Repairing The American Automobile Market

Investor’s Business Daily posted an editorial today about President Trump’s visit to Detroit to talk to auto manufacturers. The editorial reminds us of some of the policies initiated by the American government that have created problems for the auto industry. The editorial also suggests some solutions for these problems.

First, the editorial examines the history of CAFE Standards:

For those who don’t know, the federal government first imposed the “Corporate Average Fuel Economy” standard in 1975, in response to the government-caused energy crisis. The standard requires automakers to meet annual fuel economy targets based on the fleet of cars they sell in a year, or pay stiff penalties.

By the time the standards started to bite in the early 1980s — which forced a radical (and deadly) downsizing of the domestic fleet of cars — President Reagan had deregulated the oil industry, thus ending the energy crisis. And now, with fracking, the country is awash in domestic oil supplies.

But the CAFE standards persisted, and President Obama hiked them in 2009 and again in 2011. If left in place, cars will have to get an average 54.5 mpg starting in 2025 — less than eight years from now.

This was a thinly disguised effort by the Obama administration to force electric cars onto the market, since not a single conventional vehicle comes close to that mileage standard today.

This is just another example of the government interfering with the free market to the detriment of the American consumer.

The Standards were supposed to be reviewed in 2017, but the government, under President Obama, reneged on its promise:

Detroit signed on to this idiocy in 2011 in part because it reformed the existing CAFE regulations, but mainly on the promise that they’d have the chance to review and amend the standards in 2017. But just before leaving office, Obama’s EPA regulators reneged on their end of the bargain, locking the 54.5 mpg mandate in place without even a cursory review.

In a recent letter to Pruitt, the Auto Alliance — which represents Ford (F), GM (GM), Fiat Chrysler (FCAU), Toyota, Volvo and other carmakers — pushed him to allow the 2017 review to go on as promised, so they at least can make their case on why the 2025 standard should be eased. Trump announced his plans to do so on Wednesday at an event in Detroit.

The Standards did encourage auto companies to design cars that got better gas mileage. However, now it is time to let consumers make their choices as to what cars and what efficiency they want. The CAFE Standards have raised the price of cars for everyone and not really accomplished much. It is time to encourage auto makers to make cars that get reasonable gas mileage, but not hold them to unreasonable standards. The CAFE Standards need to go.

Checking The Integrity Of Our Elections

Yesterday The Detroit News posted an article about some problems with the Presidential Election in Detroit.

The article reports:

County clerk officials on Thursday released a memo to State Elections Director Chris Thomas that said 95 poll books from the 662 precincts weren’t available at the start of the canvass, which began the day after the Nov. 8 election. Five of those poll books, which contain the names of voters and ensure the integrity of elections, were never delivered to county canvassers and presumably remain missing.

The revelation comes atop other irregularities that have prompted a state audit. Among other issues, The Detroit News reported this week that voting machines registered more votes than they should have in one-third of all city precincts.

“I’m not happy with how Detroit handled this election at all,” said Krista Hartounian, chairwoman of the Wayne County Board of Canvassers, which certified the election.

“We had been seeing improvement, but this one was different. This one was off.”

Canvassers compare poll books with printouts from voting machines to ensure the number of people who signed in to vote match the number of ballots cast.

The article goes on to list other irregularities that occurred during the election. Please follow the link above to read the details.

The article continues:

The M100s, which are used in 55 percent of Michigan’s precincts, have a spotty reputation. In 2008, then-Oakland County Clerk Ruth Johnson, who is now secretary of state, urged federal officials to investigate after the optical scanners improperly counted 8 percent of ballots during testing.

“The same ballots, run through the same machines, yielded different results each time,” Johnson wrote to the Election Assistance Commission, an agency that administers federal payments to states to buy voting machines.

Johnson wrote that vendors blamed dust and debris inside the machines. A Michigan Senate Fiscal Agency report noted the machines still run on the Windows XP operating system, which Microsoft has not sold since 2008 and for which it stopped providing support and security updates in 2014.

I don’t know how much of this voter ID would cure, but it might be a step in the right direction.

