almost two years ago this month that General Motors Comp. (GM)
became the largest bankruptcy in U.S history and the
largest nationalization. Taxpayer money was spent restructuring the
The approach worked. The company has since been profitable and enjoyed a successful initial public offering of stock.
The only real issue for the company has been leadership turnover.
The company has seen
string of CEOs come and go -- Rick Wagoner, Fritz Henderson,
and, most recently, Ed Whitacre.
The current CEO, Dan Akerson recently sounded off in an
interview with The Detroit News, portions of which
will likely offend some readers.
Most notably Mr. Akerson called for a massive gas tax hike in the U.S.
commenting, "You know what I'd rather have them do — this will make my
Republican friends puke — as gas is going to go down here now, we ought to just
slap a 50-cent or a dollar tax on a gallon of gas. People will start buying
more Cruzes and they will start buying less Suburbans."
Mr. Akerson argues a tax increase would be a better way to "protect the
environment" and promote consumer fuel efficiency than direct increases
the U.S. Corporate Average Fuel Economy (CAFE) regulations. The
Obama administration and Congress are currently looking to extend increases in CAFE mandated fuel economy levels through 2025,
with the current round of increases wrapping up in 2017.
GM currently is the only member of the U.S. "Big Three" to offer an
electric vehicle. GM's Chevy Volt launched late last year and carries a $7,500
tax credit for buyers.
Mr. Akerson's comments echo those of a former senior advisor to President George W.
Bush, who also advocates raising gas taxes as the only
"practical" solution to escaping dependence on foreign oil.
Mr. Akerson suggested a tax of fifty cents or a dollar, which would make $4
USD/gallon gas cost either $4.50 or $5 USD/gallon. This is slightly less than GM's
previous suggestion to tax gas to $8 USD/gallon.
A Ford Motor Company (F)
spokesperson refused to endorse the suggestion to raise fuel taxes, commenting,
"[Ford] will leave the policy decision to Congress."
II. Akerson Praises Obama, Calls For More Taxes
The CEO, who bills himself as "a Colin Powell Republican — not a Sarah
Palin Republican", praised U.S. President Barack Obama, stating he'd
"done a pretty good job on the economy", which was a
"nightmare" when he received it from former President George W. Bush.
Aside from gas taxes to incentivize buying fuel-efficient vehicles, Mr. Akerson
also called for more taxes in general, stating, "Now, we need practical
decisions. I think you need to cut the hell out of the budget and you've got to
increase taxes … on everybody — including the middle class and the rich
He added that the U.S. government must increase the debt ceiling from $14.3T
USD, a change that Congress has until Aug. 2 to think over. He states,
"We're too good a nation to let ourselves be a banana republic" and
calls the possibility of a government default "unimaginable."
Such a default could harm auto sales, he argues.
III. No More Government Motors?
During the interview Mr. Akerson said he though the U.S. government would soon
divest its remaining stake in GM, commenting, "I actually think the
government will be out this year — within the next 12 months, hopefully within
the next six months."
"I have nothing but good things to say about them," Mr. Akerson says
of his government "investors", but adds that the relationships is
wearing on GM. He states, "It's kind of like your in-laws: It was a
nice long weekend. We didn't say a week."
The U.S. Treasury
Department once spent $49.5B USD to bail out GM and obtain a
controlling 61 percent stake in the company. It offloaded much of that
stake during the Nov. 2010 IPO. Mr. Akerson says a second PO could be
incoming, commenting "[The Treasury] will likely look at another (stock)
sale in August, after second-quarter earnings are announced."
His comments also hint that GM might buy back the stock directly, though he
would only say "But we have a lot of cash."
If the U.S. gov't sold its stake now, it would have lost $12B USD in taxpayer
money. But Mr. Akerson says that taxpayer sacrifice was worth it.
He comments, "We are in the midst of transforming an iconic American
company so 20 and 30 years from now (taxpayers) will look at this company and
they'll say, 'Absolutely it was the right thing to do.' And it shouldn't be
measured on did it sell for $43 or $53 (a share) or did they lose a couple
Part of what is depressing tax prices is a 500 million-share stock PO, which
has depressed prices of current shares 23 percent this year, down to $28.52
USD, well below the IPO price of $33 USD/share. Mr. Akerson admits,
"I think that it is an overhang — to have 500 million shares sitting out
there — it's a problem. They don't know when (the Treasury is) going to come
out. Investors hate uncertainty."
IV. Akerson Says Taxpayer Loss Was Worth It
Despite the reality that taxpayers will likely lose quite a bit of money, Mr.
Akerson infers that it's worth it and that taxpaying Americans are so
"generous" they will surely be happy to foot the bill.
He compares GM to a disaster stricken region like New Orleans post hurricane
Katrina, commenting, "We're the most generous country, even in terrible
times. We don't walk to the disaster as a nation. … We can't wait to
According to Mr. Akerson, CBS's "Face the Nation" has
invited him to be a guess, but complains he would be unable to go. He
bemoans the hostility of "fellow" Republicans, stating, "I can't
go on it. I'm toxic. I'm like a lightning rod. I couldn't have an intelligent
discussion without someone saying, 'He's a welfare guy from the bailout.'"
