The Treasury Department has sold off the last of its stock in General Motors, closing the books on the nearly $50 billion in taxpayer money loaned to keep the automaker open. In the end, they got back all but $10 billion, which is one of the best bargains I’ve ever heard of.
The Treasury took a loss of more that $10 billion on the $49.5 billion bailout, but said that saving the US auto industry, the jobs of millions of auto workers and the pensions of many retirees was worth it…
In a new study, the Center for Automotive Research said the government’s loss was paltry compared with the losses risked by letting GM and Chrysler go under.
Not including the potential impact on the parts sector, the study said the US government “saved or avoided the loss of $105.3 billion in transfer payments and the loss of personal and social insurance tax collections — or 768 percent of the net investment,” the study said.
“Additionally, 2.6 million jobs were saved in the US economy in 2009 alone and $284.4 billion in personal income saved over 2009-2010.”
The losses both in terms of taxpayer funds and economic effects of allowing GM and Chrysler to collapse are virtually incalculable. In addition to more than $100 billion in transfer payments and lost revenue for social insurance programs, a collapse of the auto industry would have triggered another massive wave of foreclosures, further stressing state and local government budgets. It would have forced the federal government to take over the pension plans at a cost of tens of billions of tax dollars. Almost 3 million jobs would have been lost. The worst recession since the Great Depression would have turned into a replay of the 1930s, maybe even worse. We should be thrilled to get out of it with only a $10 billion price tag.
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