The loss that is being reported is actually a whitewash. We don’t really know just how much we lost when the Treasury Department “bailed out” General Motors by buying its stock. The LA Times gives us the official version of the story:
The federal government on Monday sold its remaining shares of General Motors Co. stock, ending the controversial $49.5-billion bailout of the automaker with an approximately $10.5-billion loss for taxpayers.
“This marks one of the final chapters in the administration’s efforts to protect the broader economy by providing support to the automobile industry,” Treasury Secretary Jacob J. Lew said.
President Obama’s decision to continue the bailouts of GM and Chrysler, begun in late 2008 under former President George W. Bush, helped avoid a collapse of the U.S. auto industry, Lew said.
Obama tied the additional money to requirements that GM and Chrysler go through government-led bankruptcy restructurings that left taxpayers owning parts of both companies.
In 2011, Treasury closed the books on its $12.5-billion bailout of Chrysler and took about a $1.3-billion loss.
At its height, taxpayers had a 60.8% ownership stake in GM. Treasury began selling shares after the restructured company held an initial public offering in 2010.
Last month, Treasury reduced its GM stake to 2.2% and said it planned to sell the rest of the stock by year’s end. Over the last few weeks, Treasury sold the approximately 30 million shares it had left, with the final sale coming Monday.
First of all, the $49.5-billion bailout was not a $10.5-billion loss “for taxpayers.” No, it was a $49.5-billion loss. None of that money helped taxpayers in general. It helped a specific company. Nor are taxpayers getting the money back. The $49.5 billion is not being returned to each taxpayer according to how much of he or she paid in taxes.
The government gets to keep the money that it receives for the stock it sold. None of it goes to any taxpayer.
Furthermore, nothing in the bailout went to “support… the automobile industry.” The claim is bogus.
An industry is a kind of work or a kind or product, not a particular company. According to Dictionary.com:, “Industry” refers to “the aggregate of manufacturing or technically productive enterprises in a particular field, often named after its principal product: the automobile industry; the steel industry.”
By bailing out GM, the government undermined some people in that particular field of manufacturing and supported others. Specifically, it supported the management and the unions of GM and Chrysler even though they had led the company into insolvency, and they kept others from entering the field or, in the case of Ford, from massively expanding market share.
So instead of a fresh new start in the automotive industry, the Department of Treasury propped up bad leadership and snatched away opportunities from promising new leadership in the industry. They did this with multiple tens of billions of dollars robbed from taxpayers. But beyond what they robbed, the lost opportunities to get new and better automotive companies is incalculable.
We must consider the last lie: the taxpayers owned parts of GM and Chrysler. Ownership means control and taxpayers have none. The government owned parts of the companies; the taxpayers were simply the people the government robbed to purchase that ownership.