By: Trevor Loudon
Gary Jason at Real Clear Politics draws our attention to the cesspool of crony capitalism that the American auto industry has become. The United Auto Workers Union is leading the pack and is well and truly in bed with the Obama Administration. Below are three very key excerpts from his article:
“First is the news that the “new” GM walked away from the crony bankruptcy proceedings with a huge tax break — one worth up to $45 billion. It was revealed in the paperwork filed for its IPO that the Obama administration gave the new GM a sweetheart deal: it will be allowed to carry forward huge losses incurred by the “old” GM prior to its bankruptcy. Of course, the IRS doesn’t allow the new companies that emerge from bankruptcy to write off their old losses. But the feds decided to waive that rule for companies bailed out by TARP. Thus, the new GM will save about $45.4 billion in taxes on future earnings, which may allow it to escape taxes for the next twenty years…”
“…The UAW was given a big chunk of new GM in the crooked bankruptcy settlement. To be precise, the very monster that drove GM off the cliff — the UAW — received 35% of the stock in the new company. With the sale of the stock in the new GM, the UAW earned an immediate $3.4 billion in selling about one third of its shares. Moreover, if the UAW can get $36 per share for the other two-thirds of its shares, it will walk away breaking even — meaning it will walk away with its outrageously bloated pension and health care fund fully intact. The taxpayer, on the other hand, hasn’t fared well at all…”
And then as if that isn’t enough, the U.S. Government is pumping even more tax-payer dollars into the UAW via GM and Ford by purchasing almost 15,000 “unsaleable” hybrids in the last two years.
“…It turns out that the administration itself has purchased a huge, unprecedented chunk of American-made hybrid cars assembled since it took over two of the loser companies. This has propped up the sales of hybrid cars in the face of widespread consumer indifference. The U.S. General Services Administration (which handles the federal fleet of cars) bought nearly 15,000 hybrid cars over the last two years, or about 10% of the government cars purchased. This compares to only 1% of the fleet being hybrids just two years ago. Even more striking, more than 20% of the hybrids the GSA purchased were bought using “stimulus money” (yes, the GSA got “stimulus money” — $300 million in total!). Furthermore, it is interesting to note that of the 15,000 hybrids that the GSA bought, only 22 were from Toyota and Honda. All the rest were purchased from GM and Ford…”
I can’t help but think that the Obama Administration’s approach to dealing with businesses is something along the lines of “If it’s profitable, tax it to death. If it fails, bail it out.” …Especially if it was destroyed by an Administration-friendly union, and heck, bail out the union as well.