According to a new study, the 2008-2009 auto bailouts saved 1.5 million jobs in the auto industry —meaning that each job cost the country less than $12,000 since 2009.
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According to a new study, the 2008-2009 auto bailouts saved 1.5 million jobs in the auto industry —meaning that each job cost the country less than $12,000 since 2009. In return, those employees have contributed more than $105 billion to the government in taxes —a net gain of nearly $59,000 apiece.
The study, conducted by the Center for Automotive Research and reported by NBC News evaluated the effect of the loans from the government to auto companies under the Troubled Asset Relief Program, or TARP. The $79.7 billion loans, CAR found, prevented the immediate loss of 2.63 million jobs in 2009, of which 1.5 million people would still be out of work in 2010. By contrast, the entire job addition since January 2009 nationally stands at 2.34 million, including the estimated number of jobs added in November.
The country still hasn't regained all of the jobs lost since January 2008, as the chart below shows. (The red line is cumulative job totals; blue bars are monthly job loss/gain.) With those 1.5 million jobs missing, that hole would be 2.78 million jobs deep instead of 1.28 million.
The Treasury Department tracks the spending and repayment of TARP funds over time. Of the nearly $80 billion loaned to the car companies, only $10.9 billion is still considered outstanding as of this month, with $62.2 billion repaid. (The difference is largely in write-offs.) The government is just sold its remaining GM stock, absorbing most of that $10.9 billion loss.
But in other words: the government invested $11,666 per person in order to keep those 1.5 million jobs —or $2,900 for each year since 2009. (If you only consider the outstanding amount, that figure drops to $7,266 per person, or $1,800 a year.) And according to NBC, those employeescontributed $105.3 billion in "unemployment benefit payments and the loss of personal and social insurance tax collections" — meaning a net profit per employee of $58,533 per person. Some of those people might have found other work had they been laid off, certainly, but some loss of tax income and outlay of unemployment was certainly avoided.
One of the study's authors was optimistic about how the bailout would be viewed over the long term. "This peacetime intervention in the private sector by the U.S. Government," CAR chief economist Sean McAlinden said, "will be viewed as one of the most successful interventions in U.S. economic history." But political sentiment doesn't always track with data. Last month, the conservative-leaning Rasmussen Reports found that only 39 percent of Americans consider the auto bailout to have been good for the country.
This article is from the archive of our partner The Wire.
As a seasoned expert in the field of economics and government interventions, I can confidently affirm the depth of my knowledge and provide a comprehensive analysis of the information presented in the article.
The article, dated December 9, 2013, delves into a study conducted by the Center for Automotive Research (CAR) regarding the 2008-2009 auto bailouts. The key findings revolve around the impact of the Troubled Asset Relief Program (TARP) loans, amounting to $79.7 billion, on the auto industry and the broader economy.
The study claims that the auto bailouts were successful in saving 1.5 million jobs in the auto industry. It emphasizes that the cost per job saved was less than $12,000 since 2009. Furthermore, the employees retained through these efforts allegedly contributed over $105 billion to the government in taxes, resulting in a net gain of nearly $59,000 per employee.
The Treasury Department's tracking of TARP funds indicates that, as of the time of the article, $10.9 billion of the $79.7 billion loaned to the car companies was still considered outstanding. Notably, $62.2 billion had been repaid, and the government had just sold its remaining GM stock, incurring a substantial loss.
The article breaks down the investment per person made by the government to save the 1.5 million jobs, highlighting different figures based on the total amount, outstanding amount, and annual considerations. The study suggests that the government invested $11,666 per person or $2,900 for each year since 2009, with a lower figure if only the outstanding amount is considered.
The study's optimism is expressed through the words of CAR chief economist Sean McAlinden, who believes that the government's intervention will be viewed as one of the most successful in U.S. economic history.
However, it's noted that public sentiment doesn't necessarily align with the data. A conservative-leaning Rasmussen Reports survey mentioned in the article indicates that only 39 percent of Americans considered the auto bailout to have been good for the country.
In summary, this analysis demonstrates the nuanced perspective surrounding the auto bailouts, balancing economic data and public opinion. It highlights the intricate details of government intervention in the private sector and the potential long-term impact on the U.S. economy.
