General Motors is on a crash course towards bankruptcy. The company once known as the world’s largest automaker is burning cash so rapidly most experts agree that it won’t last through next year. Although Ford has more money at hand, having mortgaged everything up to and including its logo, the Blue Oval is also spending its way towards C11. Chrysler? DOA. In response, Congress recently approved massive loan guarantees for the industry. But Motown’s supporters are clamoring for another, equally massive handout. As our duly elected representatives argue how best to save Detroit, its champions warn of looming disaster. Still it must be asked: should The Shrinking Three be left to face market forces unaided by Uncle Sugar?
The D2.8 are huge, their supporters say. The domestic automakers supposedly account for six outside jobs– dealers, suppliers, service station attendants, and hosts of others– for every job within. In a worst-case scenario, two million jobs could disappear, says David Cole, head of the Center for Automotive Research in Ann Arbor. Through unemployment and/or Medicaid, those workers would quickly soak-up tax money, Cole claims.
“Because of the fragile state of suppliers, a dying GM or a Ford would take key suppliers with it,” says Cole. That would bollix the supply chain for the transplants. But Cole says that a mere $10b worth of prevention could be worth $100b of cure– his estimate for the costs of bailout and cleaning up the mess, should the companies be allowed to fail, respectively. (This is a downsized estimate; Cole’s Center’s “catastrophe studies”predicted a $200 – $300b hit to the economy from an automaker’s failure, equivalent to 2 percent of GNP.)
An odd consequence of failure to bail might be to hamper environmental protection, says Greg Nowell, a political science professor at SUNY Albany. Since the early 1980s, when the US gave the Japanese an offer they couldn’t refuse (“voluntary” import quotas), the Japanese manufacturers have always more than met US environmental standards. They’ve “let Detroit do the foot-dragging” in the political arena, says Nowell. With Detroit gone, however, they might resist tighter regulations by threatening to take their marbles and go home. “In terms of environmental regulations, [the demise of the US industry] would be a game-changer,” says Nowell.
Nonetheless, neither Nowell nor three other experts interviewed by TTAC favor bailout. “Cole assumes that [following bailout] they will start getting a positive cash flow, which is not a foregone conclusion,” says David Dapice, an economist at Harvard and Tufts Universities. “It’s one thing to have a cash transfusion so you can keep operating at a loss, and another to have a game plan for profitability.”
Cole insists US cars are improving. “My wife has the new Saturn Outlook,” he says. “The execution has improved dramatically.” But the December issue of Consumer Reports recommends against the Outlook, and says GM is a “mixed bag,” while “Ford’s reliability is now on par with good Japanese automakers.”
Dapice suggests that socializing health care costs might be a better approach than helping the auto companies directly. This would eliminate the transplants’ advantage of having younger workers with lower health care costs, and far fewer pensioners. According to the Detroit consulting firm Harbour-Felax, for each car it manufactures, GM spends $1,635 on health care for both current and retired American workers. For Toyota, the comparative figure is just $215.
Socializing health care costs would also have the advantage of avoiding picking winners, or in this case, losers. “I don’t think the US does well with industrial policy since it’s so political,” says Dapice. And “If you want a stimulus package, it might make sense to give money to [the city of] Detroit, or the state, so they can keep their bridges from collapsing. But I don’t think it makes sense to just pump money into failing companies.”
Regarding Cole’s warnings about key suppliers going under, Chris Knittle, a professor of economics at UC Davis isn’t worried. He says that if GM goes out of business, other manufacturers will pick up the slack.
If past is prescient, the demise of the shrinking three would brook no loss to automotive innovation, says Knittle, Volt notwithstanding (its projected price, 40 Gs, insures scant market penetration). The U.S. industry has not exactly been on the cutting edge for at least the last half century.
“What is fundamentally wrong with the US automobile industry?” Nobel economist Robert Solow asks rhetorically. “Why has it been unable to compete adequately, even with American plants owned by Japanese, European, and Korean automakers?”
“[American automakers] have a lot of corporate inertia,” says Knittle. And “when they can always fall back on the government to bail them, there’s even less incentive to change.” Noting that the market culls the unfit, breaking ground for new companies, he says that through bailouts, “You are taking out one of the mechanisms in which a market economy improves productivity.”
No other business could survive a cash burn equal to the budget of a small state. I don’t agree with socializing the health care costs of the automakers. The workers there got juicy benefits the rest of us dream about, i’ll be damned if I am going to pay for it plus my own health insurance too.
So, if all three Detroit automakers fail or even one of them, several parts suppliers will be out of business, which will hurt the local economies they support. Factory closings will kill the towns that depend on the employment. Dealers will close. Then the businesses that depend on the employment in all those cities and towns in the midwest will fail.
