When the new energy bill mandating higher CAFE ratings came out last December, it didn't offer automakers any kind of financial assistance to meet those goals. Since then, we've been treated to a parade of industry types wailing that with times so bleak, CAFE will kill Detroit unless the government bribes assists the domestics with following the law developing more efficient cars. Perhaps sensing John McCain's weakness with the industry, Senate Democrats are rushing to position their party to take advantage of the now free-floating "bailout vote." The Detroit News reports that Democrat leadership has agreed to support $6b in loan guarantees to domestic automakers, and is considering a further industry stimulus for plant retooling. All told, the package will total some $25b in loan guarantees that would cost taxpayers $3.75b. Tellingly, $300m of the initial $6b is earmarked for advanced battery development. If that sounds familiar, that's because it's a pretty handy preemption of John McCain's "Project Lexington." And since McCain seems happy to stick to his Nancy Reagan (just say no!) on bailouts, Obama and the Dems are going to go after the weird industry-worker alliance that wants bailout. It's populist, it's patriotic, and (post-Bear, Fannie and Freddie) it's principled. Best of all, it only costs the taxpayers a few billion. Game on!
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Sounds good to me. Less than we spend on Iraq for two months to shore up the single most important industry in the US.
Add a rider that requires new management and you’ve got a great package.
Obama has solved the World’s Energy Crisis!!!!!
July 31, 2008
Obama Energy Plan: Fill Tires Not Oil Tanks
It appears we can add automobile fuel efficiency and oilfield recovery forecasting to the already extensive Areas of Obama’s Sudden Expertise list.
Speaking Wednesday at a Springfield, MO campaign event, Obama explained the folly of opening restricted offshore waters to oil and gas drilling:
“We could save all the oil that they’re talking about getting off drilling if everybody was just inflating their tires and getting regular tune-ups. You’d actually save just as much.”
You know we can throw alot of dirt towards Obama but the Republicans who will be leaving us soon have created a real mess too.
Wish there were some good alternatives to the clown parade we have in Washington now and who want to join the Washington club next.
Sounds odd that spending money to assist GM, Chrysler, and Ford might do more for protecting our country than any money spent in Iraq.
Well, not that odd really, assuming you’ve been REALLY paying attention.
If da gobernator can (rightfully) fire part time state employees and drop an additional 200,000 state employee’s wages to the Fed Minimum wage amount while the dolts in Sacramento figure out how to pass the state budget, I see no reason why WE (it’s our money anyway) can’t demand any LOAN is charged at 20% interest to the “leaders” of the 2.8. They can then decide to take the loan from us, or from B of A.
If these companies need to borrow money from us, I see no reason to not charge credit card level interest rates.
These “government backed loans” if they occur will be yet another boondoggle by our moron “leaders”, does anyone really think the loans will be paid back in full by the companies, what if they don’t pay them? Us taxpayers suckers will end up paying the banks. What is Ford going to use for collateral? They have nothing. I think enough Americans will be appalled by this (let’s hope so), that they won’t consider buying a car from the 2.8. I know I won’t buy anything from the 2.8. And where is talk of the top management taking pay cuts?
This is bad. It is unequal protection under the law, because the auto manufacturers are part of the “special people” category (in some congresspeoples’ minds).
It’s time to let the old guard fight and prove it has the will and ingenuiety to survive and thrive, or let it die, wither it’s a death of old age or a death of its own suicidal accord.
I am going to write my congressmen. No bailouts for private firms; it will simply encourage bad management, bad products, and bad service in the future.
If we bail out the auto companies, maybe we should also give money to the oil companies “just in case” they have trouble in a couple years. Or mabye we can give a free business to everybody who wants to open one. What about the Steak and Ale and Bennigan’s restaurant chain, who just closed their doors? I just had a Bennigan’s steak last week, and shared a “Death By Chocolate” with a lovely lady friend. We should give them a bailout too!
Any company paying excutives multi-million dollar salaries shouldn’t have my money.
