PrintObama to Sell GM Stock at Huge Loss to Taxpayers
Wasn't the Obama administration supposed to make money back on a sale of GM stock? Or so Treasury Secretary Timothy Geithner and other administration officials suggested back in 2009. Now taxpayers learn that Mr. Obama wants out of GM and is willing to sell Washington's stockholdings short - to the tune of an estimated $11 billion loss. That's $11 billion in losses to taxpayers.
Why would Mr. Obama want to dump GM stock for a huge loss now? Why not hold GM stock until the government can at least recover taxpayers' money? The answer is that GM stock prices may be heading south, not north, in the coming months. According to a Wall Street Journal report, Mr. Obama may have decided to get out of GM while the getting isn't wholly disastrous.
Government officials are willing to take the loss because the Obama administration would like to sever its last ties to the auto maker, the people familiar with the matter said. A summer sale makes it more likely Treasury could sell all of its stake in GM by year's end, avoiding a potentially controversial sale in the 2012 presidential election year. [Italics added]For Mr. Obama's presidential re-election effort, a "potentially controversial sale [of GM stock] in 2012" could translate into a damaging political liability. Mr. Obama and his handlers would rather have the bad news of a huge GM taxpayer dollar loss come now. Time and events, the thinking goes, could mitigate the political damage to Mr. Obama.
Washington would have to get about $53 a share to break even on the taxpayers' "investment" in GM. As of yesterday, GM stock was selling for a little less than $30 a share. There's concern that with rising gas prices, among other factors, GM stock prices may fall further as the year progresses.
Mr. Obama has the cheekiness to tell Americans that taxes surely need to rise to help retire the outrageous national debt that he's done so much to incur. And then Americans learn that $11 billion in their hard earned money is about to fly out the window because Mr. Obama chose to rescue an automaker - GM - that, because of mismanagement, union greed, and market forces, should have long been on its way to fossil status.
If - or when - GM hits the skids again, will Mr. Obama seek to rescue the struggling automaker? What's billions of taxpayer dollars more down the drain when stacked against about $12 trillion in national debt? And there are always tax hikes to cover the cost of bailing out GM again. After all, Americans are about shared responsibility, aren't they?
