In a new report released Monday, the Center for Automotive Research (CAR) reckons that the federal government bailout of General Motors Co. (NYSE: GM) saved 1.2 million U.S. jobs and preserved $34.9 billion in personal income and social insurance (Social Security, Medicare) payments. The bulk of those jobs and tax payments would have been lost in 2009 and 2010 and would have recovered (mostly) by now without federal intervention, but the U.S. auto industry would look considerably different had both GM and Chrysler been allowed to go under.

According to the latest monthly report from the U.S. Treasury, the federal government invested a total of $51 billion in GM, of which about $37.2 billion has been recovered as of October. The Treasury Department has already said it would divest its remaining shares of GM stock by the end of the year, which would add about $1 billion more to the amount recovered. That means that U.S. taxpayers lost about $11.8 billion as a result of the investment in GM.

Ford Motor Co. (NYSE: F) did not accept any federal bailout funds, but CEO Alan Mullaly said last year, “If GM and Chrysler would’ve gone into free-fall, that could’ve taken the entire supply base into free-fall also, and taken the U.S. from a recession into a depression. That is why we testified on the behalf of our competitors even though we clearly did not need precious taxpayer money.” Chrysler received $1.9 billion in federal funds before being taken over by Italy’s Fiat SpA.

What U.S. taxpayers avoided, according to CAR, was the loss of about $105.3 billion in transfer payments plus the loss of personal and social insurance tax collections to the tune of 768% of the net investment of $11.8 billion in GM and $1.9 billion (none recovered) in Chrysler. Including jobs related to the auto industry, the federal bailout preserved 2.6 million jobs in the U.S. economy in 2009 alone and $284.4 billion in personal income in 2009 and 2010.

As we have already noted, the CAR report suggests that many jobs would have been recovered eventually, but the gains would have been made mostly in the southeastern United States, where foreign carmakers like Toyota Motor Corp. (NYSE: TM) have been building manufacturing capacity. The CAR report notes that the results of such a migration would have had severe consequences in the long term and that unemployment rates in the upper Midwestern states would likely still be in double digits.

For the record, CAR gets nearly 80% of its funding from sources other than the auto industry. The full report on the effect of bailing out GM is available at the CAR website.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.