DETROIT — Accountants, journalists and politicians are frantically calculating whether taxpayers will recover the $80 billion they invested in the turnaround of General Motors and Chrysler.
Was it worth it?
This week, the Center for Automotive Research in Ann Arbor, Mich., issued a study that says most likely yes.
The upshot: Doing nothing would have started an economic apocalypse.
Kristin Dziczek, who led the study, said multiplying stock prices by number of shares misses a key point.
More than 1.4 million jobs, most of them at suppliers, service and other vendors, would have been lost had the two companies been liquidated. In reality, about 193,100 jobs tied to GM and Chrysler were lost last year. An additional 171,200 are being lost this year.
"We're weighing it against what would have happened if the government had not intervened," Dziczek said.
Because each job at an automaker helps generate about 10 jobs through the rest of the economy, compared with two for retailers or six for electrical equipment makers, said Deb Menk at the Center for Automotive Research, saving GM and Chrysler had a broader and quicker job-saving ripple effect.
So the total outlay was $80 billion. GM, Chrysler and Chrysler Financial have paid back $13.4 billion in principal, reports the Treasury.
The Center for Automotive Research study says the federal government would have spent $28.6 billion more than it did on unemployment benefits, Medicare, Social Security and other programs had the automakers liquidated. So the entire rescue will pay for itself if the government can make $38 billion selling its shares.
Remember, Chrysler's shares won't be sold until the second half of 2011. The cash GM raised this week will be an important first step.
There was severe economic pain. Auto-related layoffs have reduced personal income nationally by $25 billion, Dziczek said. But liquidation would have wiped out $121 billion in personal income.
None of this will likely convince hard-core opponents of the rescue, who argue that many of the lost jobs and income would have eventually relocated to stronger, better-managed competitors.