Politics: The Obama camp can't stop clucking about how he saved GM and the car industry. But if the GM bailout is such a success story, why can't it pay back its debt to taxpayers?
The president's new campaign video narrated by actor Tom Hanks claims GM has "repaid" its loans. But in a revelation by the special inspector general monitoring the TARP bailout program, GM and GMAC together still owe the biggest share of the remaining $119 billion TARP debt.
Of the top bailout recipients, GM is the biggest laggard, the TARP watchdog says in his latest quarterly report to Congress. Bank of America, Citigroup, Chrysler and Chrysler Financial all have paid off their debt and left the TARP program. Even AIG has paid back more than 75% of what it owes taxpayers.
GM, on the other hand, still owes more than half the $50 billion in federal funds it received when the combination of the recession and its costly union contracts drove it into bankruptcy. And its lending arm, GMAC (now Ally Financial), still owes $14.5 billion.
What's worse, it's not clear that GM actually repaid what it's gotten credit for repaying. Check out this note buried in the inspector's report: "As part of a credit agreement with Treasury, $16.4 billion in TARP funds were placed in an escrow account that GM could access only with Treasury's permission."
As it turns out, GM got Treasury's OK to "repay" more than $6.7 billion "using a portion of the escrow account that had been funded with TARP funds." So GM is merely paying the government back with government money, not money GM is earning selling cars, as the administration has claimed.
Worse, GM in effect is still borrowing money. Consider this item from the report: "What remained in escrow was released to GM." Bottom line: Taxpayers have not been paid back and are still on the hook as GM continues to require government help. Yet Obama has hailed the GM bailout as the signature achievement of his big government programs.
"On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen," the president said. "Today, General Motors is back on top as the world's No. 1 automaker."
Even that's a stretch. GM edged tsunami-crippled Toyota by counting sales at its joint ventures in China, which aren't wholly owned subsidiaries. And the government is directly subsidizing new GM auto lines like the star-crossed Chevy Volt.
Ford, which didn't take TARP funds, grabbed market share from GM and is now more profitable. Ironically, Ford for the first time in years has outsold GM in the number of cars bought by the federal government - although Washington still owns a huge stake in GM. Not exactly a vote of confidence.
In North America, Ford just recorded its highest quarterly profit since 2000. GM missed profit estimates in the fourth quarter. And analysts are not sanguine about its first-quarter results due Thursday.
The GM story is hardly what we're looking for in terms of a recovery. That Obama is touting it as a top economic achievement speaks volumes about his policies.