THE EXTORTION OF US TAX PAYERS (a.k.a., the Detroit Bailout)

Guest blogger a/k/a guest “poster” (CB), shares with us………….

THE EXTORTION OF US TAX PAYERS (a.k.a., the Detroit Bailout)

Let’s do the math and perhaps put it out to a poll. I’ll focus on GM, you can do the same for Ford and Chrysler. GM employs about 252,000 people globally. The company website totals its US work force at 97,624 across some 87 US zip codes.

The pitch made by the Big Three last week puts the GM term loan “request” at least $12 billion they said was needed to bridge a funding gap in their global operations through just 2009. Unless you think that by the end of 2009 mobs of Americans will be buying enough GM cars to make a difference, by this time next year these same three will be asking for more tax payer money. They will site then, as they do now, a vast US unemployment amongst a plethora of other dire consequences should they be “allowed” to fail.

Now here is the math: if we consider only the US based employees of GM, that “term loan” works out to over $122,920 per current employee – including the over two dozen lucky top earners at the company that make well over $1 million per year. If we were to poll those same US employees of GM, asking simply, should GM management be handed $12 Billion IN CASH or instead should each US based employee given a severance package that includes nearly $123,000 IN CASH and then seek employment at the several other US based (but foreign) car manufacturers who for some reason are NOT asking for a bailout. By the way, these other car companies will most assuredly be delighted to increase their own US car production output to make up for the void should the “big three” go under. Now back to the math, what would those tax paying US based employees choose? Would they trust $12 Billion in the hands of a few pigeon headed multi-millionaires that drove their company, an icon of American manufacturing competence and power the world over, into total obsolescence or would they take a chance on themselves with that $122,920?

Now that $122,920 may seem like a paltry amount for some, and certainly that is so for the GM CEO who earns over $10 MILLION IN ADDITION TO his annual salary of $1.5 million (source WSJ) that he is now willing to “sacrifice”, for one year, for the sake of getting this bailout…presumingly because its good for the nation. What a patriot. Take note however, he is offering to giving up just over one tenth of his total compensation and this “sacrifice” does not include his use of the company’s air force (yes, we talking about a car company), fleet of chauffeured cars, personnel/family allowances and that all important multi-million dollar corporate expense account amongst the plethora of other perks.

Do we really need to debate this?

Author:  C.B.

See also:

CNN:  auto plea passes the House

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One thought on “THE EXTORTION OF US TAX PAYERS (a.k.a., the Detroit Bailout)

  1. GM has nearly 65 Billion USD in outstanding debt and a swelling inventory of cars they can not sell. The main beneficiaries of this bailout will be the large institutional bond holders who will now hold out for more than the 20-25% of the debt outstanding they are likely to receive in the inevitable corporate restructuring.

    Yes, it is inevitable. Forget the talk of “gass guzzlers” and the like. Manny of GM’s products are equal to or better than European and Asian manufactures in gas mileage and quality. There is simply TOO MANY CARS PRODUCED by everyone. This was true in good economic times, during a recession it is a disaster.

    The justification used by the proponents of the bailout (“TO Save The US Auto Industry”, “TO Save American Jobs”)are wrong, and they know this will do no such thing. Only a restructuring will save the US car companies. That is why banks, the entities that are in business to make loans, will not offer them one now. They see the writing on the wall.

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