Auto Bailout Cost Rises
Even though the bailout measures past during the recession have, for the most part, ended, cost estimates for many of the bailout programs are still being finalized. One such program is the famed bailout of the American auto industry. This bailout, part of the Troubled Asset Relief Program (TARP), was designed to save portions of the auto industry from financial ruin, particularly GM and Chrysler.
All told, this bailout sent $85 billion to the auto industry in the hope that it would prevent the companies from collapsing, costing a significant number of jobs and further creating a larger ripple effect hurting other dependent business sectors such as parts supplies and dealerships. The good news is that the companies are still here and they seem to be on the rebound. The bad news is that in the latest monthly update, the Treasury Department upped its cost to the taxpayers by another 15 percent - raising the cost to taxpayers from $21.7 billion to $25.1 billion (however, this is still an improvement over an early estimate by the Obama administration of $44 billion). CBO's latest estimate is that the total cost of the subsidy will be $19 billion.
|Treasury Estimate||Cost to Taxpayers ($Billions)|
This cost estimate is based off of how much money Treasury expects to recoup from the share purchases they have made - thus it is based off of company valuations. Treasury currently holds about 500 million shares of General Motors and would need to sell them at about $53 to recover the $49.5 billion spent on GM (GM closed today at $21.33).
For further information, see stimulus.org for up to date stimulus cost tracking.