Can critics of GM bailout issue a recall of their predictions?
Eighteen months after the Obama administration launched a taxpayer-funded rescue of General Motors, the company is reporting earnings so far this year of $4.8 billion, which means it is outperforming Toyota.
And on Thursday, for the first time, the new General Motors will offer stock for sale by private investors. Wall Street seems eager to have the opportunity. Experts predict the stock will sell well, and demand is so high that this week the company boosted the estimated price range of its stock from $26-$29 to $32-$33.
In the late spring and early summer of 2009, conservative critics were citing the bailout as proof that Obama was taking us “down the road to socialism,” as U.S. Sen. Richard Shelby put it. Yet after this week’s IPO, the federal government will no longer be GM’s majority owner, and government officials are debating whether to shed the remainder of GM’s stock relatively quickly or sell it more slowly, allowing it to increase in value and perhaps even turn a profit for taxpayers.
Critics were also pretty damn certain that the attempted bailout was doomed to fail, that the administration’s effort to save an estimated million jobs could not work and would only end up costing the taxpayers tens of billions of dollars.
In fact, for old times sake, let’s go back and review just a smattering of those predictions, shall we?
“Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic viability?”
– U.S. Rep. John Boehner, R-Ohio
“Every dollar spent with GM is a dollar spent against free enterprise.”
– talk-show host Hugh Hewitt
“Now the government has forced taxpayers to buy these failing companies without any plausible plan for profitability. Does anyone think the same government that plans to double the national debt in five years will turn GM around in the same time?”
– U.S. Sen. Jim DeMint, R-S.C.
“The people saying they don’t want to buy anything at General Motors are not mad at General Motors. They don’t want to patronize Obama. They don’t want to do anything to make Obama’s policies work! This is an untold story, by the way. Of course, the government-controlled media is not gonna report anything like this but there are a lot of people who are not going to buy from Chrysler or General Motors as long as it is perceived Barack Obama is running it, because people do not want his policy to work here because this is antithetical to the American economic way of life.”
– talk-show host Rush Limbaugh
“You’ve got government bureaucrats who are making decisions about what kind of car models are going to be produced, which plants are to be closed and how many dealerships to eliminate. You have in effect central planning of this industry. Karl Marx must be smiling today. We’ve never seen this level of government control of the economy in peace time history.”
– Phil Kerpen, policy director, Americans for Prosperity
“We’ll continue to make the case that President Obama and House Democrats want to do to America’s health care system what they have done to General Motors. Having to defend such drastic government intervention paid for with reckless spending and bailouts is not an enviable position for many of these Democrats to be in next year.”
– Paul Lindsay, spokesman for the National Republican Congressional Committee
“Unfortunately, this is just another sad chapter in President Obama’s eager campaign to interject his administration in the private sector’s business dealings…. We have seen time and again that when the government attempts to set business practices for private corporations, it ends in spectacular failure. It is time to stop circumventing both the markets and the legal process.”
– U.S. Rep. Tom Price, R-Ga.
“I see no hope whatsoever for the situation. I think the $50 billion might as well be kissed goodbye. I would expect that this is just the beginning.”
– conservative policy consultant Wendell Cox
“I think the long-term outcome will be the same. It’s unlikely to ever recover the huge investment that’s been made in it, and you will then be carrying this forever and ever and ever.”
– Ronald Utt, senior research fellow at the Heritage Foundation
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713 comments Add your comment
Scout
November 16th, 2010
1:55 pm
Jay:
I would give a week’s pay to see you debate everyone of the above ……… one at a time.
Hillbilly Deluxe
November 16th, 2010
1:57 pm
It would be a good thing, if GM succeeds. However, having spent quite a few years in GM dealerships and having friends who still do, I’ll have to see it to believe it. They still have the same internal upper management mindset, that they’ve had for 20-30 years. Every 2-3 years, while I was there, they always had a shake-up, followed by a “we’ve seen the light” speech, and then went right back to doing things the way they had before.
Jay
November 16th, 2010
1:58 pm
You set it up, I’ll be there, Scout.
Limbaugh in particular. Note that he never puts himself in a situation where he can actually be challenged on the nonsense he spouts?
All bluster and BS.
Mary Elizabeth
November 16th, 2010
2:06 pm
Please read my 2:00 p.m. posting in the downstairs thread. Thank you.
