Last March, I posted an article, mostly of quotes on the true nature of the auto bailout. Mr. Obama has been seen on the news of late, touting this as the big success of his administration. GM execs aren't exactly happy to be his poster child, I'm sure his lack of popularity is a drag on sales. We need to always keep in mind the illegal nature of these bailouts. Fortunately, David Skeel of the WSJ is on the job. If the government hadn't stepped in and dictated the terms of the restructuring, the story goes, General Motors and Chrysler would have collapsed, and at least a million jobs would have been lost. The bailouts averted disaster, and they did so at remarkably little cost.
The problem with this happy story is that neither of its parts is accurate.
. . .
If the government wanted to "sell" the companies in bankruptcy, it should have held real auctions and invited anyone to bid. But the government decided that there was no need to let pesky rule-of-law considerations interfere with its plan to help out the unions and other favored creditors. Victims of defective GM and Chrysler cars waiting to be paid damages weren't so fortunate—they'll end up getting nothing or next to nothing.
. . .
But the $14 billion figure omits the cost of the previously accumulated tax losses GM can apply against future profits, thanks to a special post-bailout government gift.
The pile up of lies with regards to the auto bailout is stupendous. Here's hoping creative Republican campaign commericials excoriate the President for orchestrating a web of lies to enhance his own image. Here's betting they won't.
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