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Carmaker bailouts to cost about $14 billion

WASHINGTON — Taxpayers will lose about $14 billion in the government's $80 billion bailout of Chrysler and GM, the White House said Wednesday, portraying the outcome as good news since the losses are far lower than originally anticipated.

Seizing on the figures, the Obama administration took credit for the resurgence of the U.S. auto industry, assuring taxpayers that the government's bailout of Chrysler and GM was an investment worth making.

A report by the National Economic Council noted that as Detroit automakers rebound, the taxpayers' loss from the bailout will be about $14 billion, or less than 20 percent of the $80 billion that the Bush and Obama administration used to prop up the companies. The Treasury Department had expected losses closer to 60 percent.

The report was part of a strategy by the White House to draw attention to an industry that's on the mend and whose footprint is most noticeable in key presidential battleground states. Vice President Biden and Treasury Secretary Timothy Geithner have both promoted the government's GM and Chrysler interventions as risky moves by President Barack Obama that paid off.

Obama is making the most out of Chrysler's announcement last week that it is repaying $5.9 billion in U.S. loans and a $1.7 billion loan from the Canadian government ahead of schedule. Those payments cover most of the bailout money that saved the company after it nearly ran out of cash in and went through a government-led bankruptcy.

General Motors Co., which also went through bankruptcy, received a $49.5 billion in the U.S. bailout. The federal government has lowered its equity stake in the company from 61 percent to 26.5 percent of GM after selling part of the stake in November. Ford did not seek federal government assistance.

The National Economic Council report said that since GM and Chrysler emerged from bankruptcy last year, the industry as a whole has created 115,000 jobs.

The White House is reveling in an "I-told-you-so" moment and Obama himself will take that message Friday to a Chrysler plant in Toledo, Ohio.

Ron Bloom, the president's top manufacturing adviser, said Wednesday: "At the time the president chose to help Chrysler, at the time he chose to help General Motors, a lot of people said you're throwing good money after bad, you'll never get out, these companies are not savable."

Carmaker bailouts to cost about $14 billion 06/01/11 [Last modified: Wednesday, June 1, 2011 10:19pm]
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