Did the Auto Industry Rescue Pay Off?

ABC news June, 2011 estimate of how much it'll have cost after they finish selling the shares: c. $14 billion. Low-ball estimates figure 1,000,000 jobs that would have evaporated without the bailout. Many estimates figure significantly more than a million. So at $14 billion for 1 million jobs, that's about $14,000 per job that -- thanks to the auto industry rescue -- didn't evaporate overnight.

Whether that seems steep or not, there's more to consider. For instance, how much would the unemployment and other consequences would have cost us if we hadn't prevented those job losses? Obviously there'd be unemployment checks. Also food assistance and probably medicaid. Then there'd be the lost revenue from not having those jobs to tax. Any guess as to how much we collect from auto-industry worker income taxes in a year?

Unemployment is the easiest to very roughly estimate. Multiply the average weekly unemployment benefit by the average duration of getting unemployment and (even assuming that adding another million to the unemployed wouldn't up the average) you get a govt cost of somewhere in the $10 to $12 billion range for a million unemployed. Since at least a million workers would have lost their jobs if GM and Chrysler had collapsed, we can figure that unemployment alone would have cost at least in the neighborhood of $12 billion ... perhaps much more. That'd leave us just $2 billion to cover from the estimated cost of rescuing the auto industry. $2,000 per worker. For it to have not saved us money, the combination of what we collect from the average one of those workers in annual income tax plus what it would have cost in food/medical assistance would have had to have been less than $2,000. That seems very unlikely.

In the context of what it would have cost us otherwise, it sure seems the rescue paid off. We could have expected to pay at least as much -- perhaps significantly more -- if GM and Chrysler had gone under. And that's even without considering the possibility that such a collapse might have caused collapses in unrelated industries from a million more workers suddenly having less money to spend.