It Is About Time Someone Said This Loudly And Clearly

Donald Trump gave a speech yesterday in Dimondale, Michigan. I don’t know how much of it the mainstream media will report, so I am posting some highlights. The full text can be found at Heavy.com.

Here are a few highlights:

…But to achieve this New American Future, we must break free from the bitter failures of the past – and reject the same insiders telling us the same old lies.

No group in America has been more harmed by Hillary Clinton’s policies than African-Americans. If Hillary Clinton’s goal was to inflict pain on the African-American community, she couldn’t have done a better job.

Tonight, I am asking for the vote of every African-American citizen in this country who wants a better future.

The inner cities of our country have been run by the Democratic Party for 50 years. Their policies have produced only poverty, joblessness, failing schools, and broken homes.

It is time to hold Democratic Politicians accountable for what they have done to these communities. It is time to hold failed leaders accountable for their results, not just their empty words.

Look at what the Democratic Party has done to the city of Detroit.

Forty percent of Detroit’s residents live in poverty. Half of all Detroit residents do not work.

Detroit tops the list of Most Dangerous Cities in terms of violent crime.

This is the legacy of the Democrat politicians who have run this city. This is the result of the policy agenda embraced by Hillary Clinton.

The only way to change results is to change leadership. We can never fix our problems by relying on the same politicians who created our problems in the first place.

…By contrast, the one thing every item in Hillary Clinton’s agenda has in common is that it takes jobs and opportunities from African-American workers. Her support for open borders. Her fierce opposition to school choice. Her plan to massively raise taxes on small businesses. Her opposition to American energy. And her record of giving our jobs away to other countries.

…Hillary Clinton’s plan would bring in an estimated 620,000 refugees in her first term – at a lifetime benefit cost of some $400 billion dollars, according to the U.S. Senate Immigration Subcommittee. She wants to be America’s Angela Merkel. By the way, for the price of supporting 1 refugee in the United States, we could support 12 in a safe zone in the Middle East.

The improved refugee screening standards I have proposed will save countless billions of dollars. We will invest a portion of the money saved in a jobs program for inner city youth.

The African-American community has given so much to this country. They’ve fought and died in every war since the Revolution. They’ve lifted up the conscience of our nation in the long march for Civil Rights. They’ve sacrificed so much for the national good. Yet, nearly 4 in 10 African-American children still live in poverty, and 58% of young African-Americans are not working.

…Michigan lost more than 1 in 4 of its manufacturing jobs since NAFTA. As you know, NAFTA was signed by President Bill Clinton. It was supported by Hillary Clinton. Right here, in this community, you’ve lost 1 in 7 manufacturing jobs since Bill Clinton put China into the World Trade Organization – another Hillary Clinton-backed deal. Detroit lost more than 1 in 3 manufacturing jobs following the NAFTA and WTO agreements supported by my opponent.

No industry has been hurt more by Hillary Clinton’s policies than the car industry. It’s been a total disaster.

According to the Bureau of Labor Statistics, before NAFTA went into effect, there were 285,000 auto workers in Michigan. Today, that number is only 160,000.

In 2014, GM announced plans to double its investments in Mexico by 2018.

In April 2016, Ford Motor Company announced plans to invest $1.6 billion constructing an auto plant in Mexico.

That same month, Fiat Chrysler announced 1,300 layoffs. Lear Corporation launched plans to build two new factories in Mexico.

…Look at the world before and after she became Secretary of State.

Pre-Hillary, in early 2009, Iraq was seeing a reduction in violence.

Libya was stable.

Syria was under control.

The group we know today as ISIS was close to being extinguished.

Iran was being choked by sanctions.

Now, fast-forward to present time.

After Hillary, here is what the world looks like:

Iraq is in total chaos.

Syria is in the midst of a disastrous civil war and a refugee crisis now threatens Europe and the United States.

ISIS has been unleashed onto the entire world.

Iran – the world’s top state sponsor of terrorism – has been put on the path to nuclear weapons, and was given a $400 million ransom payment, something which has now been confirmed after President Obama’s lies.

This is the legacy of Hillary Clinton: death, destruction and terrorism.

America deserves a better legacy. All of you deserve a better future. I am the change agent. Hillary Clinton is the defender of the status quo.

