President Obama announced today that General Motors is now authorized to offer low interest auto loans to new car buyers that will be paid back using payroll deductions collected by the IRS. The government will fund the 15-year term loans at current 1-year T-Bill rates (about .45% APR in January) and collect the car payments by deducting directly from payroll wages, "just like your Social Security taxes," said Treasury Department spokesperson, Aria Calda.
When asked how the government could give such an advantage to GM and not fund virtually interest free loans to Ford buyers, Ms. Calda replied simply, "We own GM. Why should we help Ford? After all, we have a duty to taxpayers to find responsible ways to recover our eleven billion dollar investment. And when you look closely, you'll see that this is a responsible way for us to use new government funds to pay back our old cash invested; and all because of the failed policies of the prior administration." When asked what this new program had to do with a "prior administration", Ms. Calda added, "I'm not sure, but I was told to end all potentially embarrassing policy announcements that way."
And what do car buyers think? "Dis awesome," said Riscul Rau while waiting in a downtown Gary, Indiana, GM showroom. As his bright yellow Escalade with gleaming 28" Dub chrome "spinner" wheels was delivered out front, the 23-year-old dishwasher Rau added in his heavy Romanian accent, "It Godsend for me and my 6 childreen. We no could afford loan on '94 Astrovan, but den sales guy say we get new Escalade."
Asked about the payroll deduction feature of the program, Rau added thoughtfully, "Dey already take income and old people tax, but wis 15-year car loan and de government modifications to my home mortgage, I maybe can afford it."
When pressed about his poor credit history, Rau snorted, "What difference I see? Sales guy say I no have liability to owe car loan if I lose job or change mind or want different color! And why not I get same interest rate as Chinese government?"
He's right, of course. China is the largest holder of U.S. T-Bills, lately the primary source of government program funding. And Ed Whiteacre, GM Chairman, having just heard about the new loan program from CNN, said it is his understanding that these new car loans have no personal liability attached.
"Now that should really boost sales," said the giddy Whiteacre. The relatively new GM Chairman and former CEO at AT&T is famous for admitting after his hiring by GM that, "I don't know anything about cars." When asked why he didn't know about the new loan program in advance, Whiteacre said, "Does it matter? Our largest shareholder communicates directly with upper and middle management and the Board and I mostly enjoy the buffet at our Board meetings. It's a win-win."