The Dems did a premature victory lap on the economy last week, at Obama’s last speech in Detroit.
General Motors and Chrysler are much better off because Bush gave them $24 billion and Obama gave them another $60 billion. Any company would be. Pouring federal dollars into businesses does improve their bottom lines, but that doesn’t mean it helps the overall economy. The real question is: What would have happened to that money if the government had not spent it in Detroit?
The government shouldn’t plan on getting its money back. President Obama concedes that the $24 billion Bush spent — more than NASA’s annual budget — is gone for good. And Obama’s claims to the contrary, the money he spent isn’t coming back, either.
We’ll never know what the private market could have done; that money’s gone.
General Motors would have to command a market value of more than $70 billion for the taxpayers’ stake in the company to be worth what Obama paid for it. Since General Motors’ highest-ever market valuation was $52 billion in 2000, at the peak of the dot-com boom and the SUV craze, that seems improbable — especially since Obama’s new miles-per-gallon regulations won’t let them build as many of those highly profitable SUVs. At the end of the day, the government will still have sunk tens of billions of dollars into GM and Chrysler with no hope of recovering it.