This speech reminds us of our recent history. It also highlights the fact that President Obama’s Administration has not been good for either the black or white community. The only people who have truly prospered under President Obama are the cronies that have been subsidized by the government–for example the green energy companies (some of which have gone bankrupt). President Obama has forced the closing of coal mines, and indications are that Hillary Clinton will continue in the same direction.

I have previously stated (and will continue to do so in the future) that Donald Trump is not a perfect candidate, but in this election cycle we do not have perfection. If he does what he says he will do in the speech he made yesterday, America will be better off. It is high time that Americans look at what forty or more years of Democrat control has done to some of our cities. If cities are a laboratory to experiment with economic policies, it is obvious that the economic policies applied have failed. I realize that there are multiple reasons for that, but the governing party has to share a large part of the responsibility. It is time for a change in our country and time for a change in our major cities. Donald Trump represents that change.

It’s Hard To Connect The Dots When Someone Keeps Erasing The Dots

On February 5th, The Hill posted an article by Philip Haney, who worked at the Department of Homeland Security for fifteen years. Mr. Haney begins his article reminding us of the unsuccessful attack on the underwear bomber in December 2009.

The article reports:

Following the attempted attack, President Obama threw the intelligence community under the bus for its failure to “connect the dots.” He said, “this was not a failure to collect intelligence, it was a failure to integrate and understand the intelligence that we already had.”

Most Americans were unaware of the enormous damage to morale at the Department of Homeland Security, where I worked, his condemnation caused. His words infuriated many of us because we knew his administration had been engaged in a bureaucratic effort to destroy the raw material—the actual intelligence we had collected for years, and erase those dots. The dots constitute the intelligence needed to keep Americans safe, and the Obama administration was ordering they be wiped away.

After leaving my 15 year career at DHS, I can no longer be silent about the dangerous state of America’s counter-terror strategy, our leaders’ willingness to compromise the security of citizens for the ideological rigidity of political correctness—and, consequently, our vulnerability to devastating, mass-casualty attack.

The article explains that shortly before the December 2009 attack, Mr. Haney was asked to delete or modify several hundred records of individuals tied to designated Islamist terror groups like Hamas from the important federal database. There was a scrubbing of potential Muslim terrorists from the database in the name of political correctness. (I believe that this was the result of the Muslim Brotherhood‘s infiltration of our government at some of the highest levels. For further information, see Center for Security Policy’s series on the infiltration of the Muslim Brotherhood into the American government.) There was also a ban on entering new data.

The article further reports:

A few weeks later, in my office at the Port of Atlanta, the television hummed with the inevitable Congressional hearings that follow any terrorist attack. While members of Congress grilled Obama administration officials, demanding why their subordinates were still failing to understand the intelligence they had gathered, I was being forced to delete and scrub the records. And I was well aware that, as a result, it was going to be vastly more difficult to “connect the dots” in the future—especially beforean attack occurs.

As the number of successful and attempted Islamic terrorist attacks on America increased, the type of information that the Obama administration ordered removed from travel and national security databases was the kind of information that, if properly assessed, could have prevented subsequent domestic Islamist attacks like the ones committed by Faisal Shahzad (May 2010), Detroit “honor killing” perpetrator Rahim A. Alfetlawi (2011); Amine El Khalifi, who plotted to blow up the U.S. Capitol (2012); Dzhokhar or Tamerlan Tsarnaev who conducted the Boston Marathon bombing (2013); Oklahoma beheading suspect Alton Nolen (2014); or Muhammed Yusuf Abdulazeez, who opened fire on two military installations in Chattanooga, Tennessee (2015).  

It is unimportant whether the problem is in the White House or the State Department–what is important is that the policy needs to change quickly. I have personally met two former CIA agents who had formerly briefed our military and State Departments who have now been blocked from briefing because they told the truth about Islamic terrorism. If our nation is to survive, we need to be aware and knowledgeable about the threats we face. Sticking our heads in the sand and erasing the evidence will result in American deaths.

Sometimes I Am Simply Amazed

Vice-President Biden has done it again. Breitbart is reporting a comment made by Vice-President Biden at a memorial for the late Jim Brady, President Reagan‘s Press Secretary who was shot during an attempt to assassinate President Reagan.