Those Republicans don't realize the effects of a GM liquidation, he argues, stating,
"If we had gone down, the supply chain would have gone down. … And Ford
was hanging on by its fingernails, too."
He argues that taxpayers "took one of the team", so to speak,
stating, "OK, we took the blow as a nation, we weathered the worst, and my
God, we're back. It's why I came here. It was a story of underdog that tripped
as we all have in our lives — it was a good feel-good story."
Mr. Akerson's interview will likely earn him some critics in Detroit, after he
concluded, stating, "I have not seen a city in this bad a shape [Detroit]
since I went to East Berlin in 1969."
quote: Mr. Akerson, you are the weakest link. Good bye.
quote: 5. Insult Detroit, alienate the home of your business.
quote: Detroit failed because America is failing. They are just the Canary due to their over-reliance on a single sector.
quote: Uhm. No.
quote: Those older homes are closely spaced, offer few modern conveniences, and there might even be a black person nearby. So everyone with money buys the new homes going up in the suburbs. Detroit failed because America is failing. They are just the Canary due to their over-reliance on a single sector.
quote: Those older homes are closely spaced, offer few modern conveniences, and there might even be a black person nearby
quote: Or maybe that increase in fuel costs (still lower than Europe!) would encourage greater efficiency?
quote: You're thinking short-term. In the long run, the higher gasoline prices will affect consumption. Just look how many cruzes and fits and aveos and priuses you see on the streets now. It just takes some time...
quote: Cool story bro! Source?
quote: But I have no actual statistical data to prove that .
quote: But most importantly, as consumers we can not effectively choose to opt for alternatives in these sectors. High Fuel costs gives us less value services and goods while our income remains the same. We then purchase less while paying the same, and those who make a living selling those services and goods make less money and we call it a bad economy.
quote: fuel is a" cost of doing business"
quote: If you eat (I find many people do) you have to buy food, food that got to the local market in a big truck, not a prius trailer
quote: I heat my home with oil and even with significant insulation upgrades I spent thousands to do so last winter.
quote: I also had solar panels installed (heavily subsidized by state and federal tax breaks).
quote: Is that everything he said is right. Granted, his motives are clearly to make his company [and by extension, himself] more money in the long run
quote: Of course this guy is going to kiss Obama's butt, after GM was graciously bailed out. This guy is going to be puppet now.
quote: I don't mind paying more when I know that those higher costs mean that my dollars are leaving the country.
quote: "You know what I'd rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas," Akerson said.
quote: Mr. Akerson suggested a tax of fifty cents on the dollar , which would make $4 USD/gallon gas cost $6 USD/gallon.
quote: Despite the reality that taxpayers will likely lose quite a bit of money, Mr. Akerson infers that it's worth it and that taxpaying Americans are so "generous" they will surely be happy to foot the bill.
quote: what I'd rather have them do — ... — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas. People will start buying more Cruzes and they will start buying less Suburbans."
quote: We are in the midst of transforming an iconic American company so 20 and 30 years from now (taxpayers) will look at this company and they'll say, 'Absolutely it was the right thing to do.'
quote: corporations spend money and create jobs
quote: Or does your local grocery store KNOW that 50 people will buy peanut butter from them for sure?
quote: If there were no supply there would be nothing to demand.
quote: Where in the H did you learn your economics from?
quote: Most democrats these days are socialists
quote: corporations spend money and create jobs, the government just takes money from people. the jobs its 'creates' are just leaching off tax payers. people who have money spend it on things which is how more jobs are created. your idea is pure socialisim, taking money from corporations because you deem them to have 'too much' of it.. wow.
quote: How do you reconcile the two problems?
quote: e GDP of the United States DOUBLED under prolonged periods of Republican "trickle down" economics. If that's "not working" I would like to see what is.
quote: The GDP of the United States DOUBLED under prolonged periods of Republican "trickle down" economics. If that's "not working" I would like to see what is.
quote: Lets look at the flat tax example: The primary problem is you'd also be hitting the poorest part of the population with some tax rate. So aside from the immediate reduction in consumer spending [and thus, Demand for goods, leading to job losses], you would also put a larger percentage of the population of government welfare programs, increasing the deficit as a result.
quote: As far as the tax code goes, keep the current brackets, but reduce all tax rates by some percent [lets say 10%] and remove ALL deductions. No more loopholes; you make some income, you pay x% of that income in taxes. Done.
quote: Don't like your tax burden? Work harder. If you're low income, your education level is clearly low, and that's your own responsibility to remedy, not Big Brother gov'ts. Take some personal responsibility.
quote: The argument that $5K USD to a person that makes $30K USD annually is worth more to that person than $166,000 USD to someone who makes $1M USD annually is essentially attempting to justify that we take money from the rich and use it to exempt low income people from paying taxes. That would essentially remove incentive to produce and gain wealth.
quote: If you're going that route, you might as well just forcibly take money away all wealth from everybody and give everyone the exact same amount of money. That is a horrible idea, though.
quote: Easier said that done. A bracket system inherently gravitates to loopholes as it's already a complex beast.
