GM CEO Mary Barra is an ingrate. In her more than 10 years at GM’s helm, Barra never once has acknowledged or thanked me for bailing out her company and then donating billions more to her enterprise so she could pay herself well over $200 million. Come December, I’m certain Barra again won’t send a holiday greetings card.
If you pay U.S. taxes, you, too, should be seething in anger.
Barra far and away is among America’s biggest corporate moochers, sponging billions from U.S. taxpayers to fund her operations, all the while moving jobs to Mexico, where under her leadership GM became that country’s biggest vehicle manufacturer. While Americans likely are aware and have become seemingly inured to Barra pigging out at the public trough, I’m doubtful they know about GM’s paltry contributions to help replenish the U.S. treasury.
GM last year paid a measly 4.1 percent tax rate on its more than $12 billion in profits, according to Americans for Tax Fairness, a coalition of over 400 organizations doing God’s work to make the rich and big corporations pay a fairer share of taxes. The statutory corporate tax rate is 21%, while a typical American family pays 13.6%.
Good Jobs First, whose stated mission is to expose wasteful government subsidies, ranks GM America’s No. 4 corporate moocher, having sponged $7.5 billion in combined federal, state, and local handouts. It’s not clear how up to date Good Jobs First keeps its list and when it records a subsidy. The Biden/Harris administration recently committed to donate $500 million in taxpayer funds to GM so that Barra can retool an aging plant in Lansing, MI, to build EVs, which would edge GM ahead of Ford on the corporate panhandlers list.
The $500 million donation, for which individual U.S. taxpayers can’t claim a tax deduction, is supposed to save 650 jobs and create 50 new ones. Even if GM makes good on its job promises — an optimistic assumption — Americans are paying Barra more than $714,000 for every job she creates. Barra also received a $2.5 billion low-cost loan from the Biden/Harris administration in December 2022 to create three joint-venture battery plants, including one in Lansing.
Good Jobs only tracks direct subsidies, but many of Barra’s electric vehicles are eligible for lucrative tax rebates, appallingly even the ones she builds in Mexico. Barra’s luxury electric Cadillac Lyriq, which she builds in Tennessee, also qualifies for a $7,500 rebate, without which Bloomberg’s GM auto writer David Welch recently admitted he couldn’t have afforded to lease the vehicle. It’s a safe bet that Welch earns well over $100,000 a year, yet U.S. taxpayers subsidized his spanking brand-new Cadillac when most Americans can’t afford to enjoy the smell of new car leather.
According to Cox Automotive, new vehicle sales in the U.S. this year will total 15.7 million, while Cox forecasts that used car sales this year will total 36.2 million. Increasingly, used car sales involve vehicles 10-years or older.
What should have all Americans screaming from the rooftops is that Barra isn’t allocating the billions she saves because of government handouts to better compete with China’s automakers, whose more technologically advanced EVs sell for half the cost. GM once had a significant share of China’s auto market, and its Buick brand enjoyed a certain cachet. GM is experiencing mounting losses in China because auto buyers there prefer EVs, and they don’t like Barra’s offerings.
Rather than invest in AI and other technologies like China’s automakers, Barra hopes to stem her losses by cutting costs. Good luck with that. Barra can sleep peacefully at night because Kamala Harris and Donald Trump are both committed to imposing 100% tariffs on China-made EVs so that most Americans could never afford the vastly superior vehicles. Ford CEO Jim Farley recently disclosed on a podcast that he’s been tooling around Chicago in a $30,000 China-made EV that’s so “fantastic” he doesn’t want to give it up.
What’s Barra doing with the billions she’s saved from taxpayer donations and subsidies? Reallocating the monies to enrich herself and GM’s other shareholders.
Under Barra’s leadership, GM was a loser stock during the first nine years of her tenure, indicating that investors weren’t as enamored with her as the corporate media. As of last fall, GM’s stock was down 25% from when Barra took over in January 2014. The stock had a slightly negative annualized return even when reinvested dividends were included.
Shortly after GM signed a supposedly “historic” new four-plus year labor deal with the United Auto Workers Union and Warren Buffett’s Berkshire Hathaway dumped its entire $843 million position in GM stock, Barra announced an accelerated $10 billion accelerated share repurchase, a giant FU to UAW President Shawn Fain who sported “Eat the Rich” t-shirts during contentious contract talks last fall.
