UAW Gets $12 Million from GM as Taxpayers Get Scrooged
Bloomberg reported last week that General Motors will be paying $12 million in additional bonuses to its UAW workers for meeting "quality targets." It's nice to see the holiday spirit of giving at GM. Unfortunately; US taxpayers are not faring as well as Government Motors' politically favored union members.
The Obama Administration still refuses to exit its stake in GM with Treasury serving as Money Manager for the American taxpayers. Geithner and friends continue to gamble on a market-timing strategy to "maximize" taxpayers return on its GM bailout (sorry, "investment.") So, how are they doing?
Back in July, I criticized Treasury's decision to continue holding the 500 million or so shares of GM that taxpayers own. Treasury could have filed to sell shares at the first available date in May at about $31 a share. The July share price was around $28 a share. The financial wizards at the Obama Administration and guardians of taxpayer funds have seen their gamble on GM lose another $3.5 billion of value since the July article and over $5 billion since they could have first filed to sell as shares now trade under $21 a share. Perhaps Treasury and the Obama Administration should give up on their unsuccessful experiment of playing market-timer with funds that America can not afford to lose.
When President Obama decided to bailout GM and instructed the Auto Task Force to engineer a bankruptcy process that protected the politically powerful UAW, he made claims that he had no desire to have the government involved in the auto industry. He then decided who would run GM as then CEO Rick Wagoner was fired and government-selected board members were appointed. We now have our executive branch of government still entrenched in GM, as well as at Ally Financial which finances GM vehicles and inventory.
The hypocrisy of the Obama GM stock market gamble is apparent when you consider the past responses to suggestions that Social Security funds be invested in the stock market to increase long term gains. The past indignation at the US Government risking taxpayer funds by gambling in equity markets has been replaced with an arrogant stance that Obama and friends can guarantee that, in the near future, GM shares will rise to over the $33 IPO price of a year ago and Treasury will exit at the higher prices. Despite all attempts by the mainstream media and the administration to put a positive face on GM, the best laid plans of mice and politicians have gone awry.
It really doesn't matter what the opinion is on where GM share price will head. The government has no business being in the auto industry. The conflicts are constantly becoming apparent as agencies of government that work for Obama, like NHTSA, are accused of not immediately reporting safety issues with the Chevy Volt. It is also clear that GM has become a political football as President Obama campaigns on a debatable stance that he saved millions of jobs by bailing out the company.
The auto industry bailouts that saw a government orchestrated GM bankruptcy process that favored politically powerful union members has been an ugly chapter in American history. Regardless of what side anyone comes down on relating to how "successful" government's auto industry intrusion has been, there is no reason to continue the divisive game. Treasury should get the American taxpayers out of GM (as well as Ally Financial) and let companies in the industry sink or swim on their own. A less intrusive government would be a Christmas present that all Americans could appreciate.
Mark Modica is an NLPC Associate Fellow.