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GM Is Still Government Motors

Wednesday June 26th, 2013   •   Posted by K. Lloyd Billingsley at 9:10am PDT   •  

GM_200x200In early June the government sold 30 million shares of GM, a move doubtless timed with GM’s return to the S&P 500 index, a position the auto giant lost in 2009 when it filed for bankruptcy reorganization. But as Business Week noted, as of April 30 the federal government still held 241.6 million GM shares, a full 16.4 percent and nearly half the 554 million shares the government owned in 2010. As part of its $49.5 billion bailout, the federal government initially held a stake of 60.8 percent in GM, which led to the “Government Motors” designation. The government has recouped about $30 billion of the $49.5 billion bailout and reportedly plans to unload the rest of its GM stock by April 2014. Observers doubt that taxpayers will see any profit, and the government move was intended to save jobs, not make money.

On some accounts, GM is now in better financial shape but the government sell-off is not the end of its woes. By one account, GM’s slow-selling Chevy Volt, a plug-in hybrid, is costing taxpayers $250,000 per car, making the Volt the most government-supported car since the East German Trabant. Subsidies include $105.9 million from the federal Department of Energy to the GM Brownstown plant that assembles batteries for the Volt and $106 million for its Hamtramck assembly plant.

If GM wants to shed the Government Motors stigma, it should encourage the government to sell off the rest of its shares and then, like other automakers, decline to take any more government money. If government wants to shed the stigma of favoritism, it should keep the playing field level and decline to pick winners and losers in the marketplace. But GM is hardly the federal government’s only problem. The government is cracking down on dissidents through the IRS, snooping on citizens through the NSA, and bumbling in Benghazi, Syria and elsewhere.

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June 2013