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Monday, December 13, 2010

Gary Jason on Obama's GM, Ford & United Auto Workers Bailout

Gary Jason at Real Clear Politics draws our attention to the cesspool of crony capitalism that the American auto industry has become. The United Auto Workers Union is leading the pack and is well and truly in bed with the Obama Administration. Below are three very key excerpts from his article,

"First is the news that the "new" GM walked away from the crony bankruptcy proceedings with a huge tax break -- one worth up to $45 billion. It was revealed in the paperwork filed for its IPO that the Obama administration gave the new GM a sweetheart deal: it will be allowed to carry forward huge losses incurred by the "old" GM prior to its bankruptcy. Of course, the IRS doesn't allow the new companies that emerge from bankruptcy to write off their old losses. But the feds decided to waive that rule for companies bailed out by TARP. Thus, the new GM will save about $45.4 billion in taxes on future earnings, which may allow it to escape taxes for the next twenty years..."


"...The UAW was given a big chunk of new GM in the crooked bankruptcy settlement. To be precise, the very monster that drove GM off the cliff -- the UAW -- received 35% of the stock in the new company. With the sale of the stock in the new GM, the UAW earned an immediate $3.4 billion in selling about one third of its shares. Moreover, if the UAW can get $36 per share for the other two-thirds of its shares, it will walk away breaking even -- meaning it will walk away with its outrageously bloated pension and health care fund fully intact. The taxpayer, on the other hand, hasn't fared well at all..."

And then as if that isn't enough, the U.S. Government is pumping even more tax-payer dollars into the UAW via GM and Ford by purchasing almost 15,000 "unsaleable" hybrids in the last two years.

"...It turns out that the administration itself has purchased a huge, unprecedented chunk of American-made hybrid cars assembled since it took over two of the loser companies. This has propped up the sales of hybrid cars in the face of widespread consumer indifference. The U.S. General Services Administration (which handles the federal fleet of cars) bought nearly 15,000 hybrid cars over the last two years, or about 10% of the government cars purchased. This compares to only 1% of the fleet being hybrids just two years ago. Even more striking, more than 20% of the hybrids the GSA purchased were bought using "stimulus money" (yes, the GSA got "stimulus money" -- $300 million in total!). Furthermore, it is interesting to note that of the 15,000 hybrids that the GSA bought, only 22 were from Toyota and Honda. All the rest were purchased from GM and Ford..."

I can't help but think that the Obama Administration's approach to dealing with businesses is something along the lines of "If it's profitable, tax it to death. If it fails, bail it out." ...Especially if it was destroyed by an Administration-friendly union, and heck, bail out the union as well.

Click here to read the entire article.


Blogger Borf said...

I have to say, this p!$$ed me off from day 1. It didn't take Einstein to figure out it was going to be a massive rip-off of the American taxpayer.

It's highly unlikely, but I hope the new Republican House has enough of what it takes to start doing a little investigation into this crap and maybe get some of our money back.

4:05 PM  
Blogger Jazzie Casas said...

For those lawyers who do offer the service, it is now more expensive for their clients because it takes more of their time. This means that you will pay more for bankruptcy under the redesigned bankruptcy laws. For example, bankruptcy lawyers now have to personally attest to the accuracy of the information provided by their clients in the bankruptcy courts. This means that they have to take the time to personally research all of the information provided by their clients. The more time a lawyer spends with a client's case, the more that case will cost.

4:44 PM  
Anonymous Anonymous said...

Socialism was designed and established by bankers, to unjustly enrich bankers. We are seeing it function exactly as it was designed to operate.

Wealth created by the labor of the producer is "redistributed" into the hands of idle "party members" ('getters', not makers) who are supported in idle luxury while those producers eat grass and bark off trees, just like we see in Cuba and North Korea. Kim Jung Il and Castro are both billionairs.

God, but people are dumb.

3:01 AM  
Blogger STC said...

This is truly becoming like something out of 'Atlas Shrugged'.

6:30 PM  

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