The US Treasury invested $50 billion for 61 % of the new GM in 2009.  In next month’s IPO, Treasury will sell enough shares to reduce its holdings to 43%.  The sales price, $26 to $29 a share, will lock in a loss of $4 to $5.5 billion on the sale.  Once the figures came out, the publicity around the sale, once trumpeted as a triumph of the bailout decision, became a bit more muted.   Moreover, we have discovered that the government will give another $45 billion in tax breaks to the new GM, allowing the company “carry-forward” tax loses denied other similiarly situated companies.  This reminds one of the “we paid off our government loans” argument made by a now departed CEO of new GM who failed to mention that the money to pay off the loans also came from the government.  There is also, of course, the subsidy to the GM’s new Volt ($6,000 a car) and the benefit of shearing off from new GM and the bailing out GMAC (Ally), a major player in the mortgage loan crisis.  The government’s painful efforts to label the GM “bridge loan facility” (“it’s not a bailout”) a success are sapping the government’s financial credibility.

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