The article reports:

According to The Washington Times, Biden stressed that the push for more gun control is not over and said he prays a new voice for the gun control movement emerges soon:

What we need is another Jim Brady, who has the skill and the ability to convince those who are afraid, who walks the halls of Congress, to step up and do what they know is right. One will come along. It will happen. I pray God it is sooner rather than later.

I am sure that the Vice-President made the comment without thinking through the implications of his statement, but can you imagine the uproar if a Republican had said something similar.

The gun control debate does not need any more victims–high profile or otherwise. What the gun control debate needs is a respect for the U.S. Constitution and the Second Amendment. In terms of crime rates, statistics show that since Detroit relaxed its gun laws, crime rates have gone done. Muggers are less likely to mug grandma if she might be packing. Criminals are not likely to obey restrictions on gun ownership.

The Statistics Are Consistent

Hot Air is reporting today that crime rates have dropped in Detroit since the population started arming itself. Detroit PD chief James Craig has spent the past six months encouraging locals to arm themselves.

The article quotes Chief Craig:

Detroit has experienced 37 percent fewer robberies in 2014 than during the same period last year, 22 percent fewer break-ins of businesses and homes, and 30 percent fewer carjackings. Craig attributed the drop to better police work and criminals being reluctant to prey on citizens who may be carrying guns.

Criminals are getting the message that good Detroiters are armed and will use that weapon,” said Craig, who has repeatedly said he believes armed citizens deter crime. “I don’t want to take away from the good work our investigators are doing, but I think part of the drop in crime, and robberies in particular, is because criminals are thinking twice that citizens could be armed.

“I can’t say what specific percentage is caused by this, but there’s no question in my mind it has had an effect,” Craig said.

This is not a unique situation. Generally speaking, civic minded citizens are the people who obey gun laws–criminals do not. The stricter the gun laws the more defenseless the citizens are. The thought of an armed victim does actually discourage some criminals.

 

Yes, We Are Bailing Out Detroit

Yesterday the Daily Caller reported that despite denials by the White House, Washington is bailing out Detroit. The bailout of $100 million is being described as “blight remediation.”

The article reports:

…it (the $100 Million) allows the city’s new managers to reshuffle more cash into the city employees’ pension funds, which were looted by city and union officials for several decades.

The stealth bailout was exposed by the Detroit Free Press, which said the $100 million would be taken from the so-called “Hardest Hit Fund.” That fund was created by the administration in 2010 to counter the disastrous implosion of the federally-inflated real estate bubble.

Evidently the “Hardest Hit Fund” had been drained over the years by unconventional practices, including the periodic payout of funds to employees in years when the funds’ value were boosted by Wall Street investments.

Keep in mind that the stock market has been in fairly good shape over the last few years due to the influx of money from quantitative easing. That should have kept the funds viable had they been handled properly.

The article further reports:

Detroit has been under Democratic control since the departure of Louis Miriani in 1962, when the city’s residents had the nation’s highest per capita income.

The city crashed in the 1970s, amid racial acrimony and incompetent management at the city’s vital auto plants.

Many other cities and states face severe pension difficulties. They’re led by Chicago and Los Angeles, where Democratic control has boosted the pensions of government employees.

Michigan’s Republican governor, Rick Snyder, has promised to send $350 million in state funds to the city.

It matters who runs your city. Part of the problem is unfunded liabilities (large pensions promised to union government employees). In order to get our cities and states under financial control, we need to make sure that the promises we make to our municipal and state employees are paid for at the time the promises are made. The federal government can print money–states and cities cannot.

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Volkswagen Employees Have Rejected The United Auto Workers Union

The Detroit Free Press posted an article today about the vote by workers at the Volkswagen plant in Tennessee. The workers voted against the United Auto Workers Union (UAW).

The article reports:

Volkswagen has said it favors the creation of a German-styleworks council,” which gives workers a voice on a variety of product and other decisions. Under U.S. law, a union must represent employees for a company to form a works council.

But Snyder voted against the UAW because, he said, Volkswagen is the best employer he’s ever worked for.

