GM Goverment Loan

This past spring, General Motors boldly announced that it had paid back its $49.5 billion government loan in full - with interest. When I heard that, I felt comfort in knowing that hard-working taxpayers were getting something back on their investment to bail out the world's largest automobile manufacturing firm.

But after further study, I am reminded of the phrase that Lee Corso, co-host of ESPN's College Football Saturday, is so fond of saying: "Not so fast my friend! "

In fact, GM didn't use its own money to pay back the entire government loan. Only $6.7 billion was paid last spring. The remainder was actually paid by a portion of a $13.4 billion aid package that was used as working capital. In other words, money from the Troubled Asset Relief Program (TARP) was used to only pay back the original $6.7 billion. The U.S. and Canadian governments still own 72.5 percent of the "new" GM.

On top of that, it was announced this past week that General Motors will receive $45.3 billion in future tax savings that would have never been afforded to any other bankrupt company. The government's rationale is that General Motors would not be an attractive investment if it had $48.5 billion on the books as taxes for future earnings.

The "new" GM, which still has not broken even, is making its sales pitch to attract instititutional investors as it attempts to go public. I asked myself, "Why would any hard-working taxpayer want GM stock since we already own a portion of the company? "

I can't fault GM for the predicament that the government is now facing. In fact, if the company was able to sell the concept to officials in the U.S. Treasury Department that this was the best way for GM to come out ahead after filing for bankruptcy, then more power to them. But shame on the government, unless it plans to hold onto GM stock for as long as it takes to turn a profit on our investment.

I certainly don't fault GM dealerships. Those companies provide good-paying jobs across the country and give money back to worthy non-profit organizations and service groups in an effort to maintain their status as leaders in their communities.

Hopefully, our government sits on our investment for years to come. Otherwise, this is another example of accounting tricks, false advertising and unnecessary government intervention with no return on investment.

Comments and constructive criticism is welcome. E-mail: editor@tblnet.com