GM's Dishonest Advertising

GM has been running a commercial claiming that they have paid off their government loan 5 years ahead of schedule. I couldn't find a way to embed it, but you can see it here. The clip opens with GM CEO Ed Whitacre observing, "A lot of Americans didn't agree with giving GM a second chance, and, quite frankly, I can respect that." Since the government shouldn't be in the business of giving out first chances, much less second chances to companies that have completely failed, that sounds about right to me. He then goes on to proudly announce that "We have repaid our government loan, in full, with interest, 5 years ahead of schedule." If the money to repay the government were the revenue from increased sales of quality cars, that might be worth running celebratory commercials about. As it turns out, though, GM repaid the government with.... more money from the government. As Senator Chuck Grassley put it in a letter to Timothy Geithner (and via HotAir):

The bottom line seems to be that the TARP loans were “repaid” with other TARP funds in a Treasury escrow account. The TARP loans were not repaid from money GM is earning selling cars, as GM and the Administration have claimed in their speeches, press releases and television commercials. When these criticisms were put to GM’s Vice Chairman Stephen Girsky in a television interview yesterday, he admitted that the criticisms were valid:

Question: Are you just paying the government back with government money?

Mr. Girsky: Well listen, that is in effect true, but a year ago nobody thought we'd be able to pay this back.

In short, GM (which the US government has a 60% stake in) and its allies at the Treasury have been blatantly and deliberately misleading the American people with the massive fanfare surrounding this accounting trick. I'm not sure that a commercial has ever made me this angry. It should give pause to those who argue that increased government involvement in business will put an end to questionable accounting and dishonest practices.