• Dec 1, 2010
The Center for Automotive Research has released a new study detailing the impact of the auto bailout of 2009. According to The Detroit Bureau, the group found that the government's involvement in the automotive industry saved 1.14 million jobs and $96.5 billion in personal income in 2009. The study also says that in 2010, around 314,400 jobs were saved by the bailout and that, in total, the loans to General Motors and Chrysler allowed $28.6 billion in social security and income taxes to be paid back to the federal government.

If these figures are accurate, they mean that, despite the fact that the two carmakers have only repaid $13.4 billion of the $80 billion that was loaned out, the government only needs to receive another $38 billion to cross a theoretical break-even point. That would be a pretty rosy picture compared to the doom and gloom that opponents to the bailout predicted before the treasury opened its doors. The full study is available at the Car Group web site.

[Source: The Detroit Bureau]


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  • 63 Comments
      • 4 Years Ago
      In the case of GM, I disagree. Bankruptcy saved many jobs, and allowed GM to renegotiate with everyone.

      Even if the bailout was the "only" reason jobs were saved, the problem is that it continues to set precedence. And who decides how big some company must be in order to give, at some risk to all taxpayers, tens of billions of dollars?

      GM especially, did no on any favors by going for years muddling along and acting like big elephant, adding brands to compete with brands, giving upper management big bonuses for failing to make a profit, and the list goes on.

      I support them, I'm a business owner myself, but it churns my stomach that a bunch of millionaire executives made so many bad decisions, and were given promotions and bonuses even when they were losing billions. All that does (and it's the boards fault) is create dumb happy fat management.
      • 4 Years Ago
      What`s the difference between a Communist and Replublican?

      The country needs a middle class.
      • 4 Years Ago
      Hope GM and Chrysler will thrive ion the years ahead.
      • 4 Years Ago
      Interesting. $50 Billion for 1 Million jobs. That translates to about $50,000/job.
      Hurrah for government welfare!!

      Saving GM jobs at any cost was stupid. The situation is destined to be repeated again given GM's arrogance and continuation to overproduce vehicles all in the name of pumping up their pre-IPO balance sheet.

      Good luck making money on that IPO...
      • 4 Years Ago
      I'm guessing that another reason not mentioned in saving the auto industry is if this country ever gets into a major war, like that of WWI or II, or worse, these factories, which I was once told could be easily converted to build weapons would be utilized in building tanks and other equipment needed in times of war. Not like we already don't have enough weapons in our arsenal to defend our country, but I think some manufacturing base has to remain here, unless we pull out the nukes. Then it won't matter if there's an auto industry or not..
      CheckTheseOut
      • 4 Years Ago
      Hey Nick,
      Thanks for letting everyone know you're a Dem. I'm sure everyone on Autoblog is feeling better for knowing.

      Ridiculous!
        • 4 Years Ago
        @CheckTheseOut
        It hurts when you get proven wrong time and time again, doesn't it?
      • 4 Years Ago
      More like "prolonged".

      Unless something radically changes in the market reality for Chrysler and GM these jobs were artifically prolonged. The market was already eliminating them itself.

      There isn't a fundamental change in Chrysler and GM's marketshare, which is the base that supports their workers, if it continues to erode these jobs are still lost.

      The bailout was a payback to the UAW for it's staunch Democrat support. Bankruptcy law already exists for these corporations to go through normally in their situation, there was no need for the government to dump billions into these companies and pervert existing laws.

      If Chrysler and GM had any real value left they would have emerged from bankruptcy normally. Well, at least GM would have. Chrysler probably would not have which would have been better for Ford and GM. They would also be free of the Union albatross around their necks.
        • 4 Years Ago
        The bailout was a payback to the UAW for it's staunch Democrat support? You need to crack open a history book.

        The initial 17.4 billion auto bailout was a unilateral action by George W. Bush, who directed the treasury to allocate funds that were meant for the bank bailout. The auto bailouts were announced in December of 2008 by Bush's administration, the result of a failure of Congress to agree on a way to move forward. Congress gave up and Bush stepped in. You can't seriously think Bush was paying back the unions for support of Democrats, can you?

        This is why there is no honest political dialogue in the country. The left blames the right, the right blames the left. It's a zero-sum squabble.
        • 4 Years Ago
        @Tri

        No, without the bailout funds there would likely have been no domestic auto industry. Even Ford wanted GM and Chrysler to receive the bailout. Why? Because there was no liquidity in capital markets due to the financial crisis. If GM and Chrysler failed (likely) then the whole auto supply chain would go down with them. Bankruptcy, without government support, would have decimated the brand and left only nameplates available for scavengers to pick up.

        Ideology blinds people from seeing reality. Sadly.
        • 4 Years Ago
        I chronicled the entire bailout the moment Bush agreed to give them money for another website. I am extremely well versed in it's events.

        The bailout was political. Bush gave them money to keep them afloat just long enough to pass off the entire issue to his successor, Barack Obama, without making a real decision on it.

        Obama agreed to bail these companies out. Thanks in no small part to the fact that they both employ the UAW, a voter base that is staunchly and reliably Democrat in some key states, Obama and his party couldn't just leave them hanging so they bailed out their employers and spun it as something to "save jobs".

        What makes a UAW job any more valuable than anyone else's? Nearly everyone agreed that letting these companies go through normal bankruptcy would have been in the best interest of the taxpayers and would have eliminated a lot of the burden both of them carry, including the UAW and it's extremely expensive legacy costs.

