Will GM Spend Taxpayer Bailout Money on Overseas Operations?

SHANGHAI, CHINA, Nov. 16, 2009— -- At a meeting with President Obama Monday morning, Communist Party Secretary Yu Xheng Sheng told the U.S. president how well General Motors' Chinese division was doing.

"The business of GM in Shanghai is pretty good," Secretary Yu told the president. "By the end of October this year their sales has increased by 40 percent over the same period of last year. I think that the fantastic performance here in Shanghai is definitely a boost to their business in the United States."

"Absolutely," said President Obama. "I think they can learn from their operations here in terms of increasing sales back in the United States."

But some critics wonder if GM is a little too focused on its international operations.

Specifically, at a time when the nation's unemployment rate has soared to levels not seen in decades and GM is cutting thousands of U.S. jobs, the company's CEO is considering spending millions from its U.S. coffers -- fattened by $50 billion in taxpayer aid -- on its overseas operations, a possibility that has outraged critics and lawmakers.

"I don't think most Americans believe that when the taxpayer bailouts were happening it was intended for that purpose," said Rep. Anthony Weiner, D-N.Y. "It was intended to protect the American economy -- not take the money overseas."

GM today reported that it lost $1.2 billion in the third quarter, from the time it left bankruptcy protection through Sept. 30.

GM's Chief Executive Fritz Henderson recently announced that the bailed-out automaker might use its U.S. funds to help restructure its European unit Opel, noting that the financing agreements with the Treasury for the $34 billion of bailout funds already spent allow GM to spend any subsequently earned funds as its executives see fit. Some $16 billion remaining after its bankruptcy has strings attached.

In a world where funds are fungible, where GM has yet to repay the $50 billion bailout, and where GM only remains in existence because of those bailout dollars, critics argue sending these funds to Europe is essentially the same as sending taxpayer dollars overseas.

"We certainly need to be prudent about it, be very careful about it, but we do have the ability to run a global business," Henderson told reporters earlier this month.