Normal
November 16th, 2010
2:07 pm
Off topic, but could this be the reason there are so many abortions?
http://www.msnbc.msn.com/id/40201197/ns/health-health_care/
TaxPayer
November 16th, 2010
2:08 pm
If it were not for bluster and BS, what would a Limbaugh or Price or Boehner, et al, have? Their faithful followers such as the Scout, of course.
Normal
November 16th, 2010
2:10 pm
I’m a Ford man so I don’t care.
Matti
November 16th, 2010
2:11 pm
Mary Elizabeth,
I did. Good post! You failed to mention that many Republicans who vocally and frequently oppose gubmint handouts are themselves recipients. From CBS news:
GOP Rep. Michele Bachmann of Minnesota, an outspoken critic of farm payments, listed between $15,000 and $50,000 in farm income as one source of revenue on her personal financial disclosure statement last year, citing a Bachmann family farm in Independence, Wis., as an asset.
That farm, which was owned by her father-in-law, received more than $250,000 in subsidies over the past 15 years, according to the Environmental Working Group. A Bachmann spokesman said she is not involved in any operational decisions.
South Dakota Republican Kristi Noem, who ousted Democratic Rep. Stephanie Herseth Sandlin, had partial ownership in a ranch that received more than $3 million in subsidies over 15 years, though her family bought her out last year.
Farmer and gospel singer Stephen Fincher won an open seat House race in Tennessee this year while both railing against federal spending and deflecting criticism that his family had received $3.2 million in federal farm subsidies in the past 10 years.
But hey, according to them, if you’re unemployed because your job (and all the others in your community) went away, and you need a few more weeks of UE checks in order to feed your children and keep a roof over their heads, you’re what’s wrong with America.
Ragnar Danneskjöld
November 16th, 2010
2:12 pm
When the $65 billion yet unrepaid by GM gets back to the public treasury, you will have a valid argument against the statement of Wendell Cox, whoever he is. The truth of the other statements is yet unrebutted.
Harry Callahan
November 16th, 2010
2:13 pm
Gee Jay…looks like the Associated Press has a somewhat different view…
Investors may sit out GM’s IPO
by Sharon Silke Carty
Associated Press Writer November 15, 2010 12:00 AM
DETROIT – General Motors executives are playing up three bright spots in the company’s future as they try to persuade investors to buy GM stock: A better lineup of cars and trucks, potential for global growth and a new cost structure that enables the company to make money even when the economy dips.
GM emerged from a government-organized bankruptcy just 16 months ago, a process the company says has made it stronger and healthier. The reorganization erased debt and lowered labor costs. It also removed $27 billion from the wallets of bondholders and left stockholders with nothing. Taxpayers spent more than $50 billion to save GM from ruin between December 2008 and July 2009 and are not expected to get all their money back.
Even with an IPO, GM is still ‘government motors.’
You might find the nickname clever, but inside the company, it’s an embarrassment and the driving force behind the decision to hold the IPO as early as possible. GM wants the government to sell off its shares.
“We want the government out. Period,” Chairman Ed Whitacre said this summer. But the IPO process will be more like a drawn-out divorce between GM and taxpayers. This stock offering will only reduce the government’s stake in GM from 61 percent to 43 percent. It will take more stock offerings, staggered over the next few years, before the U.S. government is out of the car business.
For shareholders, that means GM may not always put investors first. Political priorities may trump their demands. Some worry GM will spend too much time and use too many resources working on small cars or electric cars and not enough on profitable vehicle lines like trucks and SUVs.
The stock offering “is entirely cosmetic,” says Logan Robinson, a law professor at the University of Detroit Mercy who has worked as legal counsel at Chrysler and automotive supplier Delphi. “The government is absolutely going to call the shots, even if they are below 50 percent.”
Before handing over bailout cash, a task force convened by President Barack Obama wrote in contract provisions forcing GM to use the money in ways the government approved. Some of those provisions, including executive compensation and U.S. production levels, are locked in until 2014.
Even if the Treasury were to sell every share it owns in GM, its influence and power would remain. The top two executives, Whitacre and CEO Dan Akerson, were picked by the government. Three other directors, David Bonderman, Robert Krebs and Patricia Russo, were also chosen by the government to sit on the 13-member board.
“Where do these board members’ and executives’ priorities lie – is it with the administration, or is it with the shareholders?” asks Linda Killian, founder of Renaissance Capital, which analyzes and invests in IPOs. That question is “sitting there like an 800-pound gorilla, holding stock.”
Copyright 2010 The Marietta Daily Journal. All rights reserved.
DannyX
November 16th, 2010
2:13 pm
One of my favorite subjects.
