General Motors (majority owner, US taxpayers) is trying to rescue its European subsidiary Opel after backing out of a plan to sell the company to a consortium led by auto-equipment maker Magna.
In order to get clear of the sale, GM cut a deal with German Chancellor Angela Merkel's government to pour billions into Opel. Merkel had to sign off on the deal because Germany had provided a bridge loan to Opel in order to carry the company over until the sale could be completed. German labor unions are up in arms over GM's reversal and Merkel was under pressure to get something back.
Merkel was in town this week and after a meeting with President Obama and a phone call with him Wednesday, agreed to “coordinate on the future”
In that coordinated future, GM is planning to inject a minimum of $4.5 billion into German operations and probably much more over time. But since the company is only being kept afloat by taxpayer dollars, that means a pretty hefty investment in German auto plants with public money.
That was too much for Sen. Mike Johanns (R-Neb.):
“The Obama Administration should not be in the car business in the first place and when there's 10.2 percent unemployment in the United States, now is not the time to use U.S. taxpayer dollars to protect jobs in other countries, particularly when its leaders have their own plans to protect those jobs.”
If GM were a real company, keeping Opel might be a good decision. But sending TARP money overseas at a time when so many Americans are out of work will not be popular.