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Thursday, November 18, 2010

GM bailout: Entire GOP predicted failure and disaster

Remember when the GOP predicted President Clinton's economic policies would lead to a recession and or worse.  A balanced budget, a booming economy and 23 million jobs created proved them to be utterly wrong. 

They never learn.  Here was what they said when Obama bailed out GM. 

Rep. John Boehner (R-OH): “Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multi-national corporation to economic viability?” [6/1/09]
Sen. Richard Shelby (R-AL): “It’s basically going to be a government-owned, government-run company. …It’s the road toward socialism.” [5/29/09]
RNC Chairman Michael Steele: “No matter how much the President spins GM’s bankruptcy as good for the economy, it is nothing more than another government grab of a private company and another handout to the union cronies who helped bankroll his presidential campaign.” [6/1/2009]
Sen. Jim DeMint (R-SC): “Now the government has forced taxpayers to buy these failing companies without any plausible plan for profitability. Does anyone think the same government that plans to double the national debt in five years will turn GM around in the same time?” [6/2/09]
Rep. Tom Price (R-GA): “Unfortunately, this is just another sad chapter in President Obama’s eager campaign to interject his administration in the private sector’s business dealings.” [6/2/09]
Rep. Lamar Smith (R-TX): The auto company rescues “have been the leading edge of the Obama administration’s war on capitalism.” [7/22/09]
Rep. Trent Franks (R-AZ): When government gets involved in a company, “the disaster that follows is predictable.” [7/22/09]
The new GM went public today in the largest IPO in history.   While the Fed has no been made whole yet on the bailout they are on the way there.  The IPO helped them recoup $22 billion of the $50 billion bailout.   It also saved hundreds of thousands of jobs, preventing a huge drain on the government in unemployment benefits and lower tax revenues.   Watching CNN this morning, the economic talking heads never even considered that aspect of the bailout when discussing the economic cost of the bailout.

Ov er 80,000 jobs were directly saved and another 59,000 jobs have been added since then.  I am no economist but just the unemployment insurance on those jobs would have cost about $56 million a month.  Add in other jobs with suppliers etc that would have been lost and the revenue in taxes that both GM, now profitable, and the workers would pay and the benefit must be at least a few billion a year.  

One other interesting fact is that GM now sells more cars in China than in the U.S.  

The GOP are almost always on the wrong side in economic arguments.  The facts do not disprove that. 


joshmshep said...

Treasury lost $4.5 billion on its sale of stock today - that's all taxpayer money, down the drain. How was this a win for President Obama?

PAC said...

It's estimated that about 1.4 million jobs would have been lost if GM an Chrysler would have been forced into liquidation, which wasn't an unlikely scenario. That saved an estimated in $96 billion in personal income in 2009 and 2010.

Factor in the cost of unemployment for 1.4 million and you get an additional cost of about $2 billion a month, not to mention the residual declines in spending in those communities that would have affected every business.

Read this article from Forbes

The critics of the bailout never factor those cost benefits into their analysis. Both Ally Bank (formerly GMAC) and Chrysler plan IPO's in the next year as well.

Look at the big picture instead of isolating just one aspect of the deal and you get a very different picture.