U.S. lost $14B on auto bailout... Excellent!
July 22, 2011
Yes, the U.S. government will lose money on the auto industry bailout. But, in return, we saved jobs and got an auto industry that's finally ready to compete.
NEW YORK --Including the $1.3 billion loss on its Chrysler investment, announced Thursday, the United States government has lost about $14 billion on the auto industry bail-out. All in all, it was a bargain.
That $14 billion figure is far less than than the $40 billion bath the Congressional Budget Office expected U.S. taxpayers to take in the total auto industry bailout.
Saying the U.S. taxpayer "lost money" is probably the wrong perspective, considering that spending no money at all likely would have meant a financial catastrophe for millions of Americans far in excess of a mere $14 billion.
Had GM and Chrysler collapsed, it would have cost the federal government about $28.6 billion in lost tax revenues and assistance to the unemployed in just the first two years alone, according to the Michigan-based Center for Automotive Research. In other words, doing nothing could have cost more than twice as much the bailout.
By the way, that $28.6 billion figure doesn't include the business taxes the federal government would have lost but can now expect from two large, profitable automakers and their suppliers. It also doesn't include any lost state and local tax revenue.
At any rate, the federal government didn't become involved in lending money to Chrysler, General Motors and others in the auto industry in order to make a profit. Had that been the goal, the Treasury Dept. should have bought Google stock, instead.
No, the government stepped in to secure a pillar of American industry that was in the process of disintegrating. In the year leading up to the Chrysler and General Motors' bankruptcies, the auto industry lost 400,000 jobs. Since the bailout, about 113,000 of those jobs have been recovered, according to the Treasury Department.