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Shortly after General Motors filed for bankruptcy, a plan that will involve significant government ownership of the auto company, Republicans went into attack mode.
The General Motors restructuring plan "is nothing more than another government grab of a private company and another handout to the union cronies who helped bankroll his presidential campaign," said Republican National Committee chairman Michael Steele in a statement accompanying a newly minted ad. "President Obama will now own 60 percent of GM, and his union buddies will own almost 20 percent. And what do the taxpayers get? They’ll get stuck with up to a $50 billion tab for the taxpayer dollars Obama is using to pay for his takeover of GM."
In its bankruptcy filing, the company said it has $172.81 billion in debt and $82.29 billion in assets — all that despite a $20 billion General Motors has already received from the government, money that was initially earmarked for buying bad mortgages from banks.
Now, the company will adopt a restructuring plan that is "tailored to the realities of today's auto market," said Obama. It's "a plan that positions GM to move toward profitability, even if it takes longer than expected for our economy to fully recover; and it's a plan that builds on GM's recent progress in making better cars."
So, there's no dispute that the government is invested in General Motors — it has already shelled out $20 billion in loans — but is Steele correct about the government's new financial ties to the ailing company?
We assume that by referring to President Obama owning 60 percent of the automaker, Steele means that the government as a whole will own that stake under the restructuring plan. In fact, the White House was the first to state this fact, during a May 31 briefing with reporters. By the administration's own words, the RNC is correct on this point.
Steele goes on to say that Obama's "union buddies will own almost 20 percent." To be exact, the United Auto Workers will get 17.5 percent of General Motor's common stock, plus cash to help pay for a $20 billion health care trust fund for retirees. Whether this is a boon to Obama's "union buddies," as Steele's statement says, is a matter of opinion. However, it's worth noting that the UAW endorsed Obama for president and spent more than $4 million to assist his candidacy, according to the Center for Responsive Politics.
So Steele is right that the administration will have a 60 percent ownership in the new General Motors and that the union will have nearly 20 percent. Steele earns a True.
White House, Background on General Motors Restructuring Plan , accessed June 1, 2009
White House, President Obama's Remarks on General Motors Restructuring Plan , accessed June 1, 2009
Associated Press, General Motors Files for Bankruptcy Protection , by Dan Strumpf and Kimberly S. Johnson, June 1, 2009
CBS News, UAW Trust To Get 17.5% of GM Shares , May 26, 2009
United Auto Workers, Endorsement of Barack Obama , accessed June 1, 2009
OpenSecrets, Independent Expenditures , accessed June 1, 2009
OpenSecrets, Profile of United Auto Workers Campaign Donations , accessed June 1, 2009
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