Today I asked President Trump to seek repayment from General Motors of the $11.4 billion taxpayers lost on bailing out the company if it persists in moving its production to China, and in strengthening its relationship with the Shanghai Automotive Industry Corporation. According to President Obama, the rationale for the bailout was to help save American manufacturing jobs.
Here’s the text of my letter, which was copied to Dr. Peter Navarro, director of his National Trade Council:
During your campaign, you spoke of the importance of cutting better economic deals for Americans. In particular, you and many of your advisors have pointed out the massive trade deficit with China, produced in part by American companies that close their American factories, open up shop in China and then import their formerly American-made products into America.
While there may be reasonable arguments about the extent to which government should intervene in trade, there is surely bipartisan agreement that the United States government should not be subsidizing the outsourcing of American jobs. And yet, that is exactly what the previous administration did with the bailout of General Motors.
In the U.S., General Motors received $50 billion of U.S. taxpayer money, along with another $18 billion in tax credits. While taxpayers ultimately profited to the tune of $30 billion from the bailout of the US banks, taxpayers lost $9.3 billion on the auto bailout, due primarily to General Motors failing to pay back $11.4 billion.
Other bailed out companies repaid taxpayers, but GM did not. GM did, however, fully repay the $500 million loan that was guaranteed in 2009 by its Chinese partner, the Shanghai Automotive Industry Corporation (SAIC), which is owned by politically influential members of the Shanghai Communist Party.
Since this “Chinese bailout,” GM has:
•Announced that China will become its global export base for a family of compact vehicles, jointly developed and produced with SAIC and intended for sale in global markets.
•Signed a memo of understanding to jointly develop plug-in hybrid and electric vehicles in China in partnership with SAIC.
•Increasingly transferred its vehicle platforms and technology to its joint venture with SAIC.
•Planned $16 billion in investments in the Chinese market, in order to increase its Chinese production base by 65%.
Meanwhile, since the $50+ billion US taxpayer bailout, GM has steadily shut down U.S. plants, laid off US workers, and failed to pay back US taxpayers. In fact, one of the Obama administration officials, Harry Wilson, who structured the GM bailout has gone on to exploit that public loss for personal profit. While GM’s American bailout resulted in losses for everyone except Obama’s cronies, GM’s Chinese bailout advanced that country’s long-term strategy to build its automotive sector through increased exports and technology transfers.
The previous administration failed to ensure that the generous taxpayer bailout of GM would protect taxpayers or prioritize American jobs. In fact, they even waived GM’s domestic production requirement two years early. In contrast, GM has rewarded China’s much smaller bailout with manufacturing jobs and R&D investment. The US negotiated a bad deal with GM by any standard, but in comparison to China’s bailout the Obama Administration’s failure as negotiators is especially clear.
The U.S. bailed out GM, but GM has been bailing out on the U.S. It’s time for American leadership that will demand that GM make good on the extraordinary support the taxpayers have provided.
Mr. President, we believe it is not too late to hold GM accountable. Unless GM stops enabling China in gaining control over our auto manufacturing industry, GM should repay the full $11.4 billion taxpayers lost on the bailout. END LETTER