Taxpayers gave 'new' GM about $40 billion, which was converted to common stock. In November, the Feds sold 480 million GM shares for $20 billion. If taxpayers are to break even, the remaining 350+ million taxpayer-owned shares need to be sold above $55. GM is trading at $31.36 as I write.Tonight I find out GM wants billions more in tax subsidies. Sigh.
The Feds gave 'new' GM $14 billion in future tax breaks, even though the losses of the 'old,' defunct GM had to be counted to justify the largesse. That accounting sleight-of-hand had never been allowed before.
GM is presently profitable. This is better than the alternative. But celebrating profitability resulting from an interest free $40 billion loan, and a $14 billion tax-avoidance gift – after giving your major creditors a major haircut and while your stock sinks below its IPO price – is premature.
If taxpayers had given each of GM's 75,000 pre-bankruptcy hourly workers $250,000, we would have be ahead compared to the cost of the bailout and tax breaks.
Picking winners is bad. Picking losers to make into winners is worse.
Wednesday, May 18, 2011
This morning I got up to find a letter I wrote in the State Journal.