Gov't report: U.S. lost $11.2B on GM bailout

A new report says taxpayers lost $11.2 billion on the government's bailout of General Motors.
AP Wire
May 1, 2014

The estimate comes from a quarterly report Wednesday to Congress by a government watchdog that oversees the bailout, and is up from a previous estimate of $10.5 billion.

The Detroit automaker needed the $49.5 billion bailout to survive its bankruptcy restructuring in 2009. The company went public again in November 2010, and the government sold its last shares of GM in December. The report says the Treasury Department wrote off an $826 million administrative claim against General Motors Co. in March, ending its involvement with the company.

In an interview last year, Special Inspector General Christy Romero said there was "no question" the department and the taxpayers would lose money on GM. The agency said last year that the government lost $2.9 billion on the bailout of Chrysler, which cost $12.5 billion.

Treasury Department spokesman Adam Hodge said the agency was not looking to make money.

"The goal of Treasury's investment in GM was never to make a profit, but to help save the American auto industry, and by any measure that effort was successful," he said.

Only one auto-related company is still partly under government control: auto lender Ally Financial Inc. Ally is the former financing business of GM, and earlier this month it went public again with an IPO that raised $2.38 billion. The Treasury Department owns a 17 percent stake in the company.

Auto companies received $79.7 billion in the bailout, and the Treasury Department has been repaid $59.1 billion.

The department allocated $474.8 billion to the Troubled Asset Relief Program, or TARP, to bail out banks, insurers, auto companies and others during the financial crisis. It says it has recovered $438.4 billion.

Comments

Louie

Loosing this much money is not acceptable! However it pales in comparison to the most recent figures that show the U.S. Postal service is loosing 25 million per day..... This is the lowest amount they have lost in the last three years! As much as I hate to loose 11 billion dollars I think there is somthing much larger that needs to be fixed first. oh wait I forgot our government runs perfectly......

Lanivan

Although the USPS is managed by Congress, it does not operate on one dime of taxpayer money. It is entirely self-funded.

Tri-cities realist

Not one dime... More like $100 million. Come on Lanny, you should dig a little deeper than relying on an ad by the American Postal Workers Union, to get your "facts".

"But Congress does give the Postal Service $100 million a year to compensate the agency for revenue loss by providing, at congressional direction, free mailing privileges to blind people and overseas voters, a congressional report noted. The $100 million is less than 1 percent of the Postal Service’s annual budget." See http://www.politifact.com/georgi...

And the USPS is billions in debt and defaulted on billion dollar payments to the treasury. I wonder who will foot the bill when it becomes totally insolvent? The USPS retirees? Uh huh.

dyankee

Lanivan, you’re hilarious…..self funded? That is BK WHOPPER of a statement. I suppose the 1.36 billion dollars per year for Amtrak is self funded too.

Lanivan

Well, y'all - about twice a year, this topic comes up. And each time, like good automatons, a hue and cry goes up about the USPS relying on taxpayer money. And each time, I provide a link that shows:

The USPS has not directly received taxpayer-dollars since the early 1980s with the minor exception of subsidies for costs associated with the disabled and overseas voters.[5] Since the 2006 all-time peak mail volume,[6] after which Congress passed the Postal Accountability and Enhancement Act,[7] (which mandated $5.5 billion per year to be paid into an account to pre-fund retiree health-care, 75 years into the future, a requirement unique among organizations and businesses in the U.S.[8]), revenue dropped sharply due to recession-influenced[9] declining mail volume,[10] prompting the postal service to look to other sources of revenue while cutting costs to reduce its budget deficit.[11] The USPS lost US$ 5 billion in 2013, and its revenue was US$ 66 billion. Wiki.

dyankee

The Postal Reorganization Act of 1970 (not early 80's) replaced the Post Office Department with the U.S. Postal Service. The USPS was made an independent agency of the executive branch and designed to be financially self-sufficient, relying on the sale of postage, mail products, and services for revenue.

The USPS is required by law to cover its costs, but can borrow from the U.S. Treasury subject to a limitation of $3 billion per year and a total debt ceiling of $15 billion which was hit in 2012.

The Postal Service has been borrowing billions of dollars from TAXPAYERS in recent years to make up shortfalls caused by declining mail volumes and a 2006 congressional mandate to prefund retirement health care benefits. It reported a $5.2 billion loss last quarter and in October 2013 the USPS defaulted—on $5.6 billion owed to the U.S. Treasury (ie) taxpayers for funding of retiree health benefits. This is the third such default in as many years.

The USPS just doesn’t have the money. After seven straight years of deficits, the USPS is just about out of cash unless more money can be borrowed for the U.S. taxpayers via the Treasury department to fund USPS operations and delivery services.

The main burden of the USPS financial shortcomings is meeting the funding for retiree health care benefits negotiated by the worker’s unions through collective bargaining. While the Postal Service negotiates with its unions to structure compensation, federal statutes hamper the USPS’s ability to craft market-based pay and benefits packages.

The potential for mandatory arbitration gives the unions a big advantage in negotiations with management. When unions demand higher wages, more generous benefits, and added work rules, arbitrators usually give them part of what they want. And when weighing a decision on union contracts, arbitrators do not have to take the USPS’s financial situation into consideration.

Not surprisingly, unions have been able to extract lucrative compensation packages from the USPS over the decades. More than 85 percent of USPS employees are covered by collective-bargaining agreements.

happycamper

So how much did we lose in the housing market when all the finance company's needed a bail out and the irs is on you back big time when you owe them penny's compared to the big boys, reminds me of that song, she got the trailer and i got the shaft

Harry Kovaire

We'll make it up on our green energy investments.

Lanivan

Too bad the GOP shut down the government for 16 days in October, costing the taxpayers $24 billion, and which accomplished exactly nothing, whereas the tax revenue realized by the continuation of GM operations, the reinstatement of jobs in the auto and related industries, the added security of those jobs and the increase in the strength of the surrounding economies from the auto bailout makes the $11.2 billion loss in payback look like chump change.

Post a Comment

Log in to your account to post comments here and on other stories, galleries and polls. Share your thoughts and reply to comments posted by others. Don't have an account on GrandHavenTribune.com? Create a new account today to get started.