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Taxpayers to take GM hit

The San Diego Union-Tribune Published: December 30, 2012 4:00 AM

The announcement that the federal government would sell 200 million shares of General Motors back to GM for $5.5 billion and then dispose of its remaining 300 million shares by early 2014 makes a vast taxpayer loss close to a certainty. If the remaining shares sell for the same $27.50 as the initial block of 200 million shares -- and GM's many headaches make a big stock surge unlikely -- the hit would be $12.5 billion.

Was this worth it? If you believe the 1-million-jobs-were-saved claim, you may say yes. But that claim is based on the very dubious idea that GM would have disappeared without federal intervention. The decision by first President George W. Bush in 2008 and then President Barack Obama in 2009 to have the federal government invest in the automaker allowed GM to avoid the sort of normal bankruptcy process that would have helped it leverage a lower wage structure from the United Auto Workers, one that would have put GM on a par with most of its competitors.

Who agrees that the union made out very well from the taxpayer bailout? Stephen Rattner, the executive Obama chose to oversee the GM deal. "We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay," he said.

Keep this in mind when you hear talk about the "success" of the auto bailout.

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anonymous Jan 3, 2013 1:33 PM

RAv 1

You failed to grasp what was said in my post. I objected to the GM Executives getting millions each as an annual salary and stock options. When every one else lost all the value in their stock, the Executives and the Unions got the special treatment. They got to trade there old stock for the new stock and did not loose anything.

Then because I refuse to give these over paid people part of my hard earned money to buy their product, you say I am a conservative and am destroying this country. Man you need to rethink that hogwash.

Our country is being ruined by people like these workers and executives that already make more than the average person and then demand that everyone give them more of what little they have so these overpaid stiffs can have still more.

anonymous Jan 2, 2013 11:49 AM

Rav1, Buddy, you wrote: "My fellow voters, this how a conservative thinks." ... You got that wrong. The Conservative Republican and especially the Tea Bagger *DON'T* think. Instead they parrot the talking heads from the Conservative Media who get well paid to feed their audience unthinking BS. As an example during the time Romney was their candidate there was whining about what happened at Delphi while the Romneys made out from what happened at Delphi, and the Delphi situation was manipulated by private equity firms and investment. It was mind boggling , the Cons were crying about the ruining of America while running Romney, one of the people directly responsible for Americas decline. The Con Rep and Bagger don't think too much if any at all.

anonymous Jan 2, 2013 9:16 AM

Rav1 must be a member of the recipient class.

anonymous Jan 1, 2013 8:37 AM

DoWhatsRight says "I would even buy a foreign car but not a GM."

My fellow voters, this how a conservative thinks. They prefer to destroy our country than support it. Just like the tea party idiots in congress. Just say no to Obama, not matter what the cost to the country. And then they blame the economic calamity on others.

anonymous Dec 31, 2012 4:28 PM

Yeah, right the taxpayers will take a hit while the GM Executives get huge bonus and the workers get a $7000.00 profit sharing bonus. When GM went into that reorganizing deal, the GM stock was worthless; however, the GM Executives and the Union all got their worthless stock replaced with the new stock and did not loose a dam thing. You would think that GM could reduce the price of their cars with all the help the got, but instead they increased them. I have never bought anything but GM cars in the past, and that was a lot of GM Cars, but after that, I will never buy another one.

I use to say I would walk before I would buy a foreign car, but now I will walk before I buy a GM Car. I would even buy a foreign car but not a GM.

anonymous Dec 31, 2012 10:38 AM

...and GM will still go bankrupt with taxpayer money funneled into the UAW. We are still owed $43 billion of the no interest bailout. Only if GM is allowed to file bankrupcy is there any hope for a more competitive auto company or companies to rise up out of the ashes.

anonymous Dec 30, 2012 8:23 AM

I read in this same paper that GM LOSES $13,000 on each Volt they sell. Ford's workers didn't take any pay cuts and Ford didn't take ANY government money to be where they are. THEY ONLY CHANGED THE CEO!!!!!!!!!! I don't think the workers have a thing to do with any of those things.. It's called BAD MANAGEMENT!!!!!!! And the bailouts were a bad idea.