By Ed Failor, Jr.
Yesterday, the Wall Street Journal ran an article with the optimistic headline of “GM Plans to Repay U.S. Loan.”[i] My initial reaction was quite surprised; General Motors (GM) is already in the position to repay American taxpayers? Sounds like an amazing feat for the automaker.
Unfortunately, GM is making a move which the Journal called “controversial and risky.” General Motors plans to repay $6.7 billion of the taxpayer funded automobile bailout through so-called “other” taxpayer dollars GM has received from American taxpayers.
It certainly seems like the GM financial strategy is similar to using a Visa card to pay off the MasterCard. However, the biggest problem with this scheme is GM’s house of cards is built on the back of the American taxpayer and paid for by the American taxpayer, not once but twice.
As President of Iowans for Tax Relief and Vice-Chair of the National Taxpayers Union, I find the move by General Motors to set a bad precedent. As a taxpayer, I find General Motors so-called repayment plan absolutely appalling and offensive.
The GM repayment plan would be laughable, if they were not gambling with taxpayer money.
This week, the National Taxpayer’s Union (NTU) released a study[ii] on the auto bailout. Right now, sixty-one percent of the equity of General Motors is owned by the U.S. Government. The NTU study finds American taxpayers subsidize $12,200 per GM vehicle.
Already American taxpayers are subsidizing General Motors, now the automaker is playing a shell game, digging us further and further into their financial mess. The money maneuvering of GM reminds me of the budget game Governor Culver has played over the past year.
The use of taxpayer dollars to repay taxpayer dollars is sadly not a new concept for Iowa taxpayers. Just this year, Governor Culver followed the fiscally reckless example of their Washington D.C. counterparts and approved a borrowing plan which borrows $765 million from Iowa taxpayers. Once interest and costs are factored in, Iowa taxpayers are on the hook for more than $1.6 billion. Like the federal government, it is just another case of overspending, instead of controlling spending.
It is unfortunate even in these difficult economic times; the taxpayers are the forgotten citizens.
[i] Stoll, John, D. “GM Plans to Replay U.S. Loan,” Wall Street Journal. November 16, 2009. http://online.wsj.com/article/SB10001424052748704431804574538281493267824.html?mod=article-outset-box#printMode
[ii] Hopkins, Thomas, D. “The Auto Bailout – A Taxpayer Quagmire.” NTU Issue Brief #175. November 16, 2009. http://www.ntu.org/main/press.php?PressID=1132&org_name=NTU
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