One News Now (Link) - Jim Brown (April 29, 2009)
For the first time in history, the United States could have a government-owned automobile company.
A restructuring plan laid out Monday would cut 21,000 General Motors jobs and involve a reduction in brands and dealerships. GM bondholders would have ten-percent ownership in the company in return for relinquishing their debt claims, while the federal government would own a 50-percent share in the company. The United Auto Workers union would own 39 percent.
James Gattuso, senior fellow in regulatory policy at The Heritage Foundation, says government ownership is the most disturbing aspect of the plan. He notes it is unclear whether bondholders or the UAW will take a bigger cut.
"What's interesting to me is that no one seems to be talking about what the taxpayers' share will be," he observes. "In reality, the bankruptcy looks like it's going to be funded by the taxpayers -- and if that contribution wasn't there, probably both labor and the bondholders would have to take much larger cuts than they're talking about."
Gattuso says while so much focus is on the battle between bondholders and labor, there should be more concern about the taxpayer investment in the GM bailout and how much money they will be losing.