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The Real Problem With Cash For Clunkers

Submitted by Matthew Gagnon on Sun, 08/09/2009 - 21:15
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This morning on Meet the Press, Erin Burnett brought up an argument about the cash for clunkers program - an argument that opponants of the program have not effectively made to this point.

Most people who argue against cash for clunkers have made general points about the absurdity of the government paying consumers for junk cars, the inherent unfairness of subsidizing new car purchases for often middle and upper middle class citizens, and of course the wasteful nature of the program.

But there is a larger point that is much more important.

No Bailout Please, Part 2

Submitted by kmorrison on Tue, 12/09/2008 - 21:05
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Yesterday's article Oppose the Auto Bailout was not intended to be anti-union or anti-auto company, it's simply the opinion of an old fashion cheapskate. If the government is going to spend taxpayer dollars they need to ensure that those funds are not being wasted. There has been little effort to explain why pumping money into failed businesses will fix that failed business model. Voters should contact their lawmakers and let them know they will hold them responsible if they give automakers billions of taxpayer dollars only to see those business collapse in the future.

Contact Your Senator

Contact Your Congressman

Similar sentiments we're expressed by Senator Mitch McConnell (R - KY).

U.S. Senate Republican Leader Mitch McConnell made the following remarks on the Senate floor Tuesday regarding proposed auto legislation: “The auto industry is vitally important to our nation’s economy and it is vitally important to my home state of Kentucky. This is not in dispute. The question before us is how to reverse the decline of some of these auto manufacturers after decades of complicity between management and labor. “I understand congressional Democrats sent a revised proposal to the White House late last night. We will reserve our judgment until we see the latest text. But the proposal we saw yesterday afternoon fails to achieve our goal of securing the long-term viability of ailing auto companies. “I want to support a bill that revives this industry. But I will not support a bill that revives the patient with taxpayer dollars yet doesn’t secure a commitment that the patient will change its ways so future help isn’t needed. “To do so would be a betrayal of the millions of hardworking taxpayers who are not at fault for the troubles in the auto industry. And it would be unfair to the millions of Americans who depend on these companies.

No Auto Bailout Part 2

Auto Worker Compensation

Submitted by willamettevalley on Fri, 11/21/2008 - 05:39
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[wages.jpg]

Found graphic here.  Another graphic here.

Why should we tax workers averaging around $30/hr. in wages and benefits in order to bailout a company who can't keep labor costs under $70/hr.?  The unions have made the Big 3 inflexible and over-burdened with unfunded pension and health insurance costs. The businesses were hurting so bad, the credit crunch just sped up the inevitable day of reckoning.

I write more about this subject on my blog.

To Bail Out, or not to Bail Out?

Submitted by SteveB on Sat, 11/15/2008 - 07:20
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Crossposted at http://rockefellerconservative.blogspot.com/

 
American Cotton Oil Company, American Sugar Company, American Tobacco Company, Chicago Gas Company, Distilling & Cattle Feeding Company, Laclede Gas Light Company, National Lead Company, North American Company, Tennessee Coal, Iron and Railroad Company, U.S. Leather Company, United States Rubber Company, General Electric.

How many of these companies sound familiar? Other than GE? Probably not too many, yet all were considered the pinnacle of American business when the Dow Jones Industrial Average was first published in 1896. Where did these companies go? Some merged with other more successful companies; some changed their business model so drastically they ceased to be the same company; others simply died. Capitalism has a way of dropping the deadwood and elevating what works.

This is incredibly apropos as the government weighs the advantages and disadvantages of bailing out the auto industry. Or to be more precise Detroit, as much of the auto industry is doing just fine, thank you very much. One only needs to travel a few hundred miles south to Alabama to see the proof. The Mercedes-Benz plant in Vance, Alabama, for example, announced it would double its production three years after opening; and Honda had a $450 million expansion in Lincoln, Alabama, that added another 2,000 jobs. For each job created inside an auto plant as many as eight are created in businesses outside.

Why are foreign auto makers flocking to the American South? First of all there is a readily available work force with the population in some southern states expected to grow as much as 40% over the next few decades- and it is nonunion as well. Companies are drawn to the South where there are no mandatory unions and where workers have resisted joining voluntarily. In addition to great work force potential, the local governments realize what a boon the car industry can be for their states. They offer hundreds of millions of dollars in incentives, such as tax abatements, site preparation and employee training.

Companies like Honda, Toyota and Mercedes-Benz are proving that if you make a quality product people will buy it. And states like Alabama are showing how governments can work with business to promote growth that is beneficial to state and company alike. What we need are more American companies performing like this. We need the next generation of Henry Fords out there to make the leap into lighter and more efficient cars, even the holy grail of alternative power vehicles. It is possible; but only if we allow the marketplace to turn the page on the past.

So weshould think long and hard before we decide to bail out Detroit. Are we simply giving a hand out to a modern day Laclede Gas Light Company? Shouldn’t we let capitalism work and let the strong and well run companies survive while those that refuse to adapt to the changing economy and world go the way of the gas light?

 

Not so happy motoring: A challenge for McCain's Michigan-Ohio strategy

Submitted by Ironman on Wed, 07/02/2008 - 20:12
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Let's face it, with headlines like this it's no wonder the "wrong track" number and the level of consumer confidence is abysmal.

GM shares plunge on bankruptcy fears

The company faces so many problems, a Merrill Lynch analyst says, that bankruptcy isn't out of the question. Here's why it also may be unlikely.

Now for all you free market Ayn Rand types, this is a big deal.  The ripple effect of such an event would be massive and unpleasant. And after the Fed's weekend rescue of Bear Stearns it would be hard to explain to working people letting this place go toes up.   

Now I have no particular brief for the management, the shareholders or the UAW, whose chronic myopia led to this debacle. But let's be real, were this to happen the Bush adminstration would be blamed. 

In 2006, the President said the car companies needed to manufacture "a product that's relevant" and that his administration has discussed new fuel technologies with the nation's top two automakers. I have no idea what the Bush team has done to assist Detroit in this effort, although I would suggest this deficiency exceeds their abysmal message delivery. 

So, now that a GM bankruptcy is being bandied about, what does it mean for John McCain considering he MUST win either Ohio or Michigan? (No one since WWII has won without winning one of the two; the only time Ohio voted for a loser was in 1960 when JFK won Michigan).

*It means he must add an industrial agenda message along with Iraq.

Stating as Mac did in MI during the primary "most of these jobs aren't coming back" is accurate, but dismissive. At this point, a candidate who has a credible plan to save what's left of the U.S. auto industry is what is needed.

Promoting NAFTA is not the answer to this problem..

* It means he must find a decisive way to break with Bush economic policies

Perhaps Gore or Kerry's economic agenda would have accelerated the decline. For this region, talking up capital gains taxes et al is going to seem simply off topic.  Mac is going to have to put something on the table here and now --a specific policy item that Bush didn;t do for this industry that he will.

I would suggest that the "Drill Now" message is likely to be well received in these places. Clearly the domestic auto industry is not ready for $5/gallon gasoline. But more is needed than the refrain of "job retraining" and "supplemental umployment benefits". We are not going to outbid Mr. Hope & Change on who can throw money at the non-working. 

We are facing a Perot style economic situation with a Perot style angry electorate---the sort of voters who cast 26-29% for Perot in some rural/exurban OH & MI counties in 1992.

We need to emulate the Perot antiestablishment approach both in manner and message.  Otherwise the voters will simply conclude that we are facing an immediate problem, and with neither candidate offering a credible solution, default back to anti-Bush voting.

 

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