Taxpayer-Subsidized Political Contributions

General Motors recently filed documents with the Federal Election Commission disclosing that GM contributed some $90,000 to political candidates.  The GM spokesman quoted in the linked article seemed irked that anyone would think there was a problem with this, saying that GM isn’t going to “sit on the sidelines” while other companies shovel cash at political candidates in an attempt to influence policy.  So, GM will make contributions to candidates who support “a strong auto industry.”

The problem, of course, is that the federal government (that is, U.S. taxpayers) own 61 percent of GM and are subsidizing its operations.  While that is the case, GM shouldn’t spend one penny toward political contributions of any kind.  Any money GM earns should be devoted to paying off its debt to taxpayers and making the company more attractive to investors when GM tries to make a public offering in the near future.

It also is problematic that GM is, in effect, using taxpayer money to pick and choose candidates to support, with the inevitable acid test being whether they support “a strong auto industry” — meaning, of course, candidates who supported the GM bailout and continue to think we should do whatever is necessary to prop up the sagging, poorly managed, uncompetitive domestic auto industry.  In short, even though public opinion polls show that Americans now strongly oppose the bailout culture, our tax dollars are perversely being spent by GM to encourage the continuation of that culture.  It’s just another reason to make a change in how things are being done in Washington, D.C., and in Detroit.

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2 thoughts on “Taxpayer-Subsidized Political Contributions

  1. The auto industry “bail outs” are part of TARP, which, you may recall, passed during Bush 43’s lame duck period at the end of 2008.

    The Congressional Budget Office’s January, 2020 report includes a useful summary of where the TARP program stood as of the end of 2009.

    As of the end of 2009, the CBO was was reporting that 7 of 8 financial institutions that received substantial TARP money had essentially paid back those funds. I believe Citi group is the one that had not yet paid back its TARP funds.

    TARP was originally authorized to use up to something like $700 billion, but the program never used all of that money. As of the end of 2009, CBO was projecting that the ultimate net “cost” of TARP, would be less than $100 billion, and that the majority of the likely unrecoverable costs of TARP will not be related to Wall Street or Banks, but will represent the auto industry bail outs.

    Finally, the CBO’s summary of the status of the “Stimulus” funds, indicates that relatively little of the $800 – $900 billion of “stimulus” package was used for “infrastructure.” The vast majority of the funds were used for social welfare programs, income tax credits for low and middle class taxpayers, unemployment compensation, etc. – not the “shovel ready infrastructure projects” that were touted by the President.

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  2. Just a quick follow up. There is a summary of the TARP program in last Friday’s Wall Street Journal. It appears that the government is now projecting that the net cost of TARP will be around $50 billion, most of which seems to be related to the expectation that some of the auto industry monies will never be recovered.

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