DETROIT -- The U.S. bailout of the auto industry saved the government $28.6 billion and is close to a “two-year breakeven,” a Michigan think tank with close ties to the domestic auto industry said today ahead of General Motors Co.’s initial public stock offering.
Government assistance for GM and Chrysler saved more than 1.14 million jobs in 2009 and another 314,400 in 2010, said the Center for Automotive Research in Ann Arbor, Mich.
The net impact to the federal government -- in terms of changes in transfer payments, Social Security receipts and personal income taxes -- was $21.6 billion in 2009 and $7.0 billion in 2010, CAR said. The study thus finds that the bailout saved the government $28.6 billion in, for instance, tax revenues it might have lost.
“To date, $13.4 billion in principal has been repaid on the government’s $80 billion U.S. investment in the automotive industry,” Sean McAlinden, CAR chief economist, said in a statement. “The government need only recover $38 billion of the remaining $66.6 billion outstanding investment in this industry to achieve a two-year breakeven.”
GM’s IPO is on track to raise up to $22.7 billion, which would be split among the U.S. and Canadian governments and a retiree health-care trust administered by the UAW.
Kristin Dziczek, director of the labor and industry group at CAR, said, “The federal decision to invest in the auto industry in 2008 and 2009 deployed critical resources to one of the country’s most productive industries with the highest economic multipliers of any industry. It was clearly a very successful policy intervention at a critical time.”
Reuters contributed to this report.
