|Re: Success for who? -- Galahad|
|Posted by RichAndPretty , Mon, May 07, 2012, 20:48:01||Top of Thread||Reviews by RichAndPretty||Archive||Main BigDoggie.net site|
Obama Pushes False GM Success Story
By Investor's Business Daily
Politics: The Obama camp can't stop clucking about how he saved GM and the car industry. But if the GM bailout is such a success story, why can't it pay back its debt to taxpayers? The president's new campaign video narrated by actor Tom Hanks claims GM has "repaid" its loans. But in a revelation by the special inspector general monitoring the TARP bailout program, GM and GMAC together still owe the biggest share of the remaining $119 billion TARP debt. Of the top bailout recipients, GM is the biggest laggard, the TARP watchdog says in his latest quarterly report to Congress. Bank of America, Citigroup, Chrysler and Chrysler Financial all have paid off their debt and left the TARP program. Even AIG has paid back more than 75% of what it owes taxpayers.
GM, on the other hand, still owes more than half the $50 billion in federal funds it received when the combination of the recession and its costly union contracts drove it into bankruptcy. And its lending arm, GMAC (now Ally Financial), still owes $14.5 billion. What's worse, it's not clear that GM actually repaid what it's gotten credit for repaying. Check out this note buried in the inspector's report: "As part of a credit agreement with Treasury, $16.4 billion in TARP funds were placed in an escrow account that GM could access only with Treasury's permission." As it turns out, GM got Treasury's OK to "repay" more than $6.7 billion "using a portion of the escrow account that had been funded with TARP funds." So GM is merely paying the government back with government money, not money GM is earning selling cars, as the administration has claimed. Worse, GM in effect is still borrowing money. Consider this item from the report: "What remained in escrow was released to GM." Bottom line: Taxpayers have not been paid back and are still on the hook as GM continues to require government help. Yet Obama has hailed the GM bailout as the signature achievement of his big government programs. "On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen," the president said. "Today, General Motors is back on top as the world's No. 1 automaker." Even that's a stretch. GM edged tsunami-crippled Toyota by counting sales at its joint ventures in China, which aren't wholly owned subsidiaries. And the government is directly subsidizing new GM auto lines like the star-crossed Chevy Volt. Ford, which didn't take TARP funds, grabbed market share from GM and is now more profitable. Ironically, Ford for the first time in years has outsold GM in the number of cars bought by the federal government - although Washington still owns a huge stake in GM. Not exactly a vote of confidence. In North America, Ford just recorded its highest quarterly profit since 2000. GM missed profit estimates in the fourth quarter. And analysts are not sanguine about its first-quarter results due Thursday. The GM story is hardly what we're looking for in terms of a recovery. That Obama is touting it as a top economic achievement speaks volumes about his policies.
PS: The bailout pain was not distributed equally. It was redistributed politically. Bondholders standing up for their property and contractual rights got shortchanged and demonized personally by the president. Dealers and suppliers faced closures based on political connections and lobbying clout, rather than neutral efficiency evaluations. And as I first reported in September 2010, in the rush to nationalize the auto industry and avoid contested court termination proceedings, the White House auto team schemed with Big Labor bosses to preserve UAW members costly pension funds by shafting their non-union counterparts. These forgotten non-union pensioners (who worked for Delphi, a GM auto-parts company) lost all of their health- and life-insurance benefits. Hailing from the economically devastated Rust Belt northeast Ohio, Michigan, and neighboring states the Delphi workers had devoted decades of their lives as secretaries, technicians, engineers, and sales employees. Some have watched up to 70 percent of their pensions vanish. Theyve banded together to seek justice in court and on Capitol Hill under the banner of the Delphi Salaried Retiree Association.
Through two costly years of litigation and investigation, the Delphi workers have exposed how the stacked White House Auto Task Force schemed with union bosses to cherry pick (one Obama officials very words) which financial obligations the new Government Motors company would assume and which they would abandon based on their political expedience. Obamas own former auto czar Steve Rattner admitted in his recent memoir that attacking the unions sacred cow could jeopardize the auto-bailout deal.
Thanks to a separate Freedom of Information Act request filed by the Competitive Enterprise Institute, we already know that Geithners department and General Motors closely coordinated their PR strategy and collaborated on making fraudulent claims about GM repaying all of its government loans. The cash-strapped Delphi retirees are suing the transparency-ducking PBGC in federal court to unearth documents that may yield key details of the improper Obama-administration influence over Delphis bankruptcy organization. As ebullient UAW officials hooted and hollered on Tuesday, Obama smugly attacked Republicans for anti-worker policies and their same old youre-on-your-own philosophy. The Delphi workers know better: One unions government-subsidized, government-manipulated success story is the rest of the workforces nightmare.
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