Letter: Obama’s shrewd deal
On Dec. 12 USA Today reported that the federal government sold the last shares that it held from the General Motors bailout that saved 1.2 million jobs but left the taxpayer with a $10.5 billion loss. Many criticized this as another failure of President Obama – but was it?
Besides allowing 1.2 million people to maintain their dignity and sense of self-worth, the American taxpayer actually profited from this deal.
Each saved job cost us $8,750.
If each job paid an average annual wage, with overtime, of $50,000 and the employee pays a 15 percent actual tax rate, that’s $7,500 in federal income tax revenue, leaving a “loss” of $1,250.
If you account for the avoided costs of unemployment compensation of, say, $300 per week, this “loss” is recovered in a little more than four weeks.
This doesn’t even account for avoided costs like food stamps and other welfare benefits and other positives such as state and local employee tax payments and the multiplier effect of those employees’ spending in the Michigan economy.
All in all, I’d say that Obama put together a pretty shrewd deal that benefitted everyone.
JOHN B. ANDREWS