A Project of The Annenberg Public Policy Center

General Motors’ Debt

Q: Did General Motors repay its TARP loan from the Treasury with other TARP money?

A: Yes. GM repaid the loan portion of the automaker bailout ahead of schedule, with interest. It used TARP money it had already received but hadn’t spent. And taxpayers are still stuck with GM stock that isn’t worth what was paid for it.


There are GM commercials and mass mailings that say they’ve paid back their "government loans" ahead of schedule with interest. Didn’t the government take a 71% ownership in the company? Was that a loan or is the loan a smoke screen for the actual government ownership?

Has GM repaid its bailout loan in full with interest, 5 years ahead of schedule?

GM is running advertisements claiming the above statement is true, and the President seemed to reaffirm that claim in his most recent radio address. However, Sen. Grassely (R) claims that GM is using other bailout funds in order to pay off the aforementioned bailout funds and their claim is simply an accounting trick.


Many readers have asked us about the White House-touted news that General Motors, and Chrysler, repaid loan money from the Treasury Department, with interest, ahead of schedule. GM launched an ad boasting of the news, and President Obama talked about it in his weekly address on April 24.

We wrote about this, too, on April 26 in a review of the Sunday political talk shows. Here’s the deal for those who missed that post:

  • Yes, it’s true that GM paid back its loan from the Treasury Department, in full, ahead of schedule.
  • But the debt was only part of the automaker bailout package. Through the Troubled Asset Relief Program, the Treasury gave GM $49.5 billion, most of which was converted into an ownership stake in the form of stock. Through this equity stake, the government still owns 61 percent of GM.
  • Some Republicans, including Sen. Chuck Grassley of Iowa have pointed out that GM used TARP money to pay back its TARP debt. That’s true, but GM simply handed back TARP money it had been lent and hadn’t used. Those funds had been sitting in an escrow account, should the automaker need them. (The company didn’t borrow new money to pay back an older loan.)

Grassley has argued that this wasn’t a "meaningful" repayment of a loan, since it didn’t come from earnings. That’s an opinion, and we’ll leave it to readers to agree or disagree with the senator. The TARP special inspector general, Neil Barofsky, has said the repayment was "good news," since it meant the automaker didn’t need to use those funds held in escrow. In testimony before the Senate Finance Committee on April 20, Barofksy made it clear GM still was operating with government help:

Barofsky, April 20: G.M. has paid $1 billion, and I think they’ve announced that they’re going to be paying back the debt portion, which is about — I think there’s about $6 billion left in its entirety very shortly. But we should be a little — we need to be a little bit cautious about that because the way that that payment’s going to be made is drawing down an equity facility of other TARP money.

So it’s good news in that they’re reducing their debt, but they’re using it by taking other available TARP money to repay the TARP. It’s good news because it means that money, which was going to be available for future problems with G.M., that there’s a determination that they don’t need it, but we should caution that it’s not necessarily being generated out of earnings, but out of other TARP funds.

In an April 21 interview with Fox News’ Neil Cavuto, Barofsky repeated his assessment that the repayment was "good news" but should be taken with a grain of salt. "I mean, the good news is, that money — they already have that money that’s in that escrow account, so it does lower the total amount of money that they owe to the government, so that’s somewhat good news," Barofsky said. "But I don’t think we should exaggerate it too much, when we remember where — the source of this money is just other TARP money."

The president’s and GM’s statements may have given some the false impression that taxpayers have gotten back all the bailout money loaned to or invested in GM. Strictly speaking, Obama was accurate when he said: "GM announced that it paid back its loans to taxpayers with interest, fully five years ahead of schedule." But he alluded only vaguely to other bailout money, which taxpayers may never get back, adding: "It won’t be too long before the stock the Treasury is holding in GM can be sold, helping to reimburse the American people for their investment." Those statements might have confused anyone who wasn’t familiar with the details of GM’s stock-and-loan debt to the Treasury.

As for Treasury’s equity stake, worth $40 billion-plus, the nonpartisan Congressional Budget Office has said the Treasury won’t fully recoup that money. The total automaker bailout, including TARP money given to Chrysler, CBO estimates, will cost taxpayers about $34 billion.

— Lori Robertson

Update, May 3: The CBO doesn’t give a breakdown of how much of its $34 billion cost estimate for the bailout would have gone to General Motors. But most of the automaker bailout funds went to GM. While the Treasury has a 61 percent equity stake in GM, its stake in Chrysler is 9.9 percent.


Obama, Barack. Weekly address, transcript. WhiteHouse.gov. 24 Apr 2010.

Office of the Special Inspector General for TARP. "Additional Insight on Use of Troubled Asset Relief Program Funds." 10 Dec 2009.

Cavuto, Neil. Interview with Troubled Asset Relief Program Special Inspector, transcript. Associated Press. 21 Apr 2010.

CQ Transcriptions. Sen. Max Baucus Holds a Hearing on the Financial Institution TARP Fee. 20 Apr 2010.

Grassley, Charles. "Did General Motors Really Repay Its Taxpayer Bailout?" FOXNews.com. 23 Apr 2010.

Congressional Budget Office. Report on the Troubled Asset Relief Program — March 2010. Mar 2010.