Nov 8, 2010
On November 18, GM is expected to put up for sale approximately 12 billion dollars worth of stock, one of the biggest sales of stock in Wall Street history.
Over the last year, GM has declared profits again – despite the high unemployment, low level of auto production and a continued loss of GM’s market share in the U.S., the world’s largest auto market.
It isn’t hard to see what has made GM so profitable in the kind of downturn when auto companies never made profit.
Two years ago, when GM was close to collapse, the government stepped in and bailed it out – forking over 50 billion dollars in taxpayer money – that is, the workers’ money. This money was originally said to be a loan. But government officials are using all kinds of financial and legal maneuvers to let GM keep a big portion of that bailout money without paying it back.
The bailout was just the start of taxpayer support for GM. The federal government is also granting GM special tax breaks that are estimated to be worth as much as 45 billion dollars. That is, these tax breaks are at least as valuable as the original bailout. Ford is expected to have at least 19 billion dollars in similar kinds of tax breaks. So, bailout or no bailout, the U.S. government finds all kinds of ways to funnel taxpayer money to the auto companies.
There are also all the state and local tax breaks. The state of Michigan, which is supposed to be so hard-up for money it can’t afford state workers’ pay and benefits, once again granted 2.4 billion dollars in new tax breaks to the Big Three auto companies.
And perhaps most valuable of all are the sacrifices by GM’s workforce. Two years ago, GM and the federal government imposed such enormous sacrifices on GM workers that a growing proportion of the workforce is now making wages and benefits that are half what GM workers used to make. Retirees, that is, former GM workers, had their health benefits slashed – another gift to GM.
Tens of thousands of GM workers were laid off through speed-up, job combinations and outsourcing, letting GM close more plants, to wring out more profit. And not just GM workers lost their jobs. So did parts plants workers. And when GM shuttered more than a thousand car dealerships, tens of thousands more workers were put out on the streets.
So, workers’ lost tax money, jobs, pay, benefits and retirement are what accounts for GM’s spectacular profits.
The rest of the capitalist class is getting ready to feed on these profits, through higher dividends on the new stock and big fat interest payments on GM debt. GM’s traditional bankers, J.P. Morgan Chase and Morgan Stanley, will gain fat fees from the sale of the stock as well.
All those sacrifices by the working class – just so a few capitalists can grow ever richer.