Again, congratulations to “Government Motors” The Volt was just named Motor Trends 2011 Car of the Year.
Way to go Obama.
Harry Callahan
November 16th, 2010
2:14 pm
Jay
November 16th, 2010
1:58 pm
“You set it up, I’ll be there, Scout.
Limbaugh in particular. Note that he never puts himself in a situation where he can actually be challenged on the nonsense he spouts?
All bluster and BS.”
…and he makes more money in a day than you’ll make all year…
Normal
November 16th, 2010
2:17 pm
…and he makes more money in a day than you’ll make all year…
Oh, that’s good Harry…and Jay will be sitting in Heaven and Rush won’t…Ha, ha.
TaxPayer
November 16th, 2010
2:17 pm
…and he makes more money in a day than you’ll make all year…
Some people and their wealth envy…
Normal
November 16th, 2010
2:18 pm
Money, the great American scorecard. Sad really.
ByteMe
November 16th, 2010
2:19 pm
Harry’s proud of his values.
Randalph on the Right
November 16th, 2010
2:19 pm
No way the gubermint should have bailed GM out…
Mary Elizabeth
November 16th, 2010
2:20 pm
Matti @ 2:11
Thanks, Matti. I knew I could count on you to flesh out the details of my argument!
Looking out for “number one” – the cultural climate we have created in our nation.
Thanks, again, for reading my 2:00 posting downstairs, Matti.
Harry Callahan
November 16th, 2010
2:25 pm
TaxPayer
November 16th, 2010
2:17 pm
“Some people and their wealth envy…”
Depends how you define wealth envy, TP…I figure Rush earned it, so he’s entitled to keep it. You?
Road Scholar
November 16th, 2010
2:26 pm
Time will tell with the stock offering, but the people working at GM have jobs.
Harry, so the true value of a man is his salary/net worth? Pitiful! You give he name harry callahan a bad name!
Harry Callahan
November 16th, 2010
2:26 pm
“Can critics of GM bailout issue a recall of their predictions?”
Well, I guess they couldm but given the AP story I posted, their predictions were likely accurate, so why would they?
Harry Callahan
November 16th, 2010
2:27 pm
Road Scholar
November 16th, 2010
2:26 pm
“Harry, so the true value of a man is his salary/net worth? Pitiful! You give he name harry callahan a bad name!”
If you interpreted my post that way, I suggest you go take Reading Comprehension 101 at your local community college.
The De-parting of the Red Sea
November 16th, 2010
2:27 pm
Fortunately, the government bailout of GM and Chrysler saved more than just the companies. It saved jobs. Lots of jobs. It also kept a nearly insolvent PBGC from being forced to call on the government to bail it out had these companies gone under. The actual savings to the taxpayer from these actions, as with the AIG bailout, are still being tallied. All told, the Fed’s actions most likely kept us out of a second great depression but you’ll never get a diehard compassionate conservative to admit as much, unless you consider George Bush to be compassionate conservative, that is.
Father O' Toole
November 16th, 2010
2:29 pm
I used to drive a Popemobile.
Harry Callahan
November 16th, 2010
2:30 pm
People’s salary is often a good indication of how good they are at their job. Michael Jordan is better at playing basketball than me, so he got paid millions and I never earned a cent.
Since Bookman and Limbaugh are both political commentators, I would think that their comparative salaries and/or readership/subscriber/circulation/audience share numbers are a good indicator of how good they each are (or are not) at their jobs. Wouldn’t you?
Harry Callahan
November 16th, 2010
2:31 pm
I’m guessing Rush never heard of Jay Bookman, but that’s just a guess.
Matti
November 16th, 2010
2:31 pm
I agree with Normal. Totally sad when money is the only measure of a man’s value to be found, and yet, so many applaud him as having accomplished something meaningful. I guess he did, if you consider hatred and division, and the certainty that this divided nation will fall because of it, an accomplishment. Yeah, we’ll go down fighting — each other!
ByteMe
November 16th, 2010
2:31 pm
@De-parting is correct. The bailout wasn’t just about who got the money… it was about how much liability was really there for the government to absorb had the TBTF banks and auto makers disappeared overnight. The bailout costs are going to be trivial compared to what we would have had to pay to make pensioners and bank depositors whole when their pensions/deposits disappeared in a cloud of banker malfeasance.
Father O' Toole
November 16th, 2010
2:32 pm
Callahan was kicked out of the department and dated a dyke cop.
ByteMe
November 16th, 2010
2:32 pm
A good carnival barker will make more money off the idiot masses than a working stiff any day.
