GM Bailout Reaped Uncle Sam A Return On Investment Ranging From 334% To 768%.

It is often said that "it all depends on how you do the accounting."

And that is often true.

But in the GM deal, Uncle Sam made out like a bandit.

On Monday, the federal government announced it had sold off the remaining shares from its$49.5 billion bailout of General Motors in 2009. But the $10.5 billion loss on paper obscures the massive total return on investment for the U.S. economy overall and American taxpayers in particular. As a new analysis from the Center for Automotive Research found, had GM and Chrysler failed altogether, the result could have been 4.1 million jobs lost across the U.S. economy in 2009 and 2010, with federal transfer payments and $105 billion in lost income and payroll tax revenue for the U.S. Treasury.

In its report, CAR examined two scenarios that showed Uncle Sam reaped a return on investment ranging between 334 to 768 percent. In the worst case, the failure of the Bush and Obama administrations to rescue GM and Chrysler led to complete collapse of the American auto industry and the death of its supplier network. In the "GM only" case, CAR's only assumption was that other automakers could not replace GM capacity and employment until 2011. As the full report explained, the payoff to American taxpayers for the $13.7 billion lost in the sale of shares of companies has been immense:

Our results show the U.S. government saved or avoided the loss of $105.3 billion in transfer payments and the loss of personal and social insurance tax collections--or 768 percent of the net investment. Additionally, 2.6 million jobs were saved in the U.S. economy in 2009 alone and $284.4 billion in personal income saved over 2009-2010.

Even more impressive are the results of the GM scenario which did not even require the assumption of shutting down the supplier sector or other automaker employment. The only assumption was that other automakers could not replace GM capacity and employment until 2011. In this case, the U.S. government avoided the loss of $39.4 billion in increased transfer payments and lost taxes in just two years: 2009-2010. This is 334 percent of the projected $11.8 billion of Treasury funds not recovered on the public's investment in GM. We should add once again that in this scenario, the U.S. economy avoided the loss of 1.2 million jobs in 2009 and the loss of $129.2 billion in personal income in 2009-2010.

The Center's assessment may actually understate the impact of deciding to "Let Detroit Go Bankrupt." (That is, the future Mitt Romney proposed not for the city but for the American auto industry.) Had President Obama refused to provide a lifeline to the GM and Chrysler in early 2009, the broader U.S. economy may have experienced an "Industrial Lehman Brothers Effect" that could have devastated the American manufacturing sector for decades to come. Older centers of the industry in Michigan, Ohio, Indiana and Illinois would have been gutted. Just as important:

Almost 600,000 existing GM and Chrysler retirees would have certainly seen their company pensions delayed and reduced (as was the case for Delphi salaried workers) and their retiree health benefits cancelled. The Pension Benefit Guarantee Corporation (PBGC) would have been overwhelmed.

But thanks to the Bush and Obama administrations, the Upper Midwest did not enter an economic death spiral leading to a permanent depression.

The $10.5 billion the Treasury ultimately lost on its GM shares, along with the $1.9 billion not recouped from Chrysler may well be the best investment Uncle Sam ever made.