“How is somebody here really supposed to know what a works council is going to be like?” Snyder said. “You can have somebody tell you one thing and somebody tell you another thing. Nobody really knows.”

I think that is a really smart statement. The UAW has played something of a role in the bankruptcy of Detroit. They are not totally responsible, but they are not totally innocent either.  I think this vote represents a realization by the workers that they have been treated fairly by the management of Volkswagen and they do not want to risk their current benefits. Unions have traditionally had a role to play in American industry, but many of the benefits of unionization have been taken over by the government. The government now monitors working conditions, waste disposal, and benefits–all things the unions were originally involved in. Unfortunately the unions have become political organizations with overpaid leadership that lives far above the living standard of union members. They have become no different than the corporations and corporate fat cats they continually criticize.

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Stupid Quote Of The Week

Quoted on Fox News Sunday this week in reference to the bankruptcy in Detroit:

Steven Rattner, who is the former car czar for Detroit, wrote a story this week and he says that he believes — an essay — that he believes Washington should help. Let’s put on screen what he said.

He writes, “The 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually, Congress decided to help them.”

I have more than a few problems with that statement. The remaining residents of the Motor City are responsible for Detroit’s problems–they voted for the officials that made the decisions that brought the city to this point.

On Friday, Rich Galen posted an article at Townhall.com that pointed out the following:

But it’s not the unions’ fault. It is the fault of the elected officials — Democrats in Detroit — who didn’t have the guts to say “No” to their largest voting bloc.

It has been said that the difference between public and private unions is this: Private union leaders know that if their demands become too high, the company will go out of business and everyone will lose their job.

Public unions, until recently, just kept demanding, and getting, more and more while producing nothing new in terms of services they render. Union pensions tend to be so generous that taxpayers end up paying almost full wages to three or four workers, only one of whom is still actually working, to do exactly the same job that one person had been paid to do in an earlier age. According to some estimates, retirees outnumber active workers 2-1.

The problem is unfunded liabilities. If workers pay a small percentage of their salaries into a pension fund, that money can be set aside for the future. If workers are not required to contribute anything to their future pensions, those pensions become an unfunded liability and eventually overwhelm the system.

The bankruptcy of Detroit was the result of bad fiscal policies, raising taxes in the hopes of collecting more money (it doesn’t work–see the Laffer curve), and a population fleeing increased crime and less effective law enforcement. All of those things are avoidable–none of them are natural disasters.

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Detroit Goes Under

The Washington Examiner is reporting today that the city of Detroit is filing for Chapter 9 bankruptcy.

The article reports:

According to the bankruptcy filing, Detroit now has more than $18 billion in unfunded liabilities. The city’s population has dwindled from 1.85 million in 1950 to under 700,000 today, and its tax revenues have shrunk accordingly even as the average tax burden has risen to the highest level of any town in the state. A deficit estimated at $237 million in June was too much for the once-mighty industrial town to handle.

A website called Pensions & Investments posted the following on July 11:

Mr. Orr (Kevyn Orr, the city’s emergency fiscal manager) has proposed that city employees with less than 10 years of vested service be taken out of the defined benefit plan and be moved to 401(k)-style savings plans.

There’s no way employees or unions will bargain away pension benefits, said Michael VanOverbeke, a lawyer for the general employees retirement system, after the meeting. Michigan‘s constitution prohibits changes in accrued pension benefits, Mr. VanOverbeke said. Mr. Orr has said that a bankruptcy filing would negate the state protection.

This is a problem a lot of cities, states, and municipalities are going to be faced with in the very near future. For years unions have negotiated contracts that included retirement plans that were totally funded by taxpayer money. As private companies have converted to 401k plans where employees contribute to their retirement, public employee unions have not followed suit. The bankruptcy of Detroit is not really a surprise to anyone. You can’t continue to spend more than you take in without running out of money at some point. As the jobs left Detroit, the city had no way to make up the lost income. It attempted to raise taxes to generate income, but that simply drove people out of the city.  It’s just a shame that the leadership of the city couldn’t have done more to avoid the problem.

 

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The Search Continues

CBS Detroit is reporting that Federal agents believe that they are about to uncover the remains of former Teamsters Union Boss Jimmy Hoffa. Hoffa disappeared in July 1975.

