Report Says GM Bailout Saved 1.2 Million Jobs
December 9, 2013 by UPI - United Press International, Inc.
DETROIT (UPI) — The Center for Automotive Research said Monday the bailout of U.S. automaker General Motors saved an estimated 1.2 million jobs.
The Federal government lent General Motors $50 billion when the financial crisis of 2008 hit, which froze up credit and, in turn, sparked the worst recession since the Great Depression.
The report on the GM bailout, titled “The Effect on the U.S. Economy of the Successful Restructuring of General Motors,” also concludes that $39.4 billion in taxes would not have been generated if the company had been allowed to go under, The Hill reported.
“Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment,” study co-authors Sean McAlinden and Debra Maranger Menk said.
“If the U.S. government had refused to assist [GM and Chrysler] … in a financial crisis of unprecedented proportions, then the whole U.S. economy was operating without a safety net, with the exception of course, of the banking system,” the study says.
The car company bailouts have proven to be a political football, The Hill noted. First put together by former President George Bush, the bailouts were managed by the Barack Obama Administration.
For some, the bailouts run against the grain, as they can be described as a government interfering with the natural course of event in the business world.
One of the more famous complaints was an op-ed article published in The New York Times that was written by Republican Presidential candidate Mitt Romney. It was titled, “Let Detroit Go Bankrupt.”
Romney later complained that he did not write the headline.
Romney said he favored a “managed bankruptcy.” That was countered by Democrats who contended there was no entity, except for the U.S. government, that was big enough to rescue GM during a recession.