Barra initially said that Fain’s wage demands would put GM at a major competitive disadvantage, but she eventually caved. Barra’s $10 billion stock buyback exceeded GM’s labor costs under the new UAW contract by $700 million.
In June of this year, Barra announced another $6 billion in stock buybacks.
Stock buybacks typically boost the price of a company’s shares because they reduce the number outstanding without impacting reported earnings. That increases per share earnings, goosing the value of the stock. GM’s fewer shares outstanding also allowed Barra to increase GM’s quarterly dividend payout by more than 30%.
Stock buybacks were illegal for most of the 20th century because they allow CEOs to manipulate their share prices for personal financial gain while creating the appearance of improved stock market performance. Senator Elizabeth Warren (D-MA), who selectively calls out the stock buybacks of companies she doesn’t like, opined in a 2015 interview that “stock buybacks create a sugar high for the corporations. It boosts prices in the short run, but the real way to boost the value of a corporation is to invest in the future.”
Warren and Representatives Sean Casten (D-Ill.) Bill Foster (D-Ill.), and Pramila Jayapal (D-Wash.) wrote to Secretary of Commerce Gina Raimondo in July urging the Department of Commerce to use its full statutory authority to ensure taxpayer dollars from the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act doesn’t directly or indirectly fund stock buybacks and other shareholder distributions.
Barra’s stock buybacks worked their desired magic. GM’s stock was trading at about $40 a share when Barra announced the first tranche, and the stock instantly soared. At this writing it trades near $52.
Barra this year began dumping her GM stock to take financial advantage of her share price manipulation.
According to a public filing, Barra last week dumped 506,824 GM shares, netting her $27,029,630. In June, she unloaded 626,305 GM shares, pocketing $29,870,321. In May, Barra sold 626,313 shares worth $27,219,908. All of Barra’s sales were above the $40 GM’s shares traded at before the company’s buybacks.
All told, Barra this year realized more than $84 million selling big chunks of her GM shares. Notably, other GM insiders have also been dumping their GM holdings. I question the judgment of any investor who buys stock in a company whose insiders are dumping their holdings.
Even with all Barra’s share price manipulation, she still doesn’t command all that much respect from Wall Street. Tesla, whose CEO Elon Musk was still a kid when Barra began her GM career and whose antics the corporate media says is hurting sales, is valued at more than $807 billion. By comparison, Wall Street values GM at $57.1 billion.
Unlike Barra, Musk not only makes money in China, but Tesla is also one of the leading automakers. Musk has also resisted calls to institute stock buybacks even though it would considerably boost his net worth.
Kamala Harris and her legacy media sycophants warn that Donald Trump is a major threat to America’s democracy. Perhaps. But another major threat is growing wealth disparity, and in America the rich are getting richer, and the poor are getting poorer.
The Urban Institute reported in May that in the past 60 years, America witnessed a massive transfer of wealth from the middle class to the wealthiest families, increasing wealth inequality. In 1963, the wealthiest families had 36 times the wealth of families in the middle of the wealth distribution. By 2022, they had 71 times the wealth of families in the middle.
Using taxpayer monies to subsidize a hugely profitable corporation that effectively diverts the funds for the enrichment of its obscenely paid management is bad public policy and ultimately a potentially dangerous one. Barra, who is chair and CEO and has near absolute control of GM, last year paid herself $28 million despite missing all her previously outlined EV goals and objectives.
While Donald Trump says he will impose tariffs on vehicles manufactured outside the U.S., it’s not entirely clear he’d impose punitive measures on Barra’s Mexican-made vehicles. Even if he did, Trump also said he’d give subsidies to automotive companies to build factories in the U.S., so U.S. taxpayers might have to cover Barra’s costs to home shore her Mexican factories.
Trump’s favorite benchmark is the stock market, and likely he wouldn’t want to be seen taking actions that would hurt his Wall Street and Mar-A-Lago cronies. The top 10% of Americans hold 93% of all stocks, the highest level ever recorded. Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023.
It was once said that what was good for GM was good for America. Under Mary Barra’s leadership, the company embodies much of what’s wrong with the country. While GM is sitting pretty now raking in huge profits, the website Simply Wall Street warns that GM’s debt isn’t well covered by the money the company generates.
If the auto market blows up and GM again is forced to file for bankruptcy, guess who will be on the hook to bail out the company once more? Hint: It won’t be Mary Barra.