Obama's Big Lie

April 30, 2010 (LPAC)—In his weekly radio address of April 24, Obama said, "GM announced that it paid back its loans to taxpayers with interest, fully five years ahead of schedule."

Earlier, on April 21, White House Press Secretary Robert Gibbs had twittered his followers: "BIG NEWS: GM pays back US $6.7 billion used to save jobs. BIGGER NEWS: Payment was 5 years ahead of schedule." The White House released a special report on the auto industry later in the day, claiming that the payment shows that the White House bailout was successful and the auto industry on the right path, if not yet out of the woods. Lunatic Larry Summers couched the GM payment as downright historical, writing in the White House blog the same day that "this turnaround wasn't an accident of history."

GM's payment was indeed no accident. The money GM used to repay the TARP loan came from... another TARP account managed by Timothy Geithner's Treasury Department!

Typical of Obama, the White House is simply lying.

In fact, the day before GM "paid," and the White House lied, the Special Inspector General for TARP, Neil Barofsky, testified to the Senate Finance Committee, that GM was not using GM earnings to repay its debts to the U.S. taxpayer, but had been using TARP funds from a special Treasury Department escrow account since the fourth quarter of 2009.

Not everyone being fools, a television interviewer asked GM Vice Chairman Stephen Girsky on the same day the White House was all a-twitter over the great payment: "Are you just paying the government back with government money?" Girsky shuffled, "Well, listen, that is in effect true, but..."

Furthermore, the amount "paid" on April 21 was less than 13 percent of the $52 billion in federal bailout funds GM had received. The remainder of its debt to U.S. taxpayers was converted into stock, which GM piously insists it still intends to pay off.

Documentation of the major features of this fraud, and a demand for explanations by April 30 from the Treasury Department, are contained in a letter sent by Sen. Charles Grassley, the ranking member of the Senate Finance Committee, to Secretary Geitner, on April 22. Sen. Grassley suggests that the Treasury Department, in fact, decided to release sufficient funds for GM to pay off much more than the quarterly payments it began making in 2009, after Senators objected to administration insistence that GM be exempted from its proposed TARP excise tax.

In Senatorial tones, Grassley points out: "It is unclear how GM and the Administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way. In reality, it looks like GM merely used one source of TARP funds to repay another. The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government's ability to sell GM stock in the future. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. A debt-for-equity swap is not a repayment."