General Motors recently reported lackluster sales results for the month of March. GM share price took a hit on the news, but there is one fast-growing area of sales for the company that is outperforming other segments. Government sales for GM rose 55% in March and capped off a first quarter that saw government sales increase 23% over the prior year.
GM did not give an explanation for the increase in government sales, localities often contribute to the sales figures. In the past federal grants went to localities to pay for GM vehicles when the Obama Administration sought to prop up crony corporation GM in any way possible. Given the close ties between the Administration and GM, more transparency is needed as to exactly how taxpayer money is getting to GM.
I reported in November of last year that the Department of Homeland Security has been overspending on vehicle purchases as an oversight committee discovered about $2.5 million of waste as a division leased more vehicles (apparently from GM) than it had agents! It seems the last months of Obama’s term may see GM benefiting as efforts are made to put the Government back into Government Motors.
The sordid history of GM’s taxpayer-funded bankruptcy process has had many examples of cronyism and taxpayer abuse that went under-reported. The examples include an approximate $30 billion tax credit that went to GM as the company was allowed to go tax-free for years when they exited bankruptcy in 2009. Exceptions were made to tax laws to allow for the gift provided at the expense of taxpayers, who had already provided about $50 billion to GM in the auto bailouts.
The previously-mentioned Homeland Security example should raise the hackles of watchdogs and oversight committees. While an Inspector General report cited the waste, the connection was not made as to why the department was so freely spending taxpayer money on vehicles it didn’t need. I do not doubt that further investigation would find that GM was the recipient of the taxpayer-funded largess.
It would not be the first time that the Obama Administration filtered funds through the Department of Homeland Security. Reports as far back as 2011 exposed images of GM vehicles sitting vacant on lots at border patrol stations. There is no telling how much taxpayer money surreptitiously goes to GM through federal entities. The Administration’s green energy agenda has been utilized to fund production and continuing subsidies for the Chevy Volt. Even the military is getting into the act as undisclosed amounts of money are going to GM to develop hydrogen cell vehicles for the Army.
The US Military’s huge budget makes it an obvious choice to fund politically-popular companies or projects. The Navy was criticized in 2012 for spending $12 million on $26 a gallon biofuel to test its “green” fleet when traditional fuel is a fraction of the cost. The latest hydrogen cell project by the Army is coordinated with GM and utilizes a Chevy Colorado platform. This follows a deal that sees GM providing up to 55,000 turbodiesel V8 engines for the Army’s Joint Light Tactical Vehicle. Given GM’s crony relationship, it is questionable that a fair bidding process is taking place for these huge taxpayer-funded contracts that may end up costing billions of dollars for questionable technologies.
Extreme oversight is needed when we allow a private corporation to get in bed with an administration to the point where the President campaigns on a platform of the said company’s success. This is what happened when President Obama secured the perceived success of GM by opening the tap for government funds and then bragged about how great the company was doing as a result of the 2009 auto bailouts that he orchestrated.
We now can hear Hillary Clinton blowing the same trumpet as she boasts about how well Detroit is doing as a result of her team’s efforts. Let’s just bear in mind that taxpayers lost billions of dollars on the perceived success. Detroit, along with GM and Chrysler, went bankrupt. More importantly, based on GM stock performance (bailed-out Chrysler is not looking too great either) and the fact that the cyclical auto industry is at a peak, it is questionable as to just how healthy the bailed-out companies are doing. We should be assured that cronyism is not leading to more taxpayer money being wasted as government agencies award contracts to GM as part of a political agenda. Stricter oversight is needed for any government contracts that go to GM or any other politically-connected corporation.
Mark Modica is an NLPC Associate Fellow.