Dalmia on GM Bailout - The American Spectator | USA News and Politics
Dalmia on GM Bailout
by

Shikhia Dalmia continues to excel at dispelling confusion about the bailout of General Motors, especially Obama administration-generated confusion. In today’s Daily, she reviews the total amount of federal funds made available to GM, and concludes that any way you look at the bailout, taxpayers will suffer: 

Usually when companies declare bankruptcy, their tax liabilities increase, since they have no more losses to write off. But GM got Uncle Sam’s special bankruptcy package that allows it write off up to $45 billion of old losses going forward. That puts its total bailout at $105 billion. Even that’s not all. The Treasury gave GM $10 billion of the $60 billion as a loan; the rest was through the purchase of equity. (It has more or less paid back the loan.)

The equity means two things: One, GM has zero interest payments, something that gives it a distinct advantage over competitors….

And two, taxpayers have no guaranteed return as they would have with a loan. Therefore, market valuation of GM’s stock will determine what they will recover. 

…absent a miracle, taxpayers will lose anywhere from $13 billion to $19 billion on their principal and another $45 billion on taxes, for a grand total of from $58 billion to $64 billion in losses. And that’s just for GM. Chrysler is a whole different – and equally sordid – story. Even Treasury Secretary Timothy Geithner acknowledged last month, “We’re going to lose money in the auto industry.” 

Sign Up to receive Our Latest Updates! Register

Notice to Readers: The American Spectator and Spectator World are marks used by independent publishing companies that are not affiliated in any way. If you are looking for The Spectator World please click on the following link: https://spectatorworld.com/.

Be a Free Market Loving Patriot. Subscribe Today!

Stop the Inflation Grinch From Stealing Christmas!

That’s right, the Grinch (Joe Biden) is coming for your pocketbooks this Christmas season with record inflation. Just to recap, here is a list of items that have gone up during his reign. 

Gas: 40%+
Beef: 20%+
Used Cars: 20%+
Lodging: 17%
Eggs: 13%

What hasn’t increased? The cost to subscribe to The American Spectator! For a limited time, we are offering our popular yearly subscription for only $49.99. Lock in the lowest price of the year by subscribing today

The Grinch Stole Christmas Sale
Commander-in-chief of Christmas inflation