Wintery Knight

…integrating Christian faith and knowledge in the public square

How much did taxpayers lose in Obama’s GM bailout?

Investors Business Daily does the math on the GM bailout.

Excerpt:

Sale of the U.S. government’s stake in General Motors Corp. ends a sorry saga. Not only were Americans lied to about the costs, but the bailout underscores why replacing market forces with federal bailouts doesn’t work.

The Obama administration says it will unload 200 million shares — or about 40% of its holdings — back to GM right away. The rest, 300 million shares, are to be sold by March 2014.

[...]Well, GM on Wednesday said it will buy back the 200 million share government stake for $5.5 billion, or $27.50 a share.

The break-even point on the government’s total holdings was $53 a share. But now, with $20.9 billion in taxpayer funds left to pay off from 300 million shares, the break-even point has risen to $69.72 a share.

In other words, at current prices, taxpayers are sitting with a loss of 61%, or nearly $15 billion, on their investment.

So where did the money go, then?

According to a study last summer by the Heritage Foundation, the $80 billion auto bailout gave the UAW and its members nearly $27 billion due to the fact that GM couldn’t shed its outrageously expensive labor contracts, something it could have done in a normal bankruptcy.

As such, Obama didn’t bail out the auto industry; he bailed out the unions. Without the unions’ added costs, taxpayers would have owed nothing.

It’s not hard to see how this happened. The UAW and its affiliates give tens of millions of dollars each election cycle, almost entirely to Democrats.

This union influence explains why Obama’s auto czars, Steve Rattner and Ron Bloom, arranged a government bankruptcy for GM that flew in the face of hundreds of years of bankruptcy law and violated investor rights.

Bondholders took huge losses, while unions got a big chunk of ownership in GM stock that they weren’t legally entitled to.

In a shocking display of favoritism and blatant unfairness, GM’s union workers kept their pensions, while nonunion workers at GM spin-off Delphi lost theirs.

Those unions paid Obama back by working hard to get him re-elected. That’s how socialism works.

Filed under: News, , , , , , , , , , , , , , , , ,

Democrats join Republicans in demanding probe into Delphi pension scandal

From the Daily Caller.

Excerpt:

Twelve lawmakers wrote to House oversight committee Chairman Rep. Darrell Issa and Senate Homeland Security and Governmental Affairs Committee Chairman Sen. Joe Lieberman asking that they expand current probes into a Department of Treasury scandal that left 20,000 non-union Delphi retirees without their pensions after the 2009 General Motors bailout.

The members — Sens. Rob Portman of Ohio, Thad Cochran of Mississippi and Roger Wicker of Mississippi, and Reps. Pat Tiberi of Ohio, Steve Stivers of Ohio, Mike Kelly of Pennsylvania, Dan Burton of Indiana, Bill Johnson of Ohio, Paul Gosar of Arizona, Marcy Kaptur of Ohio and Gregg Harper of Mississippi — are led by Ohio Republican Rep. Mike Turner.

“We are writing to request that the committees which you chair submit additional requests for documents from the Department of the Treasury and the Pension Benefit Guaranty Corporation (PBGC) on matters pertaining to the unjust termination of Delphi salaried retiree pensions in the federal government’s bailout of General Motors,” the lawmakers wrote. “As you may know, the pensions of Delphi salaried retirees were significantly reduced in the aftermath of the bailout, while their union counterparts were made whole. These retirees, regardless of labor affiliation or not, spent their careers working alongside one another and should not be treated differently in their retirement. This decision of the Auto Task Force, Treasury, and the PBGC continues to affect roughly 20,000 current and future retirees across the nation.”

The bipartisan support for this renewed investigation call — Kaptur is a Democrat — undercuts the Obama campaign’s accusations that his GOP rival, Mitt Romney, and Turner are trying to “politicize” this scandal.

Portman, who’s widely considered to be on Romney’s short list of potential vice presidential candidates, said in a statement that he has “met with these hard-working Ohioans who lost a significant portion of their pension benefits while other retirees from the same company received far better treatment.”

“The idea that the administration played politics with their pensions is beyond disappointing, and it deserves answers,” Portman said. “The administration’s decisions have caused pain and loss to thousands of workers and their families as a result of their reduced benefits. This matter deserves continued scrutiny from Congress, and the administration must be called upon to account for its decisions.”

Remember way back in 2009 about how the auto bailouts favored the unions over the private sector creditors who would normally be paid more of whatever could be saved? This isn’t the first time that the private sector – which funds the government –  was screwed by the government. But “the private sector is fine”.

Filed under: News, , , , , , , , , , , , , ,

How Obama rewards Democrat special interest groups

One way to reward your favored special interests is to exempt them from the taxes that everyone else has to pay.

Consider this article from CNS News. (H/T ECM)

Excerpt:

President Barack Obama on Thursday announced a plan to impose a new tax on banks to cover an expected $117 billion shortfall in the Troubled Assets Relief Program (TARP). The tax would apply to 50 financial institutions, which have assets of more than $50 billion, and would constitute a 0.15 percent tax on the TARP liabilities of these institutions.

However, auto companies General Motors and Chrysler, which are not expected to pay back all of their $66 billion of TARP money, will not be subject to the tax. Also exempted from the tax would be mortgage institutions Freddie Mac and Fannie Mae, which are largely responsible for the financial meltdown in 2008.

What do you suppose that businesses do when the government tells them to pay more taxes? Well, they just pass that on to their consumers.

But there’s more.

Consider this article from the Heritage Foundation. (H/T ECM)

Excerpt:

After a long-week of negotiations, unions have won an exemption from the excise tax on high-cost “Cadillac” health insurance plans. The excise tax would fall on health insurance plans that cost more than $8,500 for individuals and $23,00 for families (the union deal reportedly slightly increases these thresholds) starting in 2013. It is one of the many tax hikes proposed by Congress to partially offset the cost of its take over of the health care system.

Obama’s union supporters are getting exempted from another tax that will be paid by non-unionized workers.

Filed under: News, , , , , , , , , , , , , , , , ,

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