Study reveals US bailout to have saved 1.5 million jobs image

According to a study, released yesterday after the announcement that the Treasury sold its remaining share in GM, revealed that the federal bailout of GM, Chrysler and parts suppliers in 2009 saved 1.5 million U.S. jobs and preserved $105.3 billion in personal and social insurance tax collections.

The Bush and Obama administrations loaned the auto industry, including GM and Chrysler, which is now controlled by Italy’s Fiat, $80 billion to avoid the collapse of the industry that they felt would result in the loss of millions of U.S. jobs.

Critics of the bailout at the time had argued the companies should be allowed to fail and the industry that resulted from the aftermath would be stronger. Treasury officials have repeatedly said the bailout was not an investment meant to turn a profit, but a move to save U.S. jobs.

Now, the Center for Automotive Research (CAR) in Ann Arbor, Michigan, estimated in its study that the bailout saved a lot of jobs, even crediting for a rebound of the industry in 2010 after the initial fallout.

“Two consecutive executive administrations in Washington decided in late 2008 and early 2009 that the consequences of the potential losses and outcomes to the U.S. economy … were worth avoiding through a federal intervention,” Sean McAlinden, the center’s chief economist, said in a statement. “This peacetime intervention in the private sector by the U.S. government will be viewed as one of the most successful interventions in U.S. economic history,” said McAlinden, who wrote the study along with Debra Maranger Menk.

CAR estimated that a complete shutdown of the industry that was bailed out in 2009 would have resulted in the loss of 2.63 million jobs and those losses would still have stood at more than 1.5 million in 2010. If only GM had been shut down, the job losses would have been almost 1.2 million in 2009, shrinking to 675,000 in 2010.

Via Reuters