Issue of the week: ‘Government Motors’ goes public
The federal government sold almost half its stake in an initial public offering of GM common and preferred shares, leaving taxpayers owning 33.3 percent of the company.
Here we go again, said David Welch and Craig Trudell in Bloomberg.com. Controversy flared when the Bush administration initiated the bailout of General Motors in December 2008, and it flared anew last week with GM’s return to the public equity markets. But controversy aside, it’s becoming increasingly clear that “the national budget and economy might be better off” as a result of Washington’s rescue of the auto industry. In an initial public offering of GM common and preferred shares that raised about $23 billion, the federal government sold almost half its stake in the carmaker, leaving taxpayers owning 33.3 percent of GM. Had the government sold all its shares at the IPO price of $33, it would have lost $9 billion on the bailout. That’s not peanuts, but according to Michigan’s Center for Automotive Research, had the government not bailed out GM (along with its former finance unit, GMAC, and Chrysler), the resulting social-service costs and lost tax revenue would have amounted to $28.6 billion.
Can President Obama get a little credit? asked Rick Ungar in Forbes.com. Ignoring “cries of socialism” from partisan critics, Obama forced out “a CEO who had badly failed,” and “positioned the company to become competitive” in producing energy-efficient cars, including the Chevy Volt, Motor Trend’s Car of the Year. Along the way, he saved more than 1 million American jobs. Obama’s “brutal and temporary” nationalization of GM made clear that he “has no desire to own the commanding heights of industry,” said an editorial in The Economist. He may be “a gambler” and “an interventionist,” but he’s no socialist.
He’s no accountant, either, said Francine McKenna, also in Forbes.com. “GM has been reporting profits,” including $2 billion for the third quarter, “but who’s swearing by them?” The financial statements that accompanied the IPO are unaudited, and the company admits that its accounting controls are weak. My guess is that the Obama administration intends to “stick big Wall Street firms with this dog of an IPO” and let them eat the loss when investors discover that GM’s “financial statements have been put together with Band-Aids, string, and paper clips.” The taxpayers are sure to lose too, said The Wall Street Journal in an editorial. Just wait until the administration uses the GM rescue as “a precedent” for more so-called “partnerships” with private companies. GM’s IPO will embolden Obama to put taxpayer money into green technologies, education, and other pet causes. The president will no doubt call these subsidies “investments.” We’ll call them what they really are: “industrial policy.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
5 immersive books to read this April for a brief escape
The Week Recommends A dystopian tale takes us to the library, a journalist's ode to her refugee parents and more
By Theara Coleman, The Week US Published
-
'The winners and losers of AI may not be where we expect'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
Shingles vaccine cuts dementia risk, study finds
Speed Read Getting vaccinated appears to significantly reduce the chances of developing Alzheimer's and other forms of dementia
By Peter Weber, The Week US Published
-
The JFK files: the truth at last?
In The Spotlight More than 64,000 previously classified documents relating the 1963 assassination of John F. Kennedy have been released by the Trump administration
By The Week Staff Published
-
'Seriously, not literally': how should the world take Donald Trump?
Today's big question White House rhetoric and reality look likely to become increasingly blurred
By Sorcha Bradley, The Week UK Published
-
Will Trump's 'madman' strategy pay off?
Today's Big Question Incoming US president likes to seem unpredictable but, this time round, world leaders could be wise to his playbook
By Sorcha Bradley, The Week UK Published
-
Democrats vs. Republicans: who are the billionaires backing?
The Explainer Younger tech titans join 'boys' club throwing money and support' behind President Trump, while older plutocrats quietly rebuke new administration
By Harriet Marsden, The Week UK Published
-
US election: where things stand with one week to go
The Explainer Harris' lead in the polls has been narrowing in Trump's favour, but her campaign remains 'cautiously optimistic'
By Harriet Marsden, The Week UK Published
-
Is Trump okay?
Today's Big Question Former president's mental fitness and alleged cognitive decline firmly back in the spotlight after 'bizarre' town hall event
By Harriet Marsden, The Week UK Published
-
The life and times of Kamala Harris
The Explainer The vice-president is narrowly leading the race to become the next US president. How did she get to where she is now?
By The Week UK Published
-
Will 'weirdly civil' VP debate move dial in US election?
Today's Big Question 'Diametrically opposed' candidates showed 'a lot of commonality' on some issues, but offered competing visions for America's future and democracy
By Harriet Marsden, The Week UK Published