Just one more thought related to Thursday’s post about Ed Whitacre’s ruthless replacement of GM’s top management.
A lot of people were really angry when the federal government spent $86 billion to bailout General Motors, Chrysler and GMAC Financial (GM’s old financing operation now known as Ally Financial).
But a new analysis by the Detroit Free Press says the government will probably get back more of that money that we thought.
Perhaps as much as $74 billion when all is said and done.
That would put the actual cost of saving the American auto industry at a far more modest $12 billion.
At that price the bailout was a bargain, no matter how much you hate GM for that crappy ’96 Chevy Lumina it sold you. Or how much the bailout offends your free-market principles. Or how outraged you are that the government could find billions for GM and practically nothing for financially struggling families.
If Bush and Obama (some Republicans would like to forget that the auto bailout was created by Commissar Dub-yah) had allowed GM and Chrysler to fail, they would have been liquidated with a frightful loss of jobs in every corner of the country.
And let’s be clear about this. If the government hadn’t stepped in, no private lenders would have provided those companies with the debtor-in-possession financing they needed to survive bankruptcy.
The damage to the economy would have been enormous, and probably turned a bad recession into something much, much worse.
I know $12 billion still sounds like a lot. Certainly enough to get most Teabaggers riled up. But look at it this way.
If the Free Press is right, we will have averted financial catastrophe for less than the government is spending on the wars in Afghanistan and Iraq every month.
(For the 2011 fiscal year that begins Oct. 1, the Obama administration has requested $110.3 billion for military operations in Afghanistan and $43.4 billion for ongoing military operations in Iraq, which works out to $12.8 billion a month.)
We will just have to swallow hard and accept that the ends justified the means in this case.