E.J. Dionne: The Taxpayers Losing Billions? It’s A Huge Success!

by John Hawkins | May 10, 2011 1:44 pm

This column from E.J. Dionne Jr.[1] tells you so, so, so much about the way liberals think or, more aptly, don’t think at all about certain subjects…

Rescuing Detroit: No news about government’s good news

Don’t expect to see a lot of newspapers and Web sites with this headline: “Big Government Bailout Worked.” But it would be entirely accurate.

The actual headlines make the point. “Demand for fuel-efficient cars helps GM to $3.2 billion profit,” declared The Post. “GM Reports Earnings Tripled in First Quarter, as Revenue Jumped 15%,” reported the New York Times.

Far too little attention has been paid to the success of the government’s rescue of the Detroit-based auto companies, and almost no attention has been paid to how completely and utterly wrong bailout opponents were when they insisted it was doomed to failure.

“Having the federal government involved in every aspect of the private sector is very dangerous,” Rep. Dan Burton (R-Ind.) told Fox News in December 2008. “In the long term it could cause us to become a quasi-socialist country.” I don’t see any evidence that we have become a “quasi-socialist country,” just big profits.

Rep. Lamar Smith (R-Tex.) called the bailout “the leading edge of the Obama administration’s war on capitalism,” while other members of Congress derided the president’s auto industry task force. “Of course we know that nobody on the task force has any experience in the auto business, and we heard at the hearing many of them don’t even own cars,” declared Rep. Louie Gohmert (R-Tex.) after a hearing on the bailout in May 2009. “And they’re dictating the auto industry for our future? What’s wrong with this picture?”

What’s wrong, sorry to say, is that you won’t see a news conference where the bailout’s foes candidly acknowledge how mistaken they were.

Wow, how wonderful it is that GM made a $3.2 billion profit. Of course, to do it, the government had to break legally binding contracts, give huge tax credits to people that buy their crummy Volts, and of course, no one would be shocked if it turns out that the highly publicized government investigations of Ford and Toyota were more about improving profitability for GM and Chrysler than public safety.

Yet and still, there’s that $3.2 billion. Know what I call that? I call it crony capitalism. Because GM is crowing about their huge profit, while the taxpayers look as if they’re going to lose roughly $11 billion[2].

The U.S. government plans to sell a significant share of its remaining stake in General Motors Co. this summer despite the disappointing performance of the auto maker’s stock, people familiar with the matter said.

…Shares have been hurt by rising fuel prices, industry production disruptions and management turnover. At Monday’s price, and taking into account shares sold during the IPO, taxpayers would lose more than $11 billion on the rescue if the government dumped the rest of its stake now.

….GM share price could become further depressed after investors holding bonds of the now-bankrupt “old-GM” receive warrants and stock for existing GM shares. That will happen April 21.

The American people took a huge bath on the GM bailout. We lost BIG TIME. Yet, to liberals losing $11 billion is “good news?” It means the “bailout worked?” Suddenly, the liberal view of economics seems to make a lot more sense, doesn’t it?