        Instead the administration decided it was better to save the UAW and screw virtually everyone else that was involved in Chrysler and GM from family-owned dealerships whose franchises were yanked to the bondholders.


      • 4 Years Ago
      Sadly, repugnant stories like this is precisely why Congress and the President and both parties can get away with their Unconstitutional actions!

      Just because something SHOULD be done, does not give it the FEDERAL GOVERNMENT the AUTHORITY under the CONSTITUTION to act.

      What could have been done is that the STATES could have themselves stepped in and administered benefits for the workers or themselves could have propped up facilities in their jurisdiction - something that is perfectly CONSTITUTIONAL to do since powers not delineated in the Constitution to the FEDS are automatically deferred to the STATES.

      It is about time American Citizens start learning that possessing bleeding hearts does not then confer to you the power to act on Federal Grounds! The General Welfare clause has been pimped out by Socialists, Progressives, Liberals, and Neo-Conservatives like a $1 whore. Anything they want to do now uses the General Welfare clause as an EXCUSE to act Federally. And that is NOT what the framers of the Constitution intended - they wanted to restrict Federal intrusion into the lives of Americans and they certainly would not have allowed one American to be compelled to support another - through use of his taxes or through other means by the Federal Government.

      It would have been a sad thing to see the people unemployed, but that is life. I became unemployed in June but I haven't taken a dime in other people's money - I pulled my ass off the ground and became self employed and am supporting myself. That is the spirit the founders expected from us. And I resent those overpaid UAW workers who made great money who failed to set aside money just in case - it is not, therefore, OUR RESPONSIBILITY as FEDERAL TAX PAYERS to bail them out!

      Screw the UAW - and mind you - the UAW got the sweetheart deal of sweetheart deals with that Government Motors bailout. The UAW actually made a PROFIT out of our tax dollar support! Meanwhile we will never recoup our entire investment in Government Motors!
      • 4 Years Ago
      "If these figures are accurate, they mean that, despite the fact that the two carmakers have only repaid $13.4 billion of the $80 billion that was loaned out, the government only needs to receive another $38 billion to cross a theoretical break-even point"

      What kind of voodoo accounting is this? The $28.6 billion in income and SS taxes is an additional "debt" owed to the government, on top of the $66.6 billion the car-makers still owe. The employees paid their $28.6 billion "debt" to SS and income taxes, so you are still left with the $66 billion owed to the treasury. You can't credit the same dollar to both paying taxes and paying off the debt, a dollar doesn't magically multiply when it it sent to the government. So your "theoretical break-even point" has absolutely no basis in reality.
      • 4 Years Ago
      Yea, I'd say it was worth it.
      • 4 Years Ago
      NEWS FLASH: Sarah Palin on Fox: "I have worked hard to save GM by giving them the help they need to shore up the economy and...oh it's all about shoring up healthcare too".
        • 4 Years Ago
        hehehe, downvoted because i am made some fun about Sarah Palin and her stupid connection between religion and politics.

        i gues, Many of you guys must be strong religious
        • 4 Years Ago
        "Please dont bring up that idiot's name on Autoblog"

        Obama wasn't mentioned anywhere in the response.............
        CheckTheseOut
        • 4 Years Ago
        Re: Jam Born

        There are a ton of other places I'd rather spend my money than that silly little violent racist island.

        Please, in your next reply, tell me how much I'm missing by not visiting your beloved "Jamaica mon".
        • 4 Years Ago
        @NeutralDrop
        Keep your xenophobic cry baby comments to yourself. He was responding to a political comment you jack nut!
      • 4 Years Ago
      How can such a study be so sure that those jobs would not be re-created under a newly structured, healthier, more competitive GM, or a growing Ford, or other car makers filling the demand with appropriate supply levels?

      Just because a car company re-organizes, or even fails entirely, doesn't mean there are automatically less car buyers. Someone will fill that demand, and needs a labor pool to do it. Hopefully a much more efficient and motivated labor pool than the coddled UAW.

      It is not a corporation's duty to provide jobs to anyone and everyone, just for the sake of employing people. It is their job to produce the product that they intend to as efficiently as they can, and to make a profit, so that they can continue to do so, and continue to employ the people that make sense to carry out that business.

      it is an employee's job to make themselves an efficient part of that plan, in their own self interest of remaining a part of that plan, and earning an income that can support their expenses and lifestyle. A job is not an entitlement, it is a responsibility.

      If the labor pool is starving the company to death, and making competitiveness impossible, then they are working for their own demise, just as surely as bad management that allows it, plans poorly, doesn't listen to customers, and makes poor, short-sighted decisions. It becomes a failure at every level.

      Bailing them out, just means that TAXPAYERS pay for the costs of failure, and the the people who failed, management and union, get a reprieve from the consequences of their policies and actions. GM may not be on the ropes as completely as they were a year or two ago... but I haven't seen that they've really learned the core lessons. They are just trying to 'look' busy for the new government boss.

      On the other hand.
      What DOES reduce demand for autos, and other products and services... is BIGGER GOVERNMENT.

      Government debt, taxation, and over-regulation are strangling the economy in EVERY sector, and severely hampering the household budget of most american families.

      THAT keeps those households from buying new cars, and reduces demand.

      This is very easy economics, and just plain common sense.

      Money doesn't grow on trees, and there is no such thing as a free lunch. Evidently people have forgotten those elementary principles.
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