The following Op Ed by CAGW President Tom Schatz appeared today in Investor’s Business Daily. Some highlights:
According to a mid-May news story, Democrats are considering using the issue of the auto bailouts in the 2012 election — as a political asset.
The argument is, since government losses appear to be “minimal,” Americans will likely see the auto bailouts — and by extension the entire Troubled Asset Relief Program (TARP) — as a positive. This is unlikely. Americans were not only turned off by the cost of the bailouts, but also by the driving principle behind them.
But a recent story illustrates the inherent problems in allowing the government to so deeply intervene in private markets. In April a rumor that the Treasury Department may sell off its remaining 500 million shares in General Motors sparked a 1.3% decline in GM’s stock price.
When the government takes over a company or intervenes heavily into one sector of the economy, it is often the largest consumer. One slight move can have a radical influence on the system, such as the decline of GM’s stock on a rumor.
Before his exit from the Treasury Department in March 2011, TARP Inspector General Neil Barofksy stated this issue clearly. One of TARP’s “biggest legacies,” he said, was “that when first Secretary (Henry) Paulson, then Secretary (Timothy) Geithner guaranteed the nation’s largest banks against failure … they achieved the goal of helping to preserve the system, but they also created the expectation that going forward, these largest banks will be bailed out again if there’s a problem.
Can you say moral hazard? But wait, there’s more …
In March 2011 testimony written for the House Oversight Committee, Graham Fisher analyst Josh Rosner said it is “understandable to want to move on from the crisis.”
He’s right. The temptation exists, with the recent news that taxpayers may make a buck on TARP, to ignore the more lasting consequences that TARP will have on the U.S. economic system. But lawmakers should address these larger issues before too much time passes.
More than $180 billion in TARP funds remain outstanding. Washington must stop touting the program’s bottom line and shut it down for good. It is the only way to make sure U.S. taxpayers won’t be on the hook next time.
Do click the link above and read the whole article.
In other news, General Motors – the auto company whose stocks are soon going to lose taxpayers billions of dollars – has agreed to sponsor a propaganda film celebrating the 90th anniversary of everyone’s favorite authoritarian leaders: China’s Communist Party. Truly a new low, even for GM.