CBO cuts loss estimate from auto bailout

The Congressional Budget Office cut its projections of the loss of taxpayer money from the bailout of the automotive industry nearly in half, in large part due to the highly successful General Motors IPO. The Detroit News reports:

The Congressional Budget Office said it expected the government would lose $19 billion on its bailout of the auto industry.

That’s down dramatically from its prior estimate of $34 billion and comes after the government received $13.6 billion in General Motors Co.’s initial public offering, including the exercise by underwriters last week of the purchase of additional shares.

The CBO said its “estimate of the cost of assistance to the automotive industry dropped from $34 billion to $19 billion because the auto companies have repaid or settled much of their outstanding debt with the Treasury and have continued to demonstrate some measure of financial stability.”

The Treasury Department has projected a loss of $17 billion. But those estimates do not include all of the taxpayer money saved by not allowing GM and Chrysler to go under. The Economic Policy Institute calculated that every dollar spent in the bailout returned at least $10 to taxpayers, and possibly as high as $78.