quote: Straw man
quote: Because Hard work never accomplish nothing
quote: Maybe because you are punished for your success? How does taxing someone more create more incentive than not, that makes zero sense.
quote: Yeah, if you can't provide free services without paying, people might actually be self reliant, can't have that.
quote: You generally need to work hard to make money, but working hard does not guarentee that you do make money. Thus, the idea that working hard will make things batter is a logical fallacy.
quote: Because regardless of teh increased tax rate, they still have more money in pocket. And history has shown, if people can do something to make more money, they will.
quote: in 2010 the bottom 80% controlled only 7% of the wealth in this country while the top 1% controlled 42% of the wealth. or another way to look at it is 93% of all the wealth in the US is controlled by only 10% of the population!
quote: The only way that can manifest itself is if wealth is taken from others and redistributed.
quote: That's a flawed argument, because in modern American society people have the means to increase their income
quote: Within two years, we were making 250,000 jobs. Thats a 1 Million job net turnaround from the starting condition.
quote: As for the deficit, Obama inherited the first $1 Trillion shortfall. A farther ~$450 Billion or so was tacked on due to declines in tax revenue.
quote: The vast majority of which are GOVERNMENT jobs or jobs only available because of Federal money. Which does NOT grow the economy and only puts the treasury further in the hole.
quote: Ok I'm tired of seeing you post these lies. I want a link to your source and I want it NOW. I'm betting there IS no source, you're just full of shit.
quote: FY2008 tax receipts: 2.524 Trillion FY2009 tax receipts: 2.105 Trillion FY2010 tax receipts: 2.165 Trillion Theres your $450 Billion is missing tax dollars. I'm expecting an apology in your next post, now that I've proven you wrong.
quote: The truth is that the two year extension of the Bush tax cuts (based on revenue estimates from the Joint Committee on Taxation) cost a total of $544.3 Billion for the two years (so approximately $272.2 Billion per year - or a little more that a third of what you are claiming.)
quote: Gamer reads like someone who has watched MSNBC and is completely ignorant of this well documented economic fact. Want to know how much the Bush tax cuts "cost" us? From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history.
quote: 1994 Tax Receipts: 1.258T 1999 Tax Receipts: 1.827T Increase: 1.827-1.258 = $569 Billion
quote: I'd argue that there simply isn't enough data prior to the recession to make an argument that the tax cuts by themselves increased revenue.
quote: Oh I see, but you seem to be certain there IS enough data to prove the inverse? After all, I've seen you say we "lost" 500+ billion three times before I even entered the discussion. With no proof given at all.
quote:And when he said he believes we are on the road to economic recovery - while our dollar and our credit rating under record deficits continues to fall - I laughed out loud. These people really believe what they are saying. Give it up. Don't waste more time you'll never get back. quote: Question: Where were you when Republicans took a near surplus, ran 8 years of massive (and increasing) deficits, and had to raise the debt ceailing SEVENTEEN TIMES?And then, under "the worst recession since the great depression" [I'd argue the 1980's was worse, but whatever...], the debt ceailing suddenly beceomes an issue again?Sorry, but thats hypocracy at its finest. Nevermind that NOT increasing the ceailing is beyond iditioc, and would accomplish nothing but costing us more money down the road.
quote: Question: Where were you when Republicans took a near surplus, ran 8 years of massive (and increasing) deficits, and had to raise the debt ceailing SEVENTEEN TIMES?And then, under "the worst recession since the great depression" [I'd argue the 1980's was worse, but whatever...], the debt ceailing suddenly beceomes an issue again?Sorry, but thats hypocracy at its finest. Nevermind that NOT increasing the ceailing is beyond iditioc, and would accomplish nothing but costing us more money down the road.
quote: No more loopholes; you make some income, you pay x% of that income in taxes. Done.
quote: how exactly would you pay the $700 Billion/year cost of keeping the Bush Tax Cuts?
quote: How does taking 700 billion/year out of the private sector help the economy? There reason corporations are not spending is the uncertainty of the current economic climate, who would expand now?
quote: That's right, let's increase spending that's worked so far.
quote: Yes, we must give the money back to their rightful owners, classic.
quote: For arguments sake, how exactly would you pay the $700 Billion/year cost of keeping the Bush Tax Cuts?
quote: The economy grows when people spend money. Period.
quote: Corporations reinvest money, they also expand which leads to HIRING PEOPLE. They don't just sit there and "hoard" money.
quote: due to people being out of work.
quote: Yes I have seen you repeat this, and for the second time, you're wrong again. Because the ENTIRE economy is stimulated by tax cuts, so overall demand for goods and services DO go up.
quote: So wait, let me get this straight. People get "out of work" when corporations get tax breaks and "hoard" their money??
quote: Then would you care to explain why GDP growth under Clinton was higher then GDP growth under Bush? After all, those tax cuts should have resulted in significantly higher GDP growth, right?
quote: Question: What would the taxpayer loss have been if GM had entered liquidation?
quote: Wrong. GM wasn't going into Chapter 11, they would have entered chapter 7.
quote: Someone proof read this before posting please. Despite the reality that taxpayers will likely loose quite a bit of money,