On Monday, Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty announced that their respective governments would be kicking in a few billion bucks for General Motors aka Government Motors aka Obama Inc. The federal government is providing $7.1 billion while the have-not province of Ontario is throwing in $3.5 billion. As a result of this largesse Canada will own 11.7% of GM and get one representative on GM’s board of directors along with Obama’s union buddies and other crony’s. Yippee!
The leaders of Canada and Ontario seem to differ on whether the “taxpayers” will ever see any return on their “investment”. Harper is skeptical, saying that he’s not counting on getting any money back when (it should be when or if) the equity shares are ultimately sold. McGuinty on the other hand thinks that GM will become profitable again and we, whoever “we” are, will recoup our investment. It’s not difficult to figure out which one is the optimistic liberal and the one who is at least a quasi conservative.
So which one of our fearless leaders is correct? Well, it’s no contest. When it comes to taxing and spending taxpayers’ money, Dalton McGuinty Jr. has a well deserved reputation as a liar. He made of one his famous “I won’t raise taxes” promises shortly before announcing that the province will be bringing in the Harmonized Sales Tax (HST) in July 2010. That means that the few goods and all services that are currently exempted from provincial sales tax will see the sales tax rise from 5 to 13%. This will include such services as legal fees, veterinary bills, accountants fees, dental services, hydro and natural gas costs and a whole bunch of other items that will only be realized when the first bill begin to come in. It’s a giant tax increase that is being imposed during what is billed as the worst recession since the Great Depression. If GM turns out to be profitable, McGuinty will simply use the profits to add to his government’s prolific spending. Steve is right , and at least honest -we can’t count on getting any of the money back.
Dalton McGuinty is a tax and spend liberal and Stephen Harper is really not much better. Don Drummond, the chief economist with the TD bank was quoted in yesterday’s National Postas saying that, independent of the current recession, government spending has become “like an addiction”. So if the two levels of governments do receive a return from the equity that they hold in GM, they will simply spend it.
Right now both McGuinty and Harper are saying that they really do not want to own shares in GM; they are just doing it to save the economy and jobs yada yada yada. But once having gained ownership will they or any successive governments be willing to give such equity shares up? Will they end up like Barack Obama who says he does not want to run an automobile company while calling all of the shots? It boils down to power and the decision by a government to sell the equity that they now hold will be a lot more difficult than to acquire that equity in the first place. After all throwing money at a problem is second nature to politicians and bureaucrats. Giving up power is a lot more difficult.
If GM does become a lucrative venture as McGuinty seems to think it will, he and his ilk will be the first ones to take credit for the upturn. They will say that GM only became profitable because of the involvement of governments. There will be as much chance of taxpayers receiving anything good from this bailout as there is that the tax on income, imposed temporarily after World War I will be abolished.
Right now, the federal government is considering having an asset sale; selling off government entities to the private sector. And the opposition is whining and complaining about such proposed sales. The same thing will happen if the government ever attempts to sell their shares in GM and Chrysler.
The taxpayers of Canada and Ontario will be lucky if their governments don’t end up pumping more money into a failing GM in the future. No matter what happens, the ordinary hard working taxpaying citizens of Canada will never see a return on “their” investment.
