Tuesday, January 31, 2012

Put it on the tab - In an article about Obama running on the auto bailout, this salient fact doesn't appear until (almost) the end: "The Treasury Department estimates the government will lose more than $23 billion on the auto bailout."  I guess everything's a big success (e.g. "stimulus") when you don't care how much it costs.


http://www.cargroup.org/documents/FINALDetroitThreeContractionImpact_3__000.pdf said...

The costs of a shutdown of Ford, GM and Chrysler was estimated in 2008. Personal income was projected to decline by $398 billion by 2011. Federal, state and local governments would be hit with a double whammy: losing a large amount of revenue while their welfare costs would increase by $156 billion through 2011. An additional $25 billion would disappear from the GDP (0.2% per year, not including lost jobs and wages).

Taking all of the numbers at face value, the cost of the bailout is less than 4% of the prospective loss.

Eric at work said...

Yes, we were going to firebomb the plants and kill all the workers. Also, some of them would have won Powerball so there's another hundred-million in lost taxes. Ford didn't take a bailout but they would have gone under too, we just know it.

GM and Chrysler (not Ford) could have gone through a Chapter 11 re-structuring, just like EVERY airline has done along with hundreds of companies including Friendly's here in Western Massachusetts. But that would have necessitated union contract re-tooling so Obama gave a big $85 billion gift to the UAW (on the heels of Dubya's $17 billion in loan guarantees.) Now we're left holding the bag with these useless shares of GM.

But, hey, we have this Chevy Volt.

Anonymous said...

In other words, the bailout sucks because unions suck. And P.S. hybrid cars suck.

The Center for Automotive Research cost assessment was co-funded by the auto companies, the unions and the government. It's unfortunate that the analysts didn't have access to your important information about the Chevy Volt and ice cream franchises and Powerball before finalizing their report.

Eric said...

Are you kidding me? The auto companies, the unions and the government said that using the government's money to prop up the auto companies and the unions was a great idea?

That has all the objectivity of an MSNBC report.

Anonymous said...

Oh, come on, Eric. If you would base your opinions and comments more on what Larry, Rachel, and Ed tell us, we could all rest more comfortably knowing you had the "right" data.

Anonymous said...

Yeah, let the energy companies write energy policy, and let the weapons industry advise Congress on the military, and let Wall Street oversee itself, and let lobbyists cut funding for any scientific ideas that could cost them a nickel. After all, who could be better than the existing experts in the field?

But using economists with particular knowledge of the auto industry to calculate economic data about the auto industry? That's CLASSIC loony liberalism.

Eric said...

You can stop waving your economists' credentials in the air. I get it: General Motors employed a lot of workers who provided tax revenues to the government alongside GM's corporate tax revenues.

It's strange how this situation is unique in all of American business. Now let's get back to raising taxes on the rich!