False Bravado

April 21st is a  big day for your very own Government Motors.

On this date in 1967, General Motors (GM) celebrated the manufacture of its 100 millionth American-made car.

At the time, GM was the world’s largest automaker, producing 51 percent of all the cars in the U.S.

Today, Government Motors completed the repayment of $8.1 billion in U.S. and Canadian government loans, five years ahead of schedule.

Much of the improvement comes from GM slashing its debt load and workforce as part of its bankruptcy reorganization last year.

But the automaker is a long way from regaining its old blue-chip status: It remains more than 70 percent government-owned and is still losing money — $3.4 billion in last year's fourth quarter alone.

And while its car and truck sales are up so far this year, that's primarily due to lower-profit sales to car rental companies and other fleet buyers.

GM lost $88 billion between 2004, when it last turned a profit, and last year when it declared bankruptcy.

It endured years of painful restructuring, closing 14 factories and shedding more than 65,000 blue-collar jobs in the U.S. through buyouts, early retirement offers and layoffs.

GM received $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments starting in 2008.

At first the entire amount of U.S. aid was considered a loan as the government tried to keep GM from going under and pulling the fragile economy into a depression.

But during bankruptcy, the U.S. government reduced the loan portion to $6.7 billion and converted the rest to company stock.

Canadian governments also converted part of their debt to shares, reducing its loan balance to $1.4 billion.

The final installments on those loans were repaid Tuesday, comfortably beating a 2015 deadline.

The Obama administration crowed about the "turnaround" at GM saying the government's unpopular rescue of Detroit's automakers is paying off.

Vice President Joe Biden said President Barack Obama "took a lot of heat" to keep GM alive. "And this has even exceeded our expectations."

GM had made about $2.4 billion in loan payments in December and March, and had promised to repay the full loans by June.

But company officials said sales of newer models have improved GM's cash flow and allowed it to make the remaining payments early.

GM wiped out most of its staggering $95 billion debt in bankruptcy, closing last year with $15.8 billion in debt.

As it was reorganized, the United Auto Workers agreed to concessions, including a plan to shift $50 billion in retiree health care costs to a union-run trust.

New hires and white-collar workers now don't get the same rich health benefits.

With a much leaner total U.S. work force of 77,000, GM is small enough to break even if the U.S. auto market remains sluggish.

With the GM loan payment, the Treasury Department said total repayments under the Troubled Asset Relief Program, or TARP, now stand at $186 billion, with less than $200 billion in bailout money outstanding for what started out as a $700 billion fund.

But the O-man's administration says taxpayers are still expected to lose about $36 billion on the bailouts of the automaker.

WTF?

Let me get this straight: the O-man makes a big deal about the Government Motors completing the repayment of $8.1 billion in U.S. and Canadian government loans, five years ahead of schedule, but we're still going to be stuck with a $36 billion bill for helping them?

Why not add that $36 billion to what they owe and have them keep paying for the rest of the five year period?

That's what a bank would do on a mortgage modification for you or I.

GM made about $2.4 billion in loan payments in December and March alone, so over the next five years they could certainly make a sizeable dent in the other $36 billion, it would seem.

But in the rare air of this administration, sticking the taxpayers with a measly $36 billion bill is of no consequence.

As usual, Joe Biden can be counted on to be more truthful than he intended when he said "And this has even exceeded our expectations."

Maybe yours, Joe, but not the average Joe.


“High achievement always takes place in the framework of high expectation.” ---- Charles F. Kettering

“Anger always comes from frustrated expectations.” ---- Elliott Larson


PORK OF THE DAY
$400,000 for the Vermont Global Trade Partnership in Montpelier to help small businesses participate in trade missions (despite Sen. Leahy’s continued votes against free trade agreements, including the Peru Free Trade Agreement in 2007)