The article reports:

CBS News has confirmed a suspicious concrete slab was retrieved by investigators from the Oakland Township field where they have been digging for any sign of Hoffa. It’s too soon, however, to know whether the slab is anything more than part of an old foundation for a barn.

The dig — the latest in what’s been nearly a 40-year search — is reportedly the result of extensive FBI interviews with former mobster Tony Zerilli.

As someone who was living in New Jersey during the1960’s, this story amazes me. The rumor in New Jersey was that Jimmy Hoffa was buried under the goalposts in Giants stadium. I guess we are all about to find out whether that rumor is simply not true.

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How Much Are The Taxpayers Actually Going To Lose In The General Motors Bailout ?

Today the Detroit News posted a story about the General Motors exit strategy announced today by the Treasure Department.

The article reports:

The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday. GM shares jumped sharply on the news and were up 6.7 percent to $27.10, or $1.59.

The U.S. Treasury — after more than a year of refusing to say when it might start selling its remaining stake in GM — said it will announce a written plan in January to shed its remaining 300 million shares over the next 12 to 15 months — likely in a series of small stock sales.

The Treasury’s move is intended to minimize the impact of the stock sale on the share price.

The article states that there will be serious government losses in the General Motors bailout:

The exit plan may prove to be a boost to GM’s lagging stock price and to some car buyers, who have avoided GM because of the “Government Motors” label.

Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion.

Bailing out General Motors was not a good idea. A controlled bankruptcy would have been a better idea. What the bailout did, other than cost the taxpayers serious money, was to protect the unions and ignore what was good for the company in the long run. Even after the amount of taxpayer money spent and the losses taken, there are no guarantees that General Motors will exist in five years.

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What Are They Doing To My Car ?

When I bought my latest Mustang convertible two years ago, I planned on keeping it forever. I added a number of accessories that I normally would not put on a car. Detroit has just convinced me that I made the right decision.

Yesterday the American Spectator posted an article about what Detroit is about to do to the Mustang. It’s not pretty.

The article reports:

Ford‘s new “Evos” concept features gull-wing doors, a rounded, aerodynamic body, and a smaller design clearly inspired by Europe. When Ford officially unveils its new Mustang in 2014, company insiders insist it will embrace this visual transformation.

More pertinent than its changing look will be its changing feel. Rumors abound, to the chagrin of drag racers, regarding the introduction of independent rear suspension. The five-liter engine supposedly morphs into a two-liter one. There is even talk of a hybrid Mustang.

This is the rendering of the new Mustang from their Facebook page. It took me a few years to get used to the look of the 2010 Mustang, but at least it looked like a traditional Mustang. This just doesn’t look right. And just for the record–my convertible is a six-cylinder. On the open road, it gets about 24 miles per gallon. If America would develop her own energy resources and stop cowtowing to OPEC, that wouldn’t be a problem.

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Where Is The Accountability To Taxpayers ?

Breitbart.com is reporting today on where some of the stimulus money went.

The article reports:

A portion of an $11 million grant to help 400 low-income Detroit citizens purchase “business attire” for job interviews helped exactly two people, a city audit reveals.

The audit revealed that the clothing program was supposed to help 400 people. Instead, two people were helped. The people asking for the clothing were required to have a job interview scheduled. Part of the audit included an investigation into the purchase of $182,000 worth of high-end furniture for a department office. In 2009, the department received more than $11 million in stimulus funding and created a service center. 

The article reports:

The center, at 1970 Larned, included the Customer Choice Pantry, the New Beginnings Clothing Boutique and a call center that had the capacity to service 60,000 families in need. The boutique was to provide business attire for low-income residents for job interviews. 

This is sad. The money could have been used to help people out of poverty. Instead it is used to build government infrastructure. Until we have a poverty program that has incentives for government bureaucrats to get people out of poverty instead of building their own facilities and job security, we will never end the poverty cycle.

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An Interesting Perspective On The Auto Companies Bailout

Today’s Wall Street Journal posted an article on the auto bailout and the cost to American taxpayers. The article mentioned the fact that in order to get taxpayers’ money back, shares of General Motors will need to rise to $53 from their current $26 to recoup the Bush-Obama investment. But that’s not the real cost of the bailout.

