$30 billion is gone, but it could have been worse
This was a bad year for both the auto industry and the American taxpayer. The Obama administration’s effort to save General Motors and Chrysler will cost taxpayers $30 billion. The Detroit News reported last week that the losses were less than expected. Earlier forecasts projected a loss of $44 billion of the $82 billion loaned-out.
GM received $50 billion of the money, with $43 billion given in exchange for 61 percent of the company.
A large portion of the $30 billion loss is due to Chrysler. Chrysler has had much of its $12 billion debt forgiven. The government is requiring Fiat to pay back $6 billion in loans before it can increase its 20 percent stake in the company, said Detroit News.
Briefing.com has reported that domestic auto sales are up 5.3% for the month of November. The question is will auto sales continue to rise without the benefit of the “cash for clunkers” program?
CNNmoney.com reported that the program cost Americans $24,000 for each car sold. To make matters worse, the program mostly benefited Japanese automakers.
President Obama defended his administrations action to save the auto industry in a speech given last week, “We also took steps to prevent the rapid dissolution of the American auto industry, which faced a crisis partly of its own making, to prevent the loss of hundreds of thousands of jobs during an already fragile time.”
“These were not decisions that were popular or satisfying; these were decisions that were necessary,” he said.