Megan McArdle, looking past the government’s spin, has demonstrated that taxpayers are likely to suffer a huge net loss, in an accounting sense, on the General Motors bailout. The mere fact that GM is alive and turning quarterly profits is utterly meaningless — as McArdle notes, “‘Can the government keep companies operating if it is willing to give them a virtually interest free loan of $50 billion, and a tax-free gift of $20 billion or so?’  I don’t think that this was really in dispute.”

In general, the government can successfully prop up any one company, and even make it profitable. That it has done so, at least for right now, for GM isn’t a surprise or a vindication of the bailout even in the slightest. 

No, the real story is that, even with all the advantages over its competitors the government has given it, GM will likely never be able to repay taxpayers their “investment.” And the scandal is that the taxpayers’ “investment” involved the government trampling on the rule of law on their behalf, which is exactly the opposite of what the government exists to do. 

We’ll never know the true cost of the auto bailouts, because it’s impossible to know what other automakers would have taken over the market shares of GM and Chrysler, or which investors will now hesitate to make important investments because they can’t be sure the government will honor their contracts.

There are only two reasons that someone would argue that the bailout of GM has been a success: one, because he is invested in the political success of the Obama administration, or two, because he truly does not understand the issues unless they are framed in the terms provided by the Obama administration.