The article reminds us:

However things shake out, it will be only a fraction of the true costs in precedent and politicized investment. The bailouts signaled that major companies with union labor are too politically big to fail and undermined confidence in the rule of law. More troubling, the conversion of Detroit from an indirect to transparent Washington client continues to distort the auto market.

Last November, Mr. Obama’s enviroteers tightened fuel economy regulations again, jacking them up to 54.5 miles per gallon by 2025—well beyond the standards Congress set in 2007. The auto makers agreed despite their misgivings because as wards of the state they had no political choice. So Chrysler, GM and Ford will still be forced to make cars that dealers struggle to sell profitably, only many more of them.

The rule of law was not followed in the bailouts, and that will create problems for the companies in the future.

The article concludes:

The point is that the auto bailout isn’t an example of enlightened government revitalizing an industry after a market failure. It is a bailout in the wake of failed government policies and bad management that may keep going and going as Washington does whatever it takes to make sure Detroit keeps doing its political bidding.

Government meddling in the private sector is never a good idea.

 

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Even The United Auto Workers Union Is Struggling !

Red Volkswagen Bug

Image via Wikipedia

A website called thetruthaboutcars.com posted a story on Thursday about the financial situation of the United Auto Workers Union (UAW).

The article points out:

In many ways, the UAW resembles the companies it opposed for so long. The UAW is America’s richest union. One of its biggest assets is its strike fund, which stood at $763 million at the end of 2010. If push comes to shove, a union is as strong as its strike fund. The trouble is: The UAW spends more than it takes in. Increasingly, the union has to dip into the strike fund, the Reuters report says. According to government filings, the UAW liquidated $222 million of investments from 2007 to 2009 to cover the shortfall between expenses and revenue.

The article has charts that illustrate the financial problems of the UAW in recent years. One thing mentioned in the article is the fact that the UAW membership fees have dropped to $30 a month. At the same time, the union is having to spend a great deal of money on organizing as some car manufacturers are no longer in Detroit and are no longer unionized.

A Reuters new story reports:

“Volkswagen AG is paying newly hired workers at its Chattanooga, Tennessee plant $14.50 per hour. That is almost exactly what a second-tier UAW worker would make in Detroit. In a sign of demand for jobs at that pay level, the Chattanooga plant had 85,000 applications for more than 2,000 jobs. VW workers have been promised $19.50 after three years on the job. That is just above the $19.28 per hour maximum that entry-level workers at GM would make over the term of the four-year contract now before workers for ratification.”

That is not good news for the future of the UAW.

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The Weekend In Chutzpah

CNS News posted an Associated Press story on a Labor Day Rally held in Detroit yesterday.

The article reports on the President’s statements:

I’m going to propose ways to put America back to work that both parties can agree to, because I still believe both parties can work together to solve our problems,” Obama said at an annual Labor Day rally sponsored by the Detroit-area AFL-CIO. “Given the urgency of this moment, given the hardship that many people are facing, folks have got to get together. But we’re not going to wait for them.”

“We’re going to see if we’ve got some straight shooters in Congress. We’re going to see if congressional Republicans will put country before party,” he said.

My first thought upon reading that quote is “How come only the Republicans have to put country before party?” Up until January of this year, the President held majorities in both the House of Representatives and the Senate. It is rather disingenuous on the part of the President to accuse the Republicans of obstructing his programs. For the first two years of his administration, they couldn’t have blocked anything if they had wanted to. Also, during the time, Congress never even bothered to pass a budget.

The rhetoric at the rally did not lend itself to cooperation between the political parties. This is a quote from Teamsters President Jim Hoffa who spoke at the rally:

“President Obama, this is your army. We are ready to march. Let’s take these son of b*****s out and give America back to an America where we belong.”

Tacky, over the top, but not really all that unusual. However, if the President truly wants bipartisanship, he does need to tone down his own rhetoric. Everything that has ever gone wrong in Washington is not the Republicans’ fault, and negotiations cannot be successful if the President begins with that premise.


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