{"id":519534,"date":"2010-04-07T16:11:00","date_gmt":"2010-04-07T20:11:00","guid":{"rendered":"http:\/\/www.szone.us\/f95\/so-how-government-run-auto-company-working-out-41945\/"},"modified":"2010-04-07T16:11:00","modified_gmt":"2010-04-07T20:11:00","slug":"so-how-is-that-government-run-auto-company-working-out","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/519534","title":{"rendered":"So How Is That Government-Run Auto Company Working Out?"},"content":{"rendered":"
On 04.07.10 12:00 PM posted by Mike Brownfield<\/p>\n

\n<ahref="http:\/\/blog.heritage.org\/wp-content\/uploads\/GM-dealer.jpg">\"\"<\/p>It\u0092s been nearly a year since the Obama administration took the reins of General Motors, and if today\u0092s headlines are any indication, things aren\u0092t looking good for the troubled Detroit auto maker.<\/p>\n

First off, GM just isn\u0092t making money. <ahref="http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2010\/04\/07\/AR2010040701922.html">It posted a $4.3 billion loss for the second half 2009 \u0096 far from profitability, far from a government-led turnaround. The company claims it has a chance of \u0093achieving profitability\u0094 in 2010, but keep in mind that GM is $50 billion in the hole to the American taxpayers, who paid for a bailout in 2009.<\/p>\n

And those taxpayers can\u0092t recoup their losses until the U.S. investment in GM is sold, which won\u0092t happen until someone actually wants to buy the company. With $4.3 billion in losses, don\u0092t expect buyers to come running anytime soon.<\/p>\n

<spanid="more-30760"><\/span>There\u0092s more bad news for GM. The company is <ahref="http:\/\/www.nytimes.com\/2010\/04\/07\/business\/07cars.html?ref=todayspaper">saddled with massively underfunded pension plans, and it needs to come up with $12.3 billion in payments into the plan within the next five years. According to a government report released yesterday, it\u0092s uncertain whether GM will be able to make that payment. That\u0092s not a hard conclusion to reach given today\u0092s reported $4.3 billion in losses.<\/p>\n

More bad news for Americans. <ahref="http:\/\/www.nytimes.com\/2010\/04\/07\/business\/07cars.html?ref=todayspaper">As The New York Times reports, \u0093If either company\u0092s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees.\u0094 That\u0092s 650,000 GM retirees, to be exact.<\/p>\n

But wait, there\u0092s more. Enter the United Auto Workers, <ahref="http:\/\/detnews.com\/article\/20100407\/AUTO01\/4070347\/UAW-suit-says-GM-owes-$450M#ixzz0kQKZGHMT">which yesterday sued GM, claiming that the company owes a union-run health care fund $450 million.<\/p>\n

If you add it all up, that makes for a lot of financial obligations for a company that is already well below water, to the depths of about 20,000 leagues under the sea.<\/p>\n

So what happens if GM doesn\u0092t make a profit and all of these liabilities end of sinking the company? More from The New York Times on the government report issued Tuesday:<\/p>\n

\u0093In the event that the companies do not return to profitability in a reasonable time frame, Treasury officials said that they will consider all commercial options for disposing of Treasury\u0092s equity, including forcing the companies into liquidation.\u0094<\/p>\n

In other words, back to square one \u0096 an unprofitable company overburdened with expenses, in need of a government bailout.<\/p>\n

Last year, we wrote that the federal government\u0092s ownership of GM <ahref="http:\/\/www.heritage.org\/Research\/Reports\/2009\/05\/General-Motors-Bankruptcy-and-Nationalization-Exit-Strategy-Needed">was the wrong approach, and that it necessitated an exit strategy for the American taxpayer. Given where GM is now, an exit strategy would have been a good idea.<\/p>\n

In April 2009, <ahref="http:\/\/www.cbsnews.com\/8301-503544_162-4979228-503544.html">President Barack Obama said, “I don’t want to run auto companies. … I’ve got more than enough to do.”<\/p>\n

At the time, GM was broken. Under President Obama’s leadership, the American taxpayer bought it. And all indications are that it\u0092s not getting fixed anytime soon. Buyer\u0092s remorse, anyone?<\/p>\n

http:\/\/blog.heritage.org\/2010\/04\/07\/…y-working-out\/<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

On 04.07.10 12:00 PM posted by Mike Brownfield <ahref="http:\/\/blog.heritage.org\/wp-content\/uploads\/GM-dealer.jpg"><\/p>It\u0092s been nearly a year since the Obama administration took the reins of General Motors, and if today\u0092s headlines are any indication, things aren\u0092t looking good for the troubled Detroit auto maker. First off, GM just isn\u0092t making money. <ahref="http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2010\/04\/07\/AR2010040701922.html">It posted a $4.3 billion loss for the […]<\/p>\n","protected":false},"author":4292,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-519534","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/519534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4292"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=519534"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/519534\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=519534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=519534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=519534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}