Detroit – Understandably, General Motors wants to get off the dole. The stigma of being on government welfare is a curse — and welfare-free competitors like Ford are benefiting.
But GM’s PR campaign to show the public it is weaning itself from the public teat is backfiring. Because GM is committing another public sin: It isn’t telling the whole truth.
“The GM Bailout: Paid Back in Full,” wrote GM CEO Ed Whitacre in the April 21 Wall Street Journal, kicking off a TV ad campaign. The White House declared victory too, boasting that “this turnaround wasn’t an accident of history. It was the result of considered and politically difficult decisions made by President Obama.”
Initially credulous media reports (Obama’s economic plan is working!) gave way to suspicion. The conservative Washington Times isn’t buying it. Nor is the liberal Denver Post. Nor is Sen. Charles Grassley. In short, GM’s credibility is in doubt across the ideological spectrum. And for good reason — the repayment of $5.8 billion in cash loans ignores the mother-lode $60 billion that the government still owns in GM stock.
Worse, the Times revealed a government-money shell game, noting “that GM specifically used funds it received from the Troubled Asset Relief Program to pay off the government loan.”
Worse still, Detroit-based Reason writer Shikha Dalmia reports that:
The company has applied to the Department of Energy for $10 billion in low (five percent) interest loan to retool its plants to meet (new CAFE standards). However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new–and bigger–DOE loan much more feasible.
In short, GM is using government money to pay back government money to get more government money.
GM remains deep in a government hole. And it’s only digging itself deeper.