It might be more humane to use a few neutron bombs.
What I’d like to see is the executives held accountable and the Unions swallowing a dose bitter reality. Instead, it will be the usual crony deal.
Is the top management willing to throw themselves over board if that is the price of a bailout? If they are, then I’d be in favor of a bailout
In my humble opinion: let them burn and crash. We are looking on ruins of the industry where management and workers could talk only via union representative. Why such a partnership should survive? US will still have 300 million population and that population will continue to acquire cars. Importers are already building 70-80% of cars that they sell right here; they don’t have labor wars and their cars sell. If imports are accounted for over 50% of all sales and 70-80% made right here, it means they employ nearly same amount of workers in the same industry as former Big 2.8.
If we take look at UK we’ll see that they produce more cars in UK today then 10 years ago without single UK ownership. What is wrong with this picture? Nothing!
I agree this is a bad idea, but I do feel a bit angered that there is apparently no problem in helping the banks that made horribly risky/bad decisions, yet when 2 million jobs are on the line, suddenly nobody wants to do anything. I don’t think we should do anything for any company, but why the banks and not the automakers? Seriously.
If automakers can just fail and take far more jobs with them than a certain bank, and that’s ok, then why was it not ok to let all these banks go under?
Oh, thats right, because paulson has all his friends in the banking industry, and they’d loose billions from their pockets. Detroit is just some midwestern place with a bunch of redneck, moron autoworkers who don’t really matter. Nobody will notice when they’re gone.
No money for anybody. Period. This is exactly what I was afraid would happen though. Banks go theirs now everyone else wants it too. And I can certainly understand that (if someone gave you $100 for sucking, why couldn’t I get $100…even if I wasn’t sucking?).
Jerome10 – it was horrible idea to save banks.
The reality is that Paulson and Bernanke thought/prayed that if they attempt to intervene and prevent bank or two from collapse, economy will be saved from depression or recession. We do know that they are wrong on recession, and we will never know about depression, unless it will actually happen.
On political front it was all democratic house and senate who jumped at the idea of 700 billion anchor on taxpayers neck and who knows how many gifts to campaign contributors.
I think that bailout was imagination of Paulson/Bernanke that they are craftier then mechanics of free enterprise – the market.
commented on the wrong thread
David Cole is a very smart man, but most of what bailout backers call “cost” is not really a cost at all, but a transfer.
1. As an earlier poster pointed out, a B3 Deep 6 doesn’t in itself change demand for autos. People will still buy, drive and repair them. Yes, that money may flow to different automakers, dealers, supply chains and such, but it will flow. Of course, some of it will flow out of the US, but some will flow back in too as other automakers race to fill the void.
2. But, you say, what about the people and communities who will see net outflows? We need to keep in mind that their baseline today is being supported by the B3’s losses. This sounds terrible, but to some extent the wealth (and I don’t mean to imply that its a good life) that these folks experience today is illusory. Without the capacity of these companies to run big losses, it wouldn’t be there.
3. Then there is the cost of money itself. Where does the bailout cash come from? Mostly foreign creditors. So, there’s a leakage out of our economy primarily to China and the Middle East.
4. There are other factors as well, that would mitigate costs. The price of cars would come down, the fleet as a whole might become more fuel efficient because of the technology edge of some foreign automakers in this area, which would reduce leakage of dollars to the middle east.
Large changes in the economy, such as corporate bankruptcy are incredibly disruptive and horrible for people caught up in them whose only fault was to believe the spinmeisters who said it would never happen. However, studies like these that add up the disruptions without really factoring in the offsets are not credible. When someone tells you he has a way to spend $1 to make $10, you should ask him how he plans to make money on that deal. If he can’t answer quickly, dismiss him.
If we are going to spend $10b more, let’s spend it either in direct, wealth-adjusted financial assistance to households that lack sufficient funds for food, shelter and clothing, whether due to GM’s issues in Michigan, Katrina in Louisiana, or just bad luck. Or, we can reduce taxes on capital, which is the only way to create new jobs and opportunities. Targeted government intervention of the type Detroit wants almost never really worked, not in the depression, not since.
Oh, and don’t get me started on socializing healthcare. Stick to slushboxes there David.
As this piece points out, what will a bailout accomplish? The problem is not a “lquidity” problem. The problem is from long before the latest crisis and the B3 have got as lquid as they can. 10 billion will change what? All of a sudden GM will hit upon a great idea that customers demand, thereby providing positive cash flow leading to paying off its debt and then funds huge r&d programs? I.e. the thing the B3 have been unable to do with cars since arguably the 70’s? The only thing the bailout would do would be to buy a few more months of burn and otherwise extend the pain.
