June 1, 2009
Without the prior approval of Congress or any legislation authorizing the act, President Obama plans to announce on Monday that the federal government will take a 60-percent ownership stake in General Motors as part of a bankruptcy and reorganization plan for the company.
[efoods]The White House on Sunday night announced that the plan will require the federal government to provide another $30 billion of taxpayer money to General Motors, on top of the $20 billion in aid the federal government already has given the company.
In December, Congress failed to pass legislation authorizing a federal bailout of the auto industry.
Lacking legislative authority—and despite the fact that Congress had specifically declined to approve a bailout of the auto industry—President Bush went ahead and provided General Motors and Chrysler with $17.4 billion in taxpayer money.
Analysts James Gattuso and Andrew Grossman of the Heritage Foundation argued at the time that this was “legally wrong” because Bush took the money from the $700-billion Troubled Asset Relief Program (TARP) that was authorized specifically for purchasing assets from “financial institutions” such as banks, savings and loans, credit unions, brokerages and insurance companies. The Heritage analysts argued that auto manufacturers are not “financial institutions” as envisioned by Congress under the law.