Clearly, $56.1 billion is a lot of money. That’s what General Motors and Chrysler say they will need to stay afloat through 2012.
They say getting government loans to see them through their restructuring will cost less than if the government had to finance bankruptcies for the companies.
So we decided to see what taxpayers would have to contribute to keep the companies solvent.
Citizens for Tax Justice, a taxpayer watchdog group, says there are 117 million taxpayers in the United States—a figure the IRS struggled to provide. Using that number, GM’s $22.5 billion bailout proposal would "cost" each of those taxpayers $192.31, or that is effectively their contribution to the aid. The company said it might need an extra $8 billion, by 2014, which would bring the tab to $260.68 per. So much for that new iPod Touch. Adding in the cost to bail out GMAC, GM’s former finance company would bring the total to $303.42. No songs for the iPod for a while, either.
And that’s before we get to Chrysler. Chrysler has asked for $9 billion, and its finance arm, Chrysler Financial, received another $1.5 billion in December. (In its plan, Chrysler says Chrysler Financial needs more money, but didn’t specify how much, so we’ll just count the $1.5 billion.) That amounts to another $89.74, or a total of $393.16 counting GM’s bigger potential need.
Counting the $18.1 billion auto parts suppliers have asked for brings the total to $547.86.
By comparison, GM’s estimates to for bankruptcy costs range from $231 to $735 per taxpayer, not counting Chrysler, GMAC, or suppliers. Chrysler estimates its bankruptcy costs at $205.13 per taxpayer, using the CTJ’s number of taxpayers. (In its restructuring plan, the company divided by the total number of U.S. census residents, for a total of just $65 per taxpayer.) That’s just for Chrysler, and it doesn’t count lost federal income-tax and Social Security revenue due to lost jobs, nor increased unemployment and welfare and Medicaid claims across a wide swath of related manufacturing, sales, and service industries.
A separate section in the Chrysler plan implies the government would be better off merging the two companies, though it does not quantify its assertion in that document.
However you look at it, there are big numbers flying about and the auto industry is impacting all Americans, taxpayers and otherwise. Consumer confidence is crumbling, which goes a long way toward explaining why consumers have cut back on car buying. And now even iPod sales are down.