Government: We Will Lose $30 Billion on Auto Bailout

Posted: December 11, 2009

When the final numbers are in, the federal government expects taxpayers to lose less than half of the money spent bailing out American automakers this year -- but it’s still going to hurt. 

The Detroit News reports, “The Obama administration will tell Congress Wednesday that it expects to lose about $30 billion of the $82 billion government bailout of the auto industry.” Gene Sperling, senior counsel to Treasury Secretary Timothy Geithner, told reporters the figure was lower than analysts had expected. “The real news is the projected loss came down to $30 billion from $44 billion.”

The auto industry’s losses will make up the bulk of the penalty taxpayers will pay for a $700 billion round of bailouts to multiple industries this year. Reuters reports, “The U.S. Treasury has estimated that its Troubled Asset Relief Program racked up taxpayer losses of about $42 billion in its first year of operation,” including the $30 billion loss on loans to General Motors and Chrysler.

It is still possible that the numbers could improve. The News reports, “Auto sales have improved ahead of what many analysts had forecast. The administration still holds out hope that if things improve, the administration could still recover more.”

The AP adds, “GM has $13.7 billion remaining in unused bailout funds, raising the possibility the Detroit automaker could repay a remaining $6.7 billion government loan in one lump sum. GM Chairman and CEO Ed Whitacre Jr. said earlier this week the company may repay its government loans in one payment instead of in quarterly installments.”

Administration officials, however, believe the bailout was justified even if it does result in such a loss. Autoblog reports, “President Obama stressed during a speech on the economy that while the bailout of the auto industry wasn't politically popular, it was absolutely necessary to save ‘hundreds of thousands of jobs.’” He added, "These were not decisions that were popular or satisfying; these were decisions that were necessary."

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