Friday, July 22, 2011

USA Loses $1.3 Billion and 287,000 Jobs from Auto Bailout

The bailout to the auto-industry was a flop. The American people lost $1.3 billion from the deal and Washington called it a success. While Obama claims that bailing out the auto-industry was meant to save jobs and not to make money, the bailout saved 113,000 jobs. Actually, the auto-industry lost 400,000 jobs before the bailout. Therefore, there is a net difference of 287,000 jobs lost. In summary, the bailout cost the American tax payers a lot of money, and it caused a lost in jobs.

In the year leading up to the Chrysler and General Motors' bankruptcies, the auto industry lost 400,000 jobs. Since the bailout, about 113,000 of those jobs have been recovered.

"We didn't make the auto interventions to make money, we made them to save jobs -- and on that front, we dramatically succeeded," Massad said

(CNNMoney) -- U.S. taxpayers likely lost $1.3 billion in the government bailout of Chrysler, the Treasury Department announced Thursday.

The government recently sold its remaining 6% stake in the company to Italian automaker Fiat. It wrapped up the 2009 bailout that was part of the Troubled Asset Relief Program six years early.

Originally, the government committed a total of $12.5 billion to the struggling automaker, Old Chrysler, and the company's newly formed Chrysler Group. Of those funds, $11.2 billion have been returned through principal repayments, interest and cancelled commitments, the Treasury said.

Overall, $1.3 billion will not be recovered from the bankrupt Old Chrysler, but Tim Massad, Treasury assistant secretary for financial stability, still called it a "major accomplishment."

That's because the government originally expected it would lose much more on the auto bailout. Initial estimates from the Congressional Budget Office in 2009, predicted the government would lose $40 billion on the overall auto bailout.

Now it estimates, by the time the $80 billion program is completely wrapped up, taxpayers will have lost $14 billion.