The U.S. Treasury Department is reducing its forecast for losses from the auto industry bailout by about 2 billion dollars, according to a report in the Detroit News today. The Treasury’s reduction in estimated losses comes in a monthly report released to Congress. The department reduced auto bailout estimated losses from 23.77 billion to 21.7 billion, based on GM’s recent stock price increase. GM shares have risen 19 percent this year to a price of about $24 a share. The news is encouraging, although the stock price would have to more than double for the government to recover all bailout money paid to GM.
The news comes on the heels of a recent Center for Automotive Research study that highlights how much tax revenue the federal and state governments collect. In the study, CAR estimates 13 percent of all state tax revenue—a total of $91.5 billion in 2010—comes from the auto industry. The federal government collected $43 billion in that same year from auto-related tax revenue. While that revenue comes from both foreign and domestic brands, it draws attention to the importance of a healthy auto industry here in the U.S. The study also shows the scope of the industry is far wider ranging than just GM and Chrysler profits and losses.
Source: The Detroit News