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Forbes Contributor Rick Ungar and FBN’s Liz MacDonald debate whether it was the right decision to bail out the auto industry.
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Advocates of taxpayer money going up in smoke and it's tied to auto bailout again get -- the government now says.
We're gonna lose more than 25 billion dollars that's 15% more.
That originally expected if you can believe it and believe it or not.
That could climb even higher when re -- McDonnell who has been all over this story in Forbes contributor Rick -- to debate whether or not.
It was worth at.
You go first why not because he is got you out match so I don't being handed -- an ongoing part because no one can take wickedly got a lot.
I I -- -- it's never easy our that part listener I'm -- do something you rarely have we did okay I'm gonna begin by not blaming George Bush.
But complimenting George Bush because forget that it was President Bush.
Who started the auto -- and in this speech just a few months ago you know he said he said I do it all over again.
And he was absolutely right that he would do all -- again and let me tell you why.
According to the numbers President Bush used when he made that decision -- -- bailing out the auto industry saved us a 125.
Billion dollars in lost tax revenue.
A couple hundred billion dollars in -- GDP.
And oh by the way a million jobs now -- you just say 25 billion dollars might lose we might lose it he had -- 45 billion dollar.
Is that that a billion but here's -- -- it got what this is accompanied the -- of lawsuits difficult subsidy motors because has been losing money since the eighties net.
Should I care should the cat destroyer of shareholder capital initially as it's been getting subsidies since the eighties it's gets a lot of tax -- is affected raking in the ninety's is -- In the single digits Melissa and it was losing money -- -- 2004 on it lost money at the top height of the bubble ten point five billion dollars in 2005.
Even at the -- of the bubble it was losing money.
This is a company that has been living on the taxpayer nickel for a very long time and on top of that they've -- 27 billion is still -- you know the US taxpayer is -- half a billion shares from so it's gotten about 45 billion dollars worth of tax breaks over twenty years so what we're talking about is a really bad government bailout because it was that badly run company to begin with.
And it hasn't been a great company for years prior to that.
Question now I mean it's like it was going to evaporate if it wasn't real that it would have gone into bankruptcy and been restructured like so many airlines like so many companies before -- -- could have gotten dip financing and and broken the back of the union.
Right.
This was the problem in a normal situation yes I agree with that.
There was no money out there to going to -- I have to tell you everybody except Mitt Romney has looked into this incredibly carefully there was no money there to do it.
There was -- private.
At what an eleven had to slam habit -- because -- you may have looked into that because this.
It's Stanley Citi his father was in the auto business but the initial rate -- and that liquidity greater private equity wildly down I'm even talking about the for the bailouts -- GM -- better without any government help what so ever that this has been getting.
The subsidies in in various forms for decades effort very very long time and this is crony capitalism and this is like it's bad because now the bid rapids the president did the bailout to buy votes in other -- union brilliant and that's what's EMI's -- spreads on either of them in his side of the -- -- President Obama our President Bush -- any better -- he started -- I don't I -- -- clinging to George Bush is the way to -- any kind of an -- to get -- That why wouldn't I don't think -- running or involved or around I don't know that I.
Iran he wasn't running he understood the math and the math really is clear -- and was worse than 25 billion obviously when this was done.
25 billion dollars today against what would have happened if we hadn't done it.
I don't see where it's a close call -- -- a good investment.
The what investment -- M -- -- badly run company that's been badly run for decades that's the real policeman's gun that is the real point doesn't matter -- General Motors subsidy motors has been a problem since the eighties.
OK and it's been coming to the US government for help.
Since the eighties and so that's the issue is that we helped of dying.
Bad really badly run company could it couldn't have come out better in a different way I'm not voting either way on bankruptcy yeah where what we did the ballots -- great -- because pointing out.
That there's crony capitalism.
Should it choose people who put in the lifeboat because of the same timing that we were all reporting on the sector at the time at the same time that you -- GM.
You let everybody at Lehman go under.
You -- so why why is one yeah how do you start picking families who are worth saving.
And breadwinners who are worth saving over others why is -- company more valuable I mean our our blue collar workers.
More valuable are they.
You know.
Better boats to save Ben what you to wire bankers not worth saving big you don't like them but they still have favorably there I mean.
Very fair question actually have in fact I think if you read most of the books on this some kind of come to conclusion that had Lehman not gunned down.
There may never been an automobile industry bailout I think it was that would it was set off by Lehman's going away and that actually led to.
All of this -- you know I came downstairs and a stunning enough we have true free markets anymore true you know capitalism as it should be right I mean I -- -- had a -- long time.
Silence in depression but are.
They thought and I are I -- guys thank you so much we appreciate both of your time.
