Study Examines Taxpayer Cost of Auto Bailouts

November 19, 2009

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ALEXANDRIA, Va. — The National Taxpayers Union issued a report examining the costs of the recent auto bailout to the American public and suggested that taxpayers will pay $12,000 for every General Motors unit sold and $7,600 on every Chrysler model sold through the beginning of 2011.

NTU adjunct scholar Thomas Hopkins, an economics professor at the University of Rochester, compiled "The Auto Bailout — A Taxpayer Quagmire" after researching and calculating the financial impact of the government loans to GM, Chrysler and GMAC on the American taxpayer.

The report looks at the amount that each taxpayer has contributed to the auto industry in the last 11 months as well as the supposed per-vehicle-sold cost to the public.

"Every time someone in your neighborhood drives home in a shiny new Chevy Silverado, remember that it cost American taxpayers more than $12,000," claimed Pete Sepp, NTU vice president for policy and communications.

"Between this and GM's plan to pay back their bailout debt with other taxpayer funds, I wonder if all those Americans without work right now could think of any better ways to spend that money," he suggested.

The report argues that each taxpaying family in the U.S. has put an average of $800 into the auto bailouts thus far, and also alleges that government support for GM, Chrysler and GMAC has reached $78.9 billion.

Based on that calculation and sales projections for GM and Chrysler through year-end 2010, NTU argues that each of the models sold from these automakers has a cost to taxpayers of $10,700.

Research for the report was based on the following:

—A November study from the Government Accountability Office titled "Continued Stewardship Needed as Treasury Develops Strategies for Monitoring and Divesting Financial Interests in Chrysler and GM."

—A follow-up report on the Troubled Assets Relief Program

—Statements and reports from the U.S Treasury.

"The bailout has created moral hazard problems, inadvertently handicapping the progress of stronger, non-subsidized producers," Hopkin contended.

"The problems extend beyond just the auto industry, as favored status for one financial company and its bank necessarily complicates prospects for non-subsidized rivals," he argued. "The time has come to stop such bailouts, and in an orderly way, to seek at least some recovery for taxpayers."

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