Yike! Bailouts and Corporate welfare handouts seem to be back in fashion in Washington – in both parties. Too many Biden and now Trump federal agencies act like hedge funds, doling out tens of billions of dollars of grant and loan programs. As we’ve said many times before, this seldom turns out well for taxpayers.

Advocates of AFDC (Aid For Dependent Corporations) like Obama’s “Car Czar” Steve Rattner routinely point to the General Motors bail out as “necessary” and a good deal for taxpayers.

That’s a myth and our economic wiz EJ Antoni has the real story. The government bailout of General Motors happened in two stages, first at the end of the George W. Bush administration in 2008 and then in December 2008.  Then Obama gave them the rest in 2009, totaling roughly $50 billion. When the Treasury sold its final stake in GM in December 2013, taxpayers had only recouped about $39 billion.

If the Treasury Department had just bought $50 billion of the S&P 500 at the end of 2008, reinvested the dividends, and sold at the end of 2013, it would’ve realized a gain of about 128%, for an annualized return of nearly 18%. If the Treasury still held the position today, it would have increased more than 900% (10X the original investment) for an annualized return of almost 15%.