A few weeks ago, at a campaign stop in Pueblo, Colo, Mr. Obama touted the alleged success of his government-backed takeover of two-thirds of the domestic car business. “The American auto industry has come roaring back,” he said. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.”
Mr. Obama simply cannot understand how the economy can function without government’s firm guiding hand.
Unfortunately, when you look past the campaign ads, you find a slightly different take on the bailouts from what is being told at the Democratic National Convention.
The bailout cost taxpayers around $100 billion, which means the government coughed up around $780,000 for every American GM job that Mr. Obama claims he “saved.” The feds hold 500 million shares of GM stock, which has plummeted almost 45 percent since its initial public offering.
The Detroit News reports,
The Treasury Department says in a new report the government expects to lose more than $25 billion on the auto bailout. That’s 15 percent higher than its previous forecast.
In a monthly report sent to Congress, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update.
The report may still underestimate the losses. The report covers predicted losses through May 31, when GM’s stock price was $22.20 a share.
Now taxpayers lost $1.3 billion on the Chrysler bailout.
GM still owes taxpayers an estimated $42 billion, according to an inspector general’s report.
GM owes $27 billion on the nearly $50 billion it received from the auto bailout and Ally Bank, the company’s lending arm, owes $14.7 billion of the $17.2 billion taxpayer-funded bailout it received.
Believing in GM’s resurgence is only possible through creative accounting. GM counts a car as “sold” when it arrives at a dealership, not when it is in the hands of a consumer. The increased “sales” the administration brags about are surplus cars sitting in dealer lots, a practice known as “channel stuffing.” In a healthy economy, dealers have approximately a two-month inventory on hand; GM now has over double that. So long as GM pumps out cars that are “bought” by dealers, Mr. Obama can continue to claim things are looking up. Of cars that are actually driven off the lot, many are being bought by the majority stockholder: the government. In June, government purchases of GM cars went up 79 percent.
In a related development, it looks like another taxpayer funded disaster is being exposed for what it is. “Green energy” car manufacturer Fisker was approved for $529 million of our money by the Obama administration via a government loan. Now it’s running into the same problems the Chevy volt has run into.
The cost of one of the vehicles, which the company calls Karma is $107,000! The company is now recalling some 2,400 plug-in hybrids after a second incident occurred in Woodside, California where one of the vehicles caught fire.
Even more infuriating is the car is powered by batteries that were made by A123 Systems, Inc., which just so happens to have been funded by $279 million of taxpayer money as well. In case no one is paying attention, A123 is about to sell controlling shares in a Chinese company called Wanxiang for $450 million.
Now they are looking to acquire $150 million just to stay in business.
By the way, Fisker Automotive has been to signaling it could ditch plans to build its next generation hybrid electric vehicle in the United States, despite the nearly $200 million in Obama administration loan money it has already received.
This is the problem when the government gets involved in private businesses with taxpayer’s money. It never is good for the taxpayer and you can bet your bottom dollar that the Obama administration will be willing to throw more money their way.