Isakson: Give GM stock to taxpayers

WASHINGTON —- Since taxpayers are spending billions to bail out GM and Chrysler, U.S. Sen. Johnny Isakson of Georgia and other Republican senators think there should be some payback.

Isakson announced Tuesday he is co-sponsoring legislation that would require the Treasury Department to distribute shares of GM and Chrysler to every U.S. taxpayer within one year after the companies emerge from bankruptcy court.

The legislation, written by Sen. Lamar Alexander (R-Tenn.) and backed by other Senate Republicans, would also prohibit any more government spending to bail out automakers.

Isakson said in a statement that the measure “would get the government out of the American auto business and put this stock back in the hands of the American people.”

It’s just common sense, according to Isakson.

Do the math, though, and the idea makes a little less sense —- at least for now.

As part of the GM bailout, the Treasury Department will get about 60 percent of the company’s 610 million shares of stock. Divide that by the number of U.S. taxpayers —- about 120 million —- and every taxpayer nets about three GM shares.

At General Motors’ recent closing price of 75 cents per share, that means each taxpayer’s holdings would be worth $2.25.

“It’s probably better in terms of being a balm to make everybody feel good that they’re getting a piece of this,” said Jane Mutchler, an accounting professor and associate dean at Georgia State University’s business school. But “it’s a little bit like Monopoly money.”

Just because automakers’ shares are worth less than a lunch at McDonald’s doesn’t mean they won’t be worth more in the future, Sen. Alexander said. “Those shares might not be worth much at first, but put them away and one day they might contribute something toward a college education,” he said.

President Barack Obama has indicated the government’s stake in the automakers will be sold as soon as possible after the companies emerge from bankruptcy protection. Any proceeds, Obama has indicated, would eventually filter back to taxpayers.