|Are the bailed-out car companies profitable? 37 billion reasons why they’re not |
By James Pethokoukis
April 4, 2012, 9:10 am
AEI’s Kevin Hassett:
In a February 28 speech, President Obama referred to this expenditure of $80 billion as a bet on the American worker, and added: “Now, three years later . . . that bet is paying off, not just paying off for you, it’s paying off for America.” His implication that the bailout is succeeding-that it will not ultimately be a loss for taxpayers-is a constant theme of Democrats.
The nearby chart, drawn from information released by the Treasury, shows the current status of the financial assistance that the automotive industry has received through TARP. Out of the total $80 billion that has been paid out, only $35 billion has been repaid, some $7 billion has been written off, and $37 billion is still outstanding. That is, 9 percent of the original amount has already been lost, and close to half is still in limbo.
The latest Congressional Budget Office report estimates that the total cost of the bailout will end up being $20 billion. The biggest culprit will be GM, since the Treasury has no remaining investment in Chrysler, having sold its shares in July 2011.
The automakers may be profitable now, but only because we are not counting the taxpayer losses against the profits. If the president continues to avoid this simple math, perhaps someone should ask him why he didn’t shower billions on every industry and create millions more jobs.