Government Motors Pays Worker Bonuses Before Paying Off Government Loan


My (adopted) Jewish grandfather would have called this chutzpah:

Less than two years after entering bankruptcy, General Motors will extend millions of dollars in bonuses to most of its 48,000 hourly workers as a reward for the company’s rapid turnaround after it was rescued by the government.

The payments, disclosed Monday in company documents, are similar to bonuses announced last week for white-collar employees. The bonuses to 76,000 American workers will probably total more than $400 million – an amount that suggests executives have increasing confidence in the automaker’s comeback.

[…]

But the bonuses drew criticism from an opponent of the auto industry bailout in Washington who said GM should repay its entire $49.5 billion loan before offering bonuses.

“Since the taxpayers helped these companies out of bankruptcy, the taxpayers should be repaid before bonuses go out,” said Republican Sen. Charles Grassley of Iowa. “It sends a message that those in charge take shareholders, in this case the taxpayers, for a sucker.”

The government has been repaid $23 billion but needs $26.4 billion more to recoup its whole investment. The government still owns 500 million shares of GM common stock, which would have to sell for roughly $53 per share to get all the money back.

What do you think? Should the workers get bonuses, or should GM pay the government–meaning you and me, the taxpayers–back first?

 

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About Conservative Wanderer

Conservative Wanderer is currently Editor-in-Chief of That's Freedom You Hear! That means anything that goes wrong can be blamed on him. Previously he was a contributor to the PJ Tatler.

2 responses to “Government Motors Pays Worker Bonuses Before Paying Off Government Loan”

  1. 49erDweet says :

    Obviously we don’t know enough actual facts about this to form a strong opinion. On the surface, however, I can’t fathom why in 2011 bonuses should be appropriate for a huge percentage of GM workers. There may be exceptions, but they have jobs and are working. These days that should be bonus enough.
    Accordingly, in the vast majority of cases GM IMO needs to pay off the loan first, pay incentives later. But that won’t happen. GM as a corporation is broken and beyond repair. It went bankrupt without painfully going through the reorganization it needed to come out the other side a lean, mean manufacturing machine. Instead, it is a government fiat plant – no pun intended – and over-beholden to its rank=and-file. They, right now, think that’s great. But it will be a short-lived triumph, I fear. [Again, no pun intended]. Their corporate decision making process will eventually drive them to rust. Unfortunately, since it’s Detroit no one will notice until it’s too late. Within five years they will be looking longingly at Ford’s Edsel and wishing it had been theirs.

    • Conservative Wanderer says :

      While I may change my mind if/when more evidence comes in, right now I’d say a better long-term course for GM would be to pay off the gubment and then worry about bonuses for people that are already getting union wages, pensions, healthcare… in other words, they’re probably better off than I am right now.

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