First, what was the news item? In his weekly address, the President talked about this:
Fresh off the news that General Motors had paid back its taxpayer-backed loans five years ahead of schedule, Obama said the decision to help the companies as proven to be less costly than the alternative.The CEO of GM wrote an op-ed in the WSJ, and the title of that was: The GM Bailout: Paid Back in Full
So, what does Dalmia say about this?
when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.The rest is not cash but
But, Dalmia says that is not all; it gets worse:
the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible.Hmmm .... hire a couple of accountants and executives who can juggle numbers .... wait a minute; wasn't that Enron's approach as well? Ahem ....
In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back!
GM boasts that, because it is doing so well, it is paying the $6.7 billion five years ahead of schedule since it was not due until 2015. So will there be an accelerated payback of the rest of the $49.6 billion investment? No. That goal has been pushed back, as it turns out.