Are the bailed-out car companies profitable? 37 billion reasons why they’re not

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.


5 thoughts on “Are the bailed-out car companies profitable? 37 billion reasons why they’re not

  1. Somehow I doubt the government’s stakes in GM and Ally Bank (even if it were of a mind to give up Ally, which I doubt) are worth $13 billion. It’s been a while since I ran the numbers, but I had the expected government loss at somewhere around $23 billion the last time I did.

    Meanwhile, unless Fiat America (f/k/a Chrysler) goes belly-up in the next 2 years, the UAW will have gotten back every last penny it was owed by both Chrysler and GM pre-bankruptcy. In fact, the UAW already got back more from GM than it was owed by it pre-bankruptcy.

  2. I remember reading that some of the ‘repayments’ were made with cash and grants received from other government programs. If so, then the losses are even worse.

  3. Actually Chrysler still owes money and the poster above is correct many of these firms simply borrowed money from a different program and still owe the taxpayers. The Car companies in addition to getting bail outs the financial wings also got bailed out.

    Banks are using government loans to repay TARP

    Bail Out List

    $7 B returned / $11 B disbursed / $13 B committed

    Ford, BMW, Toyota Took Secret Government Money

  4. Chrysler paid off their loan, in full, in May 2010. The gov’t offered to loan them more money, but Sergio turned them down flat, saying that their terms, (repayment AND over-and-on-the-shoulder sitting) were not feasible to run a company… any company…

  5. If GM was so bad off how did they pay it off so fast…. I think Obama and the CEO both lied big time cause Obama thought he knew more than anyone did about the Volt.. he didn know what the hell he was talking about but the CEO didn have the guts to tell Obama it wouldnt work. Ford didnt take the money so why did GM> I wonder what the CEO told his kids that he had to lie . I bet y9u anthing that GM didnt really need the money it was all a scam

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