Report: U.S. bailout of the auto industry saved the government $28.6 billion

Article by Christian A., on November 19, 2010

Ahead of General Motors Co.’s initial public stock offering, the Center for Automotive Research (CAR) in Ann Arbor, Mich. said that the U.S. bailout of the auto industry saved the government $28.6 billion and is close to a “two-year breakeven.”

GM’s IPO aims to raise up to $22.7 billion, which would be divided among the U.S. and Canadian governments and a retiree health-care trust administered by the UAW. CAR explained that government aid for Chrysler and GM saved more than 1.14 million jobs in 2009 and another 314,400 jobs in 2010.

Its asserted taht the net impact to the federal government (in terms of personal income taxes, Social Security receipts, and changes in transfer payments) was US$21.6 billion in 2009 and $7.0 billion in 2010.

CAR’s study determines that the bailout saved the government $28.6 billion in, for instance, tax revenues it might have lost.

CAR’s chief economist Sean McAlinden says the $13.4 billion in principal has been repaid on the government’s $80 billion U.S. investment in the automotive industry. To get a “two-year breakeven”, the government needs to recover $38 billion of the remaining $66.6 billion outstanding investment in the industry. [via autonews - sub. required]

Topics: united states

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