Bad Investment: Obama Admin Admits $14 Billion Auto Bailout Loss

This is what happens when you finance failure.

From The Blaze:

The Obama administration said Wednesday that the government will lose about $14 billion in taxpayer funds from the bailout of the U.S. auto industry.

In a report from the president’s National Economic Council, officials said that figure is down from the 60 percent the Treasury Department originally estimated the government would lose following its $80 billion bailout of Chrysler and General Motors in 2009.

The report‘s release coincides with the administration’s efforts to tout the bailout’s role in the revitalization of the U.S. auto industry after last week’s announcement that Chrysler is repaying $5.9 billion in U.S. loans and a $1.7 billion loan from the Canadian government. Those payments cover most of the federal bailout money that saved the company after it nearly ran out of cash in and went through a government-led bankruptcy.

Then comes the spin from tax cheat Treasury Secretary Timothy Geithner:

“We cannot guarantee their success, and at some point they may stumble. But we’ve given them a better shot,” Geithner wrote in an opinion piece in Wednesday’s edition of The Washington Post.

“While we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner,” he wrote.

Are you any happier about the federal government financing the auto industry so they could avoid bankruptcy – thus incentivizing bankruptcy?  Would Warren Buffett be eager to shell out millions or billions of his own funds on a company that has failed in business management, production, and marketing?  While he may have supported some of Obama’s policies I highly doubt the great investor would make the same decision if it was his money on the line.

But wait, there’s more!  Not only are the taxpayers losing money on this bad investment, they are losing money on all of the subsidies given to the struggling auto companies.  For instance, the Chevy Volt is full of subsidies to help make the $81,000 car sell for around $34,000.   The problem is that even with the costly subsidies the Volt is hardly flying off dealership’s lots.  Then again, GM never really expected it to be that hot of a product.

This is one reason that Volt sales are anemic: 326 in December, 321 in January, and 281 in February. GM announced a production run of 100,000 in the first two years. Who is going to buy all these cars?

Why again did we bail out the auto industry?

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