Bubba Bob
November 16th, 2010
2:34 pm
What’s to celebrate? The government screwed the primary debt holders who legally had first claim and used the situation to bailout the unions. I would much prefer to celebrate the situation knowing my government wasn’t breaking the law to pander to their gravy train.
Harry Callahan
November 16th, 2010
2:35 pm
since you guys seem to know everything Rush says and does, how about telling us how much time you spend listening to his show? Or do you get all your opinions spoon-fed from George Soros?
TaxPayer
November 16th, 2010
2:35 pm
Depends how you define wealth envy, TP…I figure Rush earned it, so he’s entitled to keep it. You?
I figure if you wish to use Limbaugh’s monetary gains from what he does as a means of comparing his “value” to that of Jay or others, you are certainly entitled to. Just sounds like wealth envy, is all… Entitlements are a completely different topic though.
Harry Callahan
November 16th, 2010
2:35 pm
ByteMe
November 16th, 2010
2:32 pm
“A good carnival barker will make more money off the idiot masses than a working stiff any day.”
Agreed. Barack Obama proves it every day.
Jay
November 16th, 2010
2:36 pm
George Soros has a radio show?
Randalph on the Right
November 16th, 2010
2:37 pm
Jay it’s called “all thing considered”
Harry Callahan
November 16th, 2010
2:37 pm
Taxpayer…Barack Obama has gone on he public record as bvelieving that anyone making $250K is doing well, and therefore should pay more taxes so that Obama can “spread the wealth around.” You agree with that?
Vinny
November 16th, 2010
2:37 pm
Jay- You spout pure nonsense once again. Any company can make money after they are given billions of taxpayer funds to keep them afloat.
When, oh when will they pay each and every american back for the money that was handed to them by the liberals?
Pure, nonsense once again Jay. You have no more credibility than Cynthia Tucker.
Randalph on the Right
November 16th, 2010
2:37 pm
that’s pretty funny if I do say so myself!
ByteMe
November 16th, 2010
2:38 pm
@Bubba needs to read more: http://www.slate.com/id/2217653/?from=rss
Perhaps there’s a reason the bondholders weren’t able to get the courts to intervene on their behalf to keep the government from imposing their own conditions on the debtor-in-kind financing they were offering.
Randalph on the Right
November 16th, 2010
2:38 pm
Vinny, Jay has a lot more credibility than Cynthia McKinney, oh you said Tucker…my bad!
ByteMe
November 16th, 2010
2:39 pm
Poor Harry keeps wanting to distract people from discussing his values, so he tosses out “Obama” and hopes that will be enough.
Matti
November 16th, 2010
2:40 pm
A good carnival barker will make more money off the idiot masses than a working stiff any day.
That explains the half-term governor turned reality star.
Harry Callahan
November 16th, 2010
2:40 pm
ByteMe, what are your values? Voting for government to tax the rich in order to fund your retirement, health care, etc? Awesome values dude. What a go-getter you are.
ByteMe
November 16th, 2010
2:41 pm
She’s only a “star” if you watch. Otherwise, she becomes a “half-term governor/failed celebrity”.
Jay
November 16th, 2010
2:42 pm
The sad thing is, I suspect that despite GM’s success and the preservation of more than a million American jobs, a good number of the posters here would STILL prefer that Obama failed.
Harry Callahan
November 16th, 2010
2:42 pm
Matti
November 16th, 2010
2:40 pm
“A good carnival barker will make more money off the idiot masses than a working stiff any day.
That explains the half-term governor turned reality star.”
I was thinking it described the Clintons pretty well, but I guess there are numerous examples to choose from.
ByteMe
November 16th, 2010
2:42 pm
Poor Harry, still trying to distract people from discussing his pathetic values.
Bubba Bob
November 16th, 2010
2:43 pm
Byteme,
Straight from that article – “The Chrysler deal, midwifed and financed by the government, does upend the traditional order and sets a precedent that, were it to be repeated, would be dangerous. In ordinary times and circumstances, there’s no justification for the government to intervene in a way that privileges unsecured lenders over secured lenders. But the times and circumstances surrounding Chrysler aren’t ordinary.”
Did you read it yourself? He’s saying there’s no justification for this except that times are bad. So I guess we can throw out the law when times are bad, huh?
ByteMe
November 16th, 2010
2:43 pm
Jay, you are correct that too many just want Obama to fail instead of wanting the country to succeed regardless of who gets the credit. The increase in instant-media outlets has not helped us in this regard.