Obama propaganda documentary's $25 billion error

[Faster horses]

by John Nolte

For those of you who don't know, Raw Story is an openly left-wing site. If the falsehood about GM repaying their bailout is so glaring that even a Raw Story feels compelled to point it out, some re-shoots might be in order.

Hopefully, the doc's narrator, Tom Hanks, is available to record something closer to the truth this time. My guess is that he'll make time even if he is rushing into production a HBO "docu-drama" called "Mitt Romney's Three Wives" -- which at this point would surprise no one.

Raw Story:


The Obama 2012 campaign has released a short film called "The Road We've Traveled," detailing the challenges faced by President Barack Obama's administration from day one through the start of the campaign.

But it's not all roses for team Obama: part of the film contains a gross inaccuracy. Specifically, it claims that General Motors (GM) has fully repaid its federal bailout loan. It has not — meaning the documentary contains a $25 billion error.

Of the nearly $50 billion given to GM, just under half has been repaid to the government. Officials still argue the auto bailouts were a good investment due to the hundreds of thousands of jobs saved by that decision, and it is accurate to say that GM has returned to record profits — as have all the other major American automakers.

Words I never thought I'd write: Raw Story is exactly right. This is a "gross inaccuracy." There's no way the White House can spin this falsehood and there's simply no way a film like this could've been produced without most everyone involved knowing this falsehood was in there.

Obama's trying to pull a fast one here and if Raw Story is calling him out on it, it should be interesting to see if the same MSM that obsessed over Rick Perry's rock will bother to do the same.

 

[Mike]

That portion of the bailout is owed to the U.S. taxpayers and they will never be paid back.

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GM's Phony Bailout Payback

The company is setting the stage for another taxpayer shakedown

Shikha Dalmia | April 27, 2010

GM CEO Ed Whitacre announced in a Wall Street Journal column last Wednesday that his company has paid back its government bailout loan "in full, with interest, years ahead of schedule." He is even running TV ads on all major networks to that effect—a needless expense given that a credulous media is only too happy to parrot his claims for free. Detroit Free Press' Mike Thompson, for example, advises bailout proponents to start "warming up their vocal chords" to jeer their opponents with chants of "I told you so."

But before belting out their victory aria, GM-boosters ought to hear the whole story—not just the fairytale version about Government Motors' grand comeback that Whitacre is feeding them.

Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn't, the company, which couldn't raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7 percent interest rate—a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8 percent equity stake in the company—arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7 percent equity stake. The U.S. and Canadian government together own 72.5 percent of the company.)

But when 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.

But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money—government money—to pay back the government loan.

GM claims that the fact that it is even using the escrow money to pay back the loan instead of using it all to shore itself up shows that it is on the road to recovery. That actually would be a positive development—although hardly one worth hyping in ads and columns—if it were not for a further plot twist.

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5 percent) 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.

In short, GM is using government money to pay back government money to get more government money. And at a 2 percent 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.

In order to recover that investment, the government has to sell its equity. It plans to do that only when GM becomes a publicly traded company once again. GM was hoping to turn a profit by the end of 2010 and float an initial public offering this winter. However, GM Chief Financial Officer Chris Liddell, when queried about that timeline a few days ago, demurred. The offering will be made, he said, "when the markets and the company are ready."

(Take that, taxpayers!)

The reality is that there is no certainty that GM will ever be able to make taxpayers whole. Some analysts such as Center for Automotive Research's Sean McAlinden and Global Insight's George Magliano believe that it will—eventually. McAlinden maintains that this will happen when the company's market capitalization touches $60 billion. (At GM's peak in 2000, this level was only $57 billion.) This is a challenging but not an impossible goal—provided the economy does not dip into another recession, he maintains. Magliano too maintains that the company will be able to pay back taxpayers if the industry is able to ramp up annual vehicle sales from the expected 10.8 million this year to 17 million in 2014 and GM captures 20 percent of these sales.

 

[Sandhusker]

Who here expected any Obama people to tell the truth, raise your hand.

 

[Soapweed]

When a conservative messes up, other conservatives are disgusted with the one who messes up, and they want proper responsibility and needed punishment to occur.

When a liberal messes up, other liberals just try to cover up the misdealings. They take no responsibility, and merely condone whatever illbegotten happening that occurred.

