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Government Is Not an Investor



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General Motors shares are plumbing new post-bankruptcy lows, having lost nearly half their value since 2010. (See chart here.) Taxpayers’ losses on the GM bailout are now about $35 billion — to save a company that is worth less than $30 billion. The amount of forgone Treasury revenue thanks to sweetheart tax breaks written into the law to subsidize GM already cost twice what Treasury’s stake in GM is worth: More than $18 billion in tax breaks to prop up a $9 billion stake in the company.

This is not “investing.” This is welfare. It is also self-interested politics on the part of the Obama administration. Bailouts and government favors (and the Japanese tsunami) allowed GM to claim record profits in 2011 — upon which it paid no taxes — but it is plain that without continued government succor it is an economically non-viable enterprise. It is a pretend car company.

If the Obama administration wants to pay UAW members to engage in non-productive activity, the White House might as well have them dig ditches and fill them up rather than run a potemkin automotive concern. Or the president could just pay them to campaign for him. Hey . . .



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