Damn, I don’t like either candidate’s ideas.
The funny part of all this is what will the few whiners who think the Japanese taxpayers paid for the hybrid technology think if we taxpayers pay for battery research for our tired old companies?
Maybe we should have term limits on companies. After 100 years they have go out of business:-) This would free up resources for new companies with new ideas.
Obama could use a Michigan in this election.
Billions for defense, not one cent for bailouts.
The Detroit 3 are too important for the political system to ignore, so some kind of Federal assistance is inevitable. The amounts contemplated are modest by Federal standards, and as a percentage of our annual economic output. Federal guarantees should definitely require a change of Board of Directors for any company taking the help. In turn the new BOD must assess and adjust the composition of management teams. It’s not realistic nor even desirable to have the Feds choose who should manage these companies.
Nevertheless, for everyone who objects to assistance (what’s on the table now really isn’t a “bail-out”), there is a far easier way to move these companies into viability: buy their best products. In the volume classes. There will still be a couple million pickup trucks sold in the US this year. Buy them from GM, Ford or Chrysler. If you don’t like Federal programs, there’s no reason whatsoever to by a truck from Nissan, Toyota or Honda. In the market for a mainstream sedan? The differences between a Malibu and a Camry or Accord are marginal and are arguably in favor of the Chevy. The million or so Americans who are going to buy a Camry, Accord or Altima/Maxima can be equally served by a Taurus, Malibu or Fusion. Is that Lexus, Mercedes, Infiniti or BMW really necessary when you can get a Cadillac? Cobalt, Focus, HHR over Corolla, Civic and even Prius. Do you have to buy that RAV4 when an Escape or Escape Hybrid will equally serve your needs? Are Americans willing to put aside notions of “what’s cool” in order to avoid a market intervention? The psychology of brand affinity and damage done to it is well-understood, but Americans are going to pay for the destruction of the Detroit 3, one way or another. It’d be much better to get a nice car in the deal and avoid the inefficiencies of market intervention, or the consequences of apathy, altogether.
Even in soft years for automobile demand, there is more than enough aggregate spending on private vehicles to fund the persistence of genuinely domestic automobile companies. Everyone look in the mirror, because the outcome of this saga and the form of your payment, is your choice.
Phil
In a reaction to this I hope the EU is going to give Airbus some more get out of jail free money as well.
Better yet though, I hope this bailout doesn’t happen at all. If the US car industry manages to make desirable products at a profit than fine, if not, let a company who can build some factories in the US where the people can still be employed and don’t poison the market any further with crappy products.
And ask Mr Wagoner if he wants to give some loan guarantees for say, about 100MM he must have skimmed of GM.
If McCain opposes bailouts, then he’s just handing Michigan over to Obama. That’s my two cents.
I never imagined gas prices could go over $0.50 cents per gallon when I bought my Ford Excess SUV which is now only worth its scrap value – where’s my bailout?
So, we’re supposed to bail them out with a mercy f*** rather than do it through the government?
Hah. No thanks, rather pay a bit extra on the tax bill.
It’s GMs responsibility to sell cars that are worthy of the American people. They don’t. 2/3rds of Consumer Reports Worst of the Worst Used Car list is GM product.
2/3rds. 22 out of 32 Worst of the Worst is from GM. They had 1 car on the Best of the Best. Out of 64 cars.
Not a single Toyota or Honda on the worst of the worst list; their entire lineups on the Best of the Best.
I don’t believe GM makes good products. Every 5 years they say “We’ve finally caught up, this time its for real”. 5 years later they’ll say “Sure, the cars 5 years ago were piss, but this time we mean it! We really caught up.” I’ll take the Malibu seriously once they get some serious miles on them and don’t turn into a money pit.
If you really car about American car companies, go buy a Ford. They really are a (relatively) solid company, and they actually have a chance of making it through this. Some extra support from ex-GM buyers would help to make sure there was an American company left standing once this automotive Ragnarock is over.