The headlines declare that General Motors is “recovering.”
Despite continuing to lose money at what historically would have been identified as an astronomical rate, the auto company is losing less money and doing so at a slower pace than was the case a year ago.
So Obama administration aides now say they are “encouraged” by what the New York Times refers to as “signs of life” on the part of a company that many thought had “problems (that) were too big and numerous to fix.”
Things are going so great, chirps G.M.’s chief executive Fritz Henderson, that he suggests that returning to the days of big bonuses for corporate executives is again “an open question.”
But GM’s “recovery” is a paper improvement, not a real one.
The company’s improved position was purchased with an infusion of $50 billion in taxpayer dollars.
Even now, as Henderson and other GM officials talk of repaying some of the federal money they took, the Times notes the inconvenient truth that: “The money it is returning to the government is simply part of the loan that the company does not need.”
In other words, GM is using borrowed money to pay back borrowed money.
That’s not exactly a triumph of capitalism.
Worse yet, GM’s “signs of recovery” have been purchased at immense cost to working Americans.
The company has used its massive federal bailout to begin a process of shuttering more than a dozen factories, to lay off tens of thousands of auto workers, to eliminate more than one thousand car dealerships and to eliminate tens of thousands of jobs at those facilities across the country.
Even as the bailout was being arranged, GM was busy shuttering plants in communities such as Janesville, Wisconsin, leaving thousands of workers for the company and its suppliers jobless. Since the bailout, the rate of factory and warehouse closings has actually accelerated as the company has used federal dollars to pay to padlock facilities in the U.S. and to open plants in Mexico and China.
The raw numbers are staggering. In June, GM announced that 14 plants and three warehouses would be closed, at a cost of up to 20,000 jobs in communities across states such as Michigan and Ohio, as well as a number of other states.