GOP Grumbles as GM Spends $500M on Bonuses
Uncle Sam should come first, Republicans say
By Rob Quinn, Newser Staff
Posted Feb 29, 2012 4:31 AM CST
An assembly line worker moves a door into position for a 2012 Chevrolet Volt at the General Motors Hamtramck Assembly plant in Hamtramck, Mich.    (AP Photo/Paul Sancya, File)

(Newser) – General Motors had a great year last year—making a record profit and reclaiming its crown as the world's biggest automaker—but some lawmakers aren't happy about its plans to reward its workers. The company plans to pay bonuses of at least $182 million to white-collar workers today, on top of $332.5 million in profit-sharing it's paying factory workers, reports AP. The bonuses, of 8% to 14% of base pay, will go to most of the company's 26,000 salaried employees, many of whom make more than $100,000 a year. Some Republicans believe the government should get back the money it spent to save GM before anybody gets a bonus.

"As the company gives out bonuses, the Treasury Department needs to have an exit strategy for getting GM to repay the taxpayers for helping the company survive," says bailout critic Sen. Charles Grassley. The government has recouped more than $22 billion of the $50 billion it spent to rescue GM, but it still owns close to a quarter of the company. Its shares are worth $13.2 billion, and will have to more than double in price for the government to get all its money back. GM argues that the bonuses—which are being offered instead of pay raises—are necessary to prevent rivals from poaching its talent.

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Showing 3 of 68 comments
beckjr2000
Mar 2, 2012 12:11 PM CST
As long as the Taxpayers get their 25% of the earnings as a dividend they can go ahead with their bonuses otherwise GM needs to repay the Taxpayers for their Loan first!
LibertyGuard
Mar 1, 2012 2:28 PM CST
Gary, was GM too big to fail? Why did the bankruptcy court take away senior bondholders stakes to give them instead to the union and the government. This is not an example of capitalism, it is an example of socialism and fudged numbers to give GM the illusion of being a success as Ford is because of proper, capitalist management at Ford - they don't need the government - and lest we forget all the Detroit businesses that went belly-up 'cause they couldn't kiss the administrations backside? GM may work for the next couple quarters if that long because the union, who speaks for the labor pool, took a cut in their wages, which, if they would have done with earlier days, GM might have succeeded even with the poor management it yet has. But there is a big wad of taxpayer caused money floating around and GM can and does take it. Socialism does not net create. Redistribution of goods and services others have created is its hallmark. There can be no socialism without taking from creators. Government does not create - it takes.
GaryReber
Mar 1, 2012 1:08 PM CST
The government bought an ownership position in GM representing a quarter of the company's ownership. This was not a loan or loan guarantee, thus would not be a first-position recoupment position. Rather than profit-sharing without employee ownership, the government should have required broadened ownership of the productive capital assets of GM among the employees, who would pay back their acquisition of ownership in GM out of the earnings of the investment. While GM received financial support from the government, the structure of the support should have been to provide an insured loan as restructuring and investment capital. GM certainly qualifies as a major company within a major industry with long-term productivity growth potential with the resulting benefit of promoting the diffusion of advanced technology into civilian industries. The loan would have been used to modernize and build new superautomated and computerized robotic assemblies. Where necessary the monies would be used for supplemental retraining of labor workers to qualify them for the new jobs created. Most important, the profits from the investments would be fully paid out to new capitalists owners––the corporate employees. This should be a condition to receive the capital investment loans. The goal would be to create new capitalist owners simultaneously with the growth of the economy financed with government loan support. The profits would represent wealth created by public capital invested in GM. The desired result would be to decrease, rather than increase, the existing concentration of productive capital ownership and thus economic power in the hands of a minority. The credit mechanisms supported by the government would not involve the expenditure of any tax money and would support profit-making operations for the primary purpose of earning dividends for GM's stockholders, including the newly created capitalist owners. Businesses supported by such credit mechanisms would have a profit motive and operate with the requirement for efficiency imposed by a market economy. The goal would be to broaden the ownership of private corporations so as to make the interests of private industry more synonymous with the public interest and vice versa––while broadening private enterprise capitalism to include everyone in the society. Such policies and programs aimed at broadening productive capital ownership would foster extensive utilization of the most modern and efficient technological innovations and result in the revitalization of American free-enterprise capitalism mirrored in a strong growth-projected economy.