White House says taxpayers could lose $14B with bailout
The White House announced on Wednesday that taxpayers could lose about $14 billion due to the auto industry bailouts, even though the market seems to be recovering. 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, according to an article on The Wall Street Journal.
The U.S. could lose more than $10 billion in General Motors Co. alone if the government sold its remaining shares of the auto maker at current share prices. The report also says that of the $80 billion in bailout money given to the auto industry, less than 20 percent, or $16 billion, may be lost in the long run. That's down from the 60 percent loss projected two years ago, the report said. The White House's top auto and manufacturing adviser, Ron Bloom, later tells the Journal the loss at closer to $14 billion.
"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.
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Now, the Obama administration has shown signs that it wants to gouge its remaining GM shares over the next few months. Under terms of GM's IPO, the U.S. Treasury could start selling additional shares of its GM holdings as of late May. The administration has not settled on a price or date for selling its remaining shares.
While it seems as if the economy is on the up again, this major setback within the auto industry could hurt the government tremendously. However, it does appear as if GM and Chrysler saved the government tens of billions of dollars in direct and indirect costs, including the cost of unemployment insurance and lost tax receipts that the government would have incurred had the big Detroit auto makers collapsed, according to the Journal. Since GM and Chrysler emerged from bankruptcy, the industry has created 115,000 jobs, its strongest period of growth since the late 1990s, the report said.