Flounder, you are dead wrong on your "hate group" theories. Conservatives merely hate stupidity and lack of common sense, whether it be from Liberals or even from fellow Conservatives. Conservatives don't hate Obama because of his color, but they are thoroughly disgusted with his lousy leadership and spendy ways.

 

[MsSage]

Who here expected any Obama people to tell the truth, raise your hand.

Hey I was moving my hair NOT raising my hand................ :lol:

 

[loomixguy]

This is precisely why I can't ever in good conscience buy another Government Motors vehicle, or a Chrysler product, for that matter. Rice burner? Forget that, too. So, like "Highlander"...there can be only one.

 

[Steve]

When a conservative messes up, other conservatives are disgusted with the one who messes up, and they want proper responsibility and needed punishment to occur.

When a liberal messes up, other liberals just try to cover up the misdealings. They take no responsibility, and merely condone whatever illbegotten happening that occurred.

Soapweed, you forgot to add...


when all the liberal miss-dealings, blaming others, excuses and other attempts fail, the liberals resort to finding obscure examples of republicans who have done the same.. (even if the republican was force to apologize, resign,give reparations, or serve time for lesser miss-dealings.)...

 

[Larrry]

This is precisely why I can't ever in good conscience buy another Government Motors vehicle, or a Chrysler product, for that matter. Rice burner? Forget that, too. So, like "Highlander"...there can be only one.

The way things are going maybe a Schwinn is in your future

 

[Larrry]

I am tired of the liberals comparing two wrongs in order to justify the lefts wrong.

 

[loomixguy]

This is precisely why I can't ever in good conscience buy another Government Motors vehicle, or a Chrysler product, for that matter. Rice burner? Forget that, too. So, like "Highlander"...there can be only one.

The way things are going maybe a Schwinn is in your future

I think all the Schwinns are now made in China. Other than daughter #1's Caddy and daughter #2's Buick, everything else I own has a blue oval or the long Lincoln crosshairs.

After our Expedition got totalled in December, the other party's insurance company generously offered to provide us with a "loaner" for 10 days. I told them fine, but it had to be 4WD, no exceptions. Living where I do, the closest place to get a "loaner" was 75 miles away, Enterprise doesn't "pick you up", and if I wanted the vehicle, I had to pay the insurance on it for the 10 days! F'n State Farm! Bottom line, we ended up with a 2012 Chevy Silverado 1/2 ton, extended cab 4WD. It had a nice radio, but the rest pretty well sucked. It rode harder than my F250, was hard to get into, had uncomfortable seats, the inside door handle required one to be a gymnast to open, and it sucked down fuel way worse than my F550! Bottom line, if this is the best Government Motors can do in a pickup, they better quit. All the more reason to stay with Ford.

 

[Larrry]

Yep it has to be Ford for me. I don't like State Farm, bunch of independent btards. But they do give me the best deal on the flatbeds and the semi's. They always tell me to come in to get some discounts. If I can get a discount why don't they just give it to me, like I would turn a discount down.

 

[Faster horses]

That reminds me of Wells Fargo Bank. I like their calendars, the
stagecoach and horses for those that might not know. I asked at
3 different locations for a 2012 calendar and in order to get one,
I had to schedule a meeting with a banker and have them go over
our accounts. I don't use WF as my main back, in fact, I don't even
like Wells Fargo Bank as they have had some major problems with
our accounts...but we keep it for when we are out of town and need
something--they seem to be all over the place. Anyhow, I told
them that we are customer and we want a calendar. Didn't work.
And we never got one cuz I never met with their banker. :x

 

[Steve]

That reminds me of Wells Fargo Bank. I like their calendars, the
stagecoach and horses for those that might not know. I asked at
3 different locations for a 2012 calendar and in order to get one,
I had to schedule a meeting with a banker and have them go over
our accounts. I don't use WF as my main back, in fact, I don't even
like Wells Fargo Bank as they have had some major problems with
our accounts...but we keep it for when we are out of town and need
something--they seem to be all over the place. Anyhow, I told
them that we are customer and we want a calendar. Didn't work.
And we never got one cuz I never met with their banker. :x

next time they decline your request for a calender ask them for a withdrawal slip and your account totals..

bet the bank manager will take a moment to hand you one personally..

:shock: