Sen. Chuck Grassley made the following comment on the terms of GM's initial public offering of stock that were made public today.  Grassley is concerned about whether the taxpayers will be repaid for rescuing the automaker.

"The inspector general confirmed for me weeks ago that the GM initial public offering would need to clear a high bar to repay taxpayers.  The inspector general said GM stock would need to sell for an average of $133.78 a share to fully recoup the tax dollars spent to rescue the automaker.   The highest share price the former GM ever reached was $94.63 in 2000.  Today's filing says at least 365 million shares will be offered at a projected $26 to $29 each.  Short of a miracle, the initial public offering won't repay the taxpayers.  The onus is on the Treasury Department to come up with a plan to make sure taxpayers get their money in full."

A press release describing what Grassley learned from the inspector general follows.

For Immediate Release

Wednesday, September 22, 2010

Grassley Finds Out What's Needed to Make Taxpayers Whole in GM Bailout

WASHINGTON - Continuing to look out for taxpayers in the bailout of General Motors, Senator Chuck Grassley has secured an official determination that the U.S. government needs to sell all its stock in GM at an average price of $133.78 a share to fully recoup the tax dollars spent to rescue the automaker.

The highest share price the former GM ever reached was $94.63 in 2000.

The latest assessment comes from Neil Barofsky, the Special Inspector General for TARP, in response to a request from Grassley last month.  Grassley worked to establish and empower this inspector general in order to hold the government accountable for the use of bailout dollars.

"I didn't support the government bailout of the automakers, and I'll continue to work to see taxpayers repaid and to hold the Treasury Department accountable for the sale of the taxpayers' share of GM," Grassley said.

Earlier this year, the Iowa senator exposed the misleading claim by the Treasury Department and GM that the car company had "paid back" its $6.7 billion taxpayer-funded loan "in full, with interest, ahead of schedule.  In fact, the loan had been repaid by another taxpayer account.  Because most of the government's emergency loan to GM was converted to shares of stock during bankruptcy, that money can only be recovered if the government can sell its shares of GM at significantly higher prices than it is currently estimated to be worth.

Click to read Grassley's letter Barofsky and Barofsky's reply to Grassley.

Grassley Releases Report on Lack of Inspector General Oversight

at the International Trade Commission

WASHINGTON - Sen. Chuck Grassley of Iowa today released a new Government Accountability Office (GAO) report on the lack of Inspector General (IG) oversight at the International Trade Commission (ITC).  Although, the Inspector General Act requires that agencies appoint an IG to detect waste, fraud, and abuse, the ITC failed to fill the position for more than four years.  Instead, the GAO report found, ITC relied on "acting" and "temporary" appointments for most of the period between November 2005 and December 2009.  For 17 months during that time, ITC operated with neither an acting nor a temporary IG, according to the GAO report.

"Agencies need to understand that Inspector General oversight is not optional," Grassley said.  "The law requires that they have an IG on the job and that the IG be given the resources and access to information necessary to do the job.  The ITC needs to finish implementing the GAO's recommendations for corrective action as soon as possible to ensure that there is adequate oversight of the agency from now on."

GAO also found that the ITC failed to support the temporary and acting IGs with policies and procedures to ensure access to agency records.  The ITC failed to provide notice and coordination with the temporary IG on a criminal referral to the Justice Department.  And, the ITC kept the IG's budget flat while its own budget increased by 23 percent.

Grassley is ranking member of the Committee on Finance, with jurisdiction over international trade, and a long-time advocate for inspectors general.

The GAO report on the ITC is available here.

Sen. Chuck Grassley, ranking member of the Committee on Finance, today made the following comment on a report released from the Government Accountability Office, "Tax Debt Collection: IRS Could Improve Future Studies by Establishing Appropriate Guidance."  The report is available here.  Grassley has written to the IRS regarding private contractors for debt collection. The March 5, 2009, IRS response to Grassley is available here.  The May 6, 2009, IRS response to Grassley is available here.

"According to this report, the IRS used a flawed study to justify ending its contracts with private agencies to collect owed taxes that the IRS wasn't collecting on its own.  The IRS knew the study was flawed because the GAO told the IRS how to do the study.  But the IRS didn't implement the GAO's recommendations to fix the study, even though it agreed with them.  The IRS used the results from the defective cost-effectiveness study to defend its decision to terminate the use of private collection agencies, even though that wasn't the primary purpose of the study.

"Union advocates, including members of Congress, Obama administration officials and the taxpayer advocate, tried to tell the public that IRS employees could collect the tax debts cheaper and better than private employees.  Yet, the IRS' own information shows that the fledgling pilot program was returning money to the Treasury and that private employees' quality ratings were consistently higher than that of IRS employees.  Union supporters' successful disinformation campaign ultimately hurts other taxpayers, as private agencies were collecting dollars that the IRS wasn't and isn't going to collect anyway."

"The IRS used a poor study to secure a task it said it could perform but hasn't.   As of the most recent fiscal year, unpaid tax debts equal $328.1 billion. Only $120.4 billion of that amount is deemed potentially collectible and IRS is not actively pursuing $27.4 billion that it says is collectible. These are significant increases from when GAO first started tracking these numbers.  So, not only has the IRS made no progress in reducing unpaid tax debt, but also we're worse off every year."