Reason Writers Around Town: Shikha Dalmia on Government Motors's Profit Targets in Bloomberg
General Motors released some very impressive profit targets for 2012. But does this mean that taxpayers will recover their "investment" in the company any time soon—or ever? Not a chance, notes Reason Foundation Senior Analyst in a column at Bloomberg. GM has many problems and is facing a very tough competitive environment going forward. But, she reports:
If GM manages to address all its issues, notes Sean McAlinden of the Center for Automotive Research, its share price might go up $40 to $45, leaving taxpayers still $5 billion to $8 billion in the red. But that's under the best scenario. If stock prices remain at the current $25 level, the losses could mount up to $15 billion. That's not counting the $15 billion in tax write-offs that GM got as part of the bankruptcy deal. All in all, taxpayers are facing somewhere from $20 billion to $30 billion in losses.
That's not all the exposure that taxpayers will have going forward. The GM bailout has distorted the playing field so badly that its competitors are demanding their own handouts to even things out.
In fact, the taxpayer "investment" was designed not to be paid back.
Read the whole thing here.
