June 3rd, 2011 at 07:29am
When it’s a sum of money that big, it’s almost always a government that lost it. So, which government lost $14 billion? Obama’s government of course.
The White House said Wednesday that taxpayers could lose roughly $14 billion of the money spent on auto industry bailouts, despite the industry’s recent recovery.
The White House cites the potential losses in a report, “The Resurgence of the American Automotive Industry,” released ahead of President Barack Obama’s trip Friday to a Chrysler Group LLC facility in Toledo, Ohio.
The report said that of the $80 billion in bailout money supplied to the auto industry, less than 20%, or $16 billion, ultimately may be lost. That’s down from the 60% loss projected two years ago, the report said. The White House’s top auto and manufacturing adviser, Ron Bloom, later specified the loss at closer to $14 billion.
So the figures are rubbery anyway. The report says 16, Mr. Bloom says 14…well, what’s two billion dollars between friends? Still a massive amount of money…but anyway, somewhere in the range of $14 million – $16 million. If someone lost that much of my money, I’d want an apology, even if it was a qualified “I’m sorry, but we did this for a good reason” apology, and I’d hope that the person/people/group responsible would have the common decency to apologise. So, does Mr. Bloom or Mr. Obama want to offer an apology? Errr, no. In fact, they arrogantly refuse to apologise.
“So while we are obviously extremely conscious of our obligation to get every penny we can for the taxpayer, we’re also not going to apologize for the fact that there are literally hundreds and hundreds of thousands of Americans who are working today” because of the bailouts, he said.
Really? Even if it is true that the auto industry is helping to keep people in a job, at what cost? A quick skim of the headlines shows:
422,000 new unemployment claims were filed last week, 428,000 the week before, with the overall number of people on unemployment benefits sitting at 7.68 million (this number does not include the number of under-employed people and unemployed people who are not receiving unemployment benefits)
Stocks are down again, due to poor economic data.
60% of surveyed major retailers reported that their sales were down in May.
And, underpinning all of that, the US Government’s credit rating is teetering on the edge due to its astounding level of debt.
So effectively what we can see is that one industry might be doing OK, but at the cost of an amazing amount of government debt and a worsening crisis in the rest of the economy.
General Motors should have been allowed to fail. It should have gone through the bankruptcy process without government assistance, from which it would have come out the other side as a more robust business. The government interference in this process (for this and other companies, and done by both Bush and Obama) may have caused some short term benefits, but is causing major long-term problems, the most pressing of which at the moment is the massive government debt which is causing all sorts of economic problems and will continue to do so.
Returning to the original article, and it gets stranger.
“The president has made clear that he does not believe that is the proper role of government in the long term to be an owner of a private corporation,” Mr. Bloom said. “And so we do not view ourselves as kind of market timer looking for the absolute best opportunity to sell.”
Obama is right that it is not the government’s role to own private corporations, however the government also has a responsibility to the people, and having gotten in to this silly situation, they now have a responsibility to get as much money back as possible, and to say that they’ll just sell it with no consideration for how much money they will get out of it is insane. If hanging on to the stock for a bit longer means that they will get more money for it, then this is what they should do, especially given the current debt problems.
All of this goes to show that what the US needs now is a fiscal conservative who understands that money has a value, and that the way to keep a country running successfully is not through endless government interference. One can only hope that the Republican Primaries result in such a person opposing Obama in the 2012 Presidential election.
(h/t for the quoted article: Josh Mitchell, Wall Street Journal. For other paraphrased articles, Wall Street Journal and FOX Business Network).