- Feb 12, 2007
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The Con played on Taxpayers by the Obama Administration keeps getting smellier and smellier.
As galling as the auto bailout was for many Americans, the hidden stealth bailouts that occurred during the government-led industry reorganization are often even more galling. Today the final chapter of one of those stealth bailouts has taken place, as GM has sold its stake in its spun-off supplier Delphi for $3.8b, booking a $1.6b gain on the deal. So, how is GM divorcing its former in-house supplier a stealth bailout? Back in the dark Summer of 2009, the government organized a GM-led rescue of Delphi, which had been languishing in bankruptcy since 2005 (after GM. By buying a chunk of Delphi for $2.5b of the governments money and selling it back for a profit, GMs helped itself to a little extra bump of public money. Oh, and did we mention that GM dropped all kind of pensions in Delphis lap when it spun the supplier, including workers who had never been employed by Delphi.
But thats not the worst part: any guesses as to why GMs stake in Delphi is suddenly worth so much more? A recovering industry, perhaps? Wrong. Shortly after GM bought back its stake in Delphi, the supplier dumped $6.5b worth of pensions onto the governments Pension Benefit Guarantee Company, causing huge benefit cuts and hidden government costs. What did the PBGCs stake, given as partial compensation for that pension dump, yield it? A cool $594m. Meanwhile, thanks to the government s arguments, GM still had to top-up UAW retiree pensions, leaving non-union retirees and members of other unions out in the cold [read all about it in a just-released GAO report in PDF here]. A shell game inside of a political payoff inside of another shell game, in other words. Theres nothing to not love here
GM Books $1.6b Gain On Delphi Share Sale/Pension Shell Game | The Truth About Cars
And then we have the $45B in tax breaks granted in violation of the standard treatment in bankruptcy proceedings, and an additional $14B domestic tax break:
That's only the beginning. Both the White House and the Congressional Oversight report omit the fact that during its bankruptcy, GM got a $45 billion tax break, courtesy of the American people.
GM is driving away from its U.S.-government-financed restructuring with a final gift in its trunk: a tax break that could be worth as much as $45 billion, reported The Wall Street Journal last November.
Over one year after the promises President Obama and his administration made about the auto bailout, a February piece on AutoBlog also confirms that GM will also get a $14 billion dollar domestic tax break:
GM will be able to skip its tax tab due to years of massive losses. Companies are typically forgiven a portion of future taxes due to their past losses, but that benefit is typically stripped after an organization goes through bankruptcy.
http://www.washingtontimes.com/blog...1/barack-obama-losing-84-billion-big-success/
As galling as the auto bailout was for many Americans, the hidden stealth bailouts that occurred during the government-led industry reorganization are often even more galling. Today the final chapter of one of those stealth bailouts has taken place, as GM has sold its stake in its spun-off supplier Delphi for $3.8b, booking a $1.6b gain on the deal. So, how is GM divorcing its former in-house supplier a stealth bailout? Back in the dark Summer of 2009, the government organized a GM-led rescue of Delphi, which had been languishing in bankruptcy since 2005 (after GM. By buying a chunk of Delphi for $2.5b of the governments money and selling it back for a profit, GMs helped itself to a little extra bump of public money. Oh, and did we mention that GM dropped all kind of pensions in Delphis lap when it spun the supplier, including workers who had never been employed by Delphi.
But thats not the worst part: any guesses as to why GMs stake in Delphi is suddenly worth so much more? A recovering industry, perhaps? Wrong. Shortly after GM bought back its stake in Delphi, the supplier dumped $6.5b worth of pensions onto the governments Pension Benefit Guarantee Company, causing huge benefit cuts and hidden government costs. What did the PBGCs stake, given as partial compensation for that pension dump, yield it? A cool $594m. Meanwhile, thanks to the government s arguments, GM still had to top-up UAW retiree pensions, leaving non-union retirees and members of other unions out in the cold [read all about it in a just-released GAO report in PDF here]. A shell game inside of a political payoff inside of another shell game, in other words. Theres nothing to not love here
GM Books $1.6b Gain On Delphi Share Sale/Pension Shell Game | The Truth About Cars
And then we have the $45B in tax breaks granted in violation of the standard treatment in bankruptcy proceedings, and an additional $14B domestic tax break:
That's only the beginning. Both the White House and the Congressional Oversight report omit the fact that during its bankruptcy, GM got a $45 billion tax break, courtesy of the American people.
GM is driving away from its U.S.-government-financed restructuring with a final gift in its trunk: a tax break that could be worth as much as $45 billion, reported The Wall Street Journal last November.
Over one year after the promises President Obama and his administration made about the auto bailout, a February piece on AutoBlog also confirms that GM will also get a $14 billion dollar domestic tax break:
GM will be able to skip its tax tab due to years of massive losses. Companies are typically forgiven a portion of future taxes due to their past losses, but that benefit is typically stripped after an organization goes through bankruptcy.
http://www.washingtontimes.com/blog...1/barack-obama-losing-84-billion-big-success/
