GM Is Profitable Again, but Taxpayers Are Still in the Red
By Randall Holcombe • Friday February 25, 2011 8:00 AM PDT • 3 Comments
Last Summer, as General Motors was preparing to make an initial public offering of stock, President Obama said the federal government had made an investment in GM, and that the taxpayers would get all their money back from this investment. I was skeptical, because for taxpayers to recover all their money meant that GM would have to be valued at about $80 billion, which seemed unrealistic to me.
GM just reported a 2010 profit of $4.7 billion, so their recovery after their government bailout is on track. The day after reporting that profit, GM stock is selling for $34 a share, making the market capitalization of GM about $51 billion.
GM’s stock would have to rise to more than $50 a share for the taxpayers to recover President Obama’s “investment” in GM. That’s more than a 50% increase over its current price.
I doubt that anybody — including President Obama — really thought that the government could get its money back from the GM bailout. But the president did say that last year, prior to GM’s initial public offering. Now that GM’s stock is on the market, and GM has reported a very profitable year, I don’t think it is a bad thing to point out that despite good news for GM, the deal did not turn out well for taxpayers. We now have facts to evaluate the president’s claim, and what the president said turned out not to be true.
Tags: Bailouts, Economics, Free Market, Government subsidies, Politics, Transportation 
Don’t forget, GM is not paying taxes on that profit – thanks to the loss carry forward (value about 45 billion) the government allowed them to keep through the “bankruptcy” process.
mdb | Feb 25, 2011 | Reply
No one should be surprised when the taxpayers get the shaft. Corporations, unions, and welfare recipients are at the head of the line. The taxpayer? He just gets the bill.
Steve Hogan | Feb 25, 2011 | Reply
I think the bad days of GM have gone, as profitability cannot be questioned
The GM has been profitable and daewoo gm in korea has been merged now known as GM Korea
in developing countries like India and Pakistan gm is doing well by launching their cheap to run and cost cut cars under Chevrolet brand
The GM is 2nd in sales in the whole world for the year 2010 it was 4th in 2008-09.
The brand where GM was Paying the Leisure bills like Saab, Opel, Hummer, Oldsmobile etc have all closed down even Saturn too their are only Buick, GMC, Chevy and Pontiac only for gm to market it
Chevrolet is chosen By GM as a global brand to enter every Country and let people expeirence American technology
So no bad news for gm
Gm has able to withstand the losses and Come up with flying colors
In india it sales increases to 1000% more , where i live
Abhishek Goyal | Apr 7, 2011 | Reply