In the long run the US auto industry is going to be okay; it just won’t include certain sick Detroit companies.
Bailout bucks are fine IF they are spent on fundamentally healthy companies that just need a loan to help them through the downturn.
Sick companies need to be restructured, broken up, gutted, sold off and reinvented.
That’s harsh, but inevitable.
They asked for low-interest loans, Ford and GM never asked for a bail-out
Low interest loan to a habitual drunk does not constitute reasonable investment. How it is not a bail-out?
Dapice suggests that socializing health care costs might be a better approach than helping the auto companies directly. This would eliminate the transplants’ advantage of having younger workers with lower health care costs, and far fewer pensioners.
Dapice is misleading. The transplants’ younger workers are a small part of the picture.
1) Detroit’s gold plated health care plans cost more than anything the transplants offer.
2) The transplants have almost ZERO pensioners. (I think there’s a few hundred old Nissan employees with pensions). Like every other MODERN firm in the USA, transplants have 401K’s instead of defined benefit pensions.
I think it is unfair that large corporations are receiving bailouts on the pretense that many jobs are at stake. This is the fault of those that are leading these companies. The problems that the “big” 3 have now did not surface overnight. The executives must be held accountable.
I realize that jobs will be lost, but when a small business goes bankrupt, they do not receive a bailout, and nor should the big 3 simply based on their sheer size.
If the big 3 do indeed go under, the automakers that are still in business will have to ramp up production to satisfy the market needs, and so hopefully, new jobs will be created.
I think with 2 million jobs at stake, the feds have no choice but to do the bailout. It would be political suicide to just say no.
We are in unchartered waters here. There was never a situation in any developed economy when the whole domestic industry of this size (one of the top 3 industries) just collapsed within a span of months or a year. Maybe nothing much will happen, just like when electronics industry disappeared. But maybe not. Judging by the sentiment on this website the populace is feeling lucky.
If we are going to spend $10b more, let’s spend it either in direct, wealth-adjusted financial assistance to households that lack sufficient funds for food, shelter and clothing, whether due to GM’s issues in Michigan, Katrina in Louisiana, or just bad luck.
The great rabbi and philosopher Maimonides outlined 8 levels of charity, ranked from highest to lowest:
1. Investing in a poor person in a manner that they can become self-sufficient.
2. Giving to the poor without knowledge of the recipient and without allowing the recipient to know your identity.
3. Giving to the poor with knowledge of the recipient but without allowing the recipient to know your identity (anonymous giving).
4. Giving to the poor without knowledge of the recipient but allowing the recipient to know your identity.
5. Giving to the poor without or before being asked.
6. Giving to the poor after being asked.
7. Giving to the poor happily but inadequately.
8. Giving to the poor unwillingly.
If you note, the hierarchy is rather concerned about the dignity of the recipient. Being self-sufficient is always better than being on the receiving end of a handout.
As far as I know, there is also much greater general economic benefit to employment than welfare – unless you’re a member of a gov’t employees’ union with a job in the welfare department. I think the multiplier is something like 8 to 1, for employment dollars vs. entitlements.
I’m no fan of bailouts and making money off of money as opposed to selling goods and services is an unfortunate artifact of the economic necessity for venture capital. At least Detroit makes stuff. What does Wall Street make?
The automobile industry is not the first domestic industry to go extinct in the face of foreign competition. For the most part, they stopped making shoes, apparel, televisions, and machine tools in the United States some times ago. Were all those industries run by idiots and knaves and staffed by corrupt and lazy union members? Do you think your fellow Americans, the folks you work with at your job, are like that? It’s not just Detroit, this has happened all over the country, from the textile mills of New England, to shipyards in on the Pacific coast.
At which point will we decide that an industry (besides Wall Street which donates mostly to Democrats) is worth saving? Our ability to produce state of the art weapons is vital for the defense of the United States and without a general manufacturing industry we cannot maintain a defense industry for very long. It’s not just Predator drones and kevlar body armor, will we import our army boots from China?
I don’t agree with socializing the health care costs of the automakers. The workers there got juicy benefits the rest of us dream about, i’ll be damned if I am going to pay for it plus my own health insurance too.
I think you are assuming something that is incorrect. I believe the the economist David Dapice meant that the socializing of health care would be for everyone not just the auto workers.
You apparently fear our government’s abilities, well I hate insurance companies because they take 1/3rd of all the money we spend on health care for their own administrative expenses and are very choosy on who and what they will cover. Paying as we go