GM Shares Are Artificially Inflated (Letter to the Editor)

GM Shares Are Artificially Inflated (Letter to the Editor)

November 25, 2010
Originally published in The Washington Examiner

The Examiner was right to note that General Motors' supposed "success story" is actually a money-loser for taxpayers. Not only did GM's recent sale of some government-owned shares raise billions less than was needed for taxpayers to break even, but future sales of GM shares may also lose money because GM's value is artificially inflated by government favors that may not last forever.

GM stock is worth something partly because its government ownership allows it to claim up to $45 billion in tax savings that would otherwise have been wiped out in bankruptcy. GM is also getting massive taxpayer subsidies for its Chevy Volt, despite recent revelations that it exaggerated its performance.

GM's finances are also puffed up by temporary deferral of union pension obligations, which rose $6 billion since 2009.