From the Detroit Free Press….
Backers of a program that would lend up to $25 billion to automakers and auto parts suppliers said today they had garnered 71 U.S. House members to support their search for $3.75 billion in funding over the next couple of months.
There only looking for $3.75 billion because that is all they think it will cost the government to borrow $25 billion and loan it to the auto makers. Apparently they expect it to be repaid. But read this from Reuters…..
General Motors Corp will need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is “not impossible” if the U.S. auto market continues to slump, Merrill Lynch said.
And that is just GM. The other car manufactures are in even worse shape. Very little chance of seeing the money repaid. And in related news….
The White House predicted on Monday that the Bush administration would bequeath a record deficit of $482 billion to the next president — a sobering turnabout in the nation’s fiscal condition from 2001 when President Bush took office and inherited three consecutive years of budget surpluses.
And this is including all the “extra” money from social security.
Given the scale of the federal budget, 25 billion is pocket change. But we are running out of pocket change.