Peter Flaherty, president of the National Legal and Policy Center (NLPC), today posed key questions to the General Motors leadership at a National Press Club press conference, including whether the company will repay to taxpayers the $10 billion direct cost of the GM bailout.
News that the U.S. Treasury Department has sold its remaining stake and that Mary Barra will take over as GM's new CEO have put the spotlight on the company and its future. GM executives have pointed to GM's $26.8 billion in cash as evidence of its improved financial position. Analysts have raised the possibility that the company will buy back shares or institute a dividend.
Questions for GM:
1) Will GM compensate taxpayers for the $10 billion loss they have taken on their involuntary "investment" in the company?
2) If not, why should taxpayers take a loss now on their GM "investment" when the company allegedly has such a strong cash position?
3) Because of a novel application in bankruptcy of the tax-loss carryforward provisions of the tax code, $30-$40 billion in GM profits are shielded from taxation. Should a profitable GM pay taxes? When do you estimate GM will pay taxes?
4) Do you think the $10 billion loss represents the full cost to taxpayers of GM's bailout in light of the bailouts of former GM companies like GMAC/Ally Financial and Delphi, not to mention the separate bailout of automotive suppliers?
5) If not repaid, do you think the taxpayer loss on its "investment" in GM will create a negative reaction among consumers, similar to the reaction to the bailout itself and the years-long government ownership?
6) The United Autoworkers (UAW) and its affiliates are now GM's largest shareholders. How can you negotiate with the UAW when it is both your workforce and your employer? Do you believe that the UAW should also sell its stake?
7) Bloomberg recently quoted former Automotive Task member Harry Wilson as saying GM's cash "hoard" might make it a target for activist investors. If so, such investors are likely to make demands such as reducing the workforce that will be opposed by the UAW. How will you be able to serve two masters?
8) With GM's pension obligation easily exceeding its market capitalization, some $71 billion at of the end of 2011, does GM face a long-term competitive challenge if it can't coax further concessions by the UAW? Are any concessions likely to be forthcoming?
9) To what extent was the Treasury's sale of GM equity coordinated with your company? Was it announced to coincide with Dan Akerson's speech today?
10) Where will GM's employment grow the most in the next five years? What percent of GM's new employees in that period do you estimate are likely to be UAW represented?
11) To what extent and how soon will the government's exit affect compensation for GM management including yourself?
12) By any metric, the Chevy Volt has been costly failure. It has been kept alive presumably to help President Obama reach his goal of putting one million electric vehicles on the road. Now that government control has been removed from GM, will you kill the Volt?
NLPC has been a persistent critic of the auto bailout during both the Bush and Obama administrations. NLPC Associate Fellow Mark Modica, a frequent guest on television and radio shows, blogs regularly on the bailout and related issues. NLPC published an October 2013 survey titled " Auto Bailout is Drag on GM Truck Sales ," which verified that disapproval of the auto bailout is hurting GM pickup truck sales.
