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General Motors now says it's tired of the smothering hand of government on its operations and wants the Treasury to sell its stake. Treasury says no. Maybe GM should have thought of that when it took the money in the first place.
News reports say GM is having second thoughts about letting the U.S. Treasury take a 30% ownership stake and running the company as a semi-private arm of the government.
GM now complains its reputation has suffered, and it's having trouble — surprise! — getting talented managers to sign on because the government won't let the company pay them enough.
But it's worse than that.
After taking nearly $50 billion in TARP funds in 2009, GM effectively became a subsidiary of the U.S. government. Since then, a host of government officials have claimed that General Motors "is back."
It isn't. And the government's stifling embrace and the bad deal it signed with the politically favored United Auto Workers union will only make its precarious financial situation worse.
"I think people will go, 'Wow, I'm glad we invested in GM,'" said CEO Dan Akerson, hand-picked by the Obama administration to head the bankrupt car maker, in a recent USA Today interview. "I'm talking about the American taxpayer."
But by the government's own estimates that's not even close to being true. And it looks like Akerson has come around to that opinion, too.
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In a report just last month, the Treasury Department gave its best-guess estimate of $25 billion for the public's loss in its investment in GM. Hardly a "glad we invested in GM" moment.
The U.S. now owns about 500 million shares of GM, just under a third of the total, purchased under the $85 billion TARP auto bailout. It needs a share price of $53 to break even. It closed Monday at $23.84. So that's a $14.6 billion loss on the shares alone.
But that's not all of it. The U.S. is sitting on a $14.5 billion loss on the former GMAC financing unit, as well. And a recent Heritage Foundation analysis says a proper accounting of the GM fiasco should add the $26 billion giveaway to its unions — money taken from nonunion workers, bondholders and taxpayers.
Then there's the unpopular Chevy Volt. GM's government bosses force it to build the Volt, even though it loses nearly $49,000 on each car, according to a recent Reuters analysis.
Yet, despite all this, this year Obama and his surrogates have repeatedly claimed that GM again sits atop the world auto market.
"(Thanks to the bailout) General Motors is back on top as the world's No. 1 automaker," the president said in his 2012 State of the Union address.
Well, the Wall Street Journal reports that GM's market share through August was 18.1% — down from 20% for the same period in 2011. That's a 9.5% decline in market share.
General Motors is, in fact, stumbling and needs breathing room to cut costs and retool its car lines — something the smothering embrace of the government overlords won't allow.
Recent news about GM executives being let go and the disastrous abandonment of the well-known Opel brand in Europe only add to the sense of chaos surrounding GM since its "rescue" by the government in 2009.
With Obama in a tight race for the presidency, it's no surprise the Treasury wants to hold on to its GM shares.
Taking a big loss now would reveal the false premises behind Obama's claims about GM and the auto industry — and the other stimulus-related meddling in our economy.
Still, it's funny to hear a company that took $50 billion from taxpayers now complaining about the problem of being run by the government.
GM could have entered bankruptcy and voided its absurd union contracts, which paid workers $70 an hour. That would have preserved the rule of law, the rights of bondholders, shareholders and nonunion workers equally.
Instead, taxpayers will lose money, and GM may once again go bankrupt without necessary changes being made — thanks to its embrace of Big Government.
There's an old saying that covers this: Lie down with dogs and wake up with fleas. It seems Government Motors is scratching.
