000 working in foreign

plants. Yet GM has not been accused of outsourcing jobs.

GM takes its place next to the Obama administration s Solyndras, another rotten fruit of an industrial policy where wealth is redistributed, not

created, and where government picks winners and losers in an economy in which we all ultimately lose.

Venture Capital Dispatch

An inside look from VentureWire at high-tech start-ups and their investors.

MARCH 2, 2012, 7:18 PM

GM’s Volt Stumble Imperils Obama’s

Electric-Car Goals

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announcement Friday that it would halt production of its plug-in hybrid

car, the Volt, for five weeks figures to threaten President Obama’s

stated goal of seeing

a million electric cars in the U.S. by 2015.

That goal assumed that the Volt would

become the industry leader and that GM

would have produced 505,000 Volts by

investments to promote the electric car

industry, including granting GM $105.9 million to help it produce battery packs for the Volt,

and $151.4 million in a grant for LG Chem to produce battery cells for the Volt. The

government also gives buyers of electric cars a tax credit.

The Chevy Volt, some analysts predicted, would be more appealing to consumers than

the Nissan Leaf, because it can run on both batteries and on gasoline, preventing

chances of being stranded if the battery taps out. It costs $40,000 before the tax credit of


The Volt was ahead of the Leaf in the past few months in sales, and hit monthly sales

record in December 2011, selling 1,529 vehicles, according to data from investment bank

Stifel Nicolaus. Both manufacturers saw sales decline in January and February. Nissan

sold 9,674 Leafs in North America last year, and 22,000 globally.

A123 Systems, a battery supplier to Fisker that is struggling with that car’s high costs and

slow sales, are already seeing hopes for a quickly growing electric-car market, at least in

the U.S. dashed.

Even as GM halts production, many other automakers are launching new electric models

this year. Supporters hope that the initial difficulties are not going to spell the end of the

industry in its infancy, which would be a repeat of a previous industry failure. In the

ally-gets-payoff-energy-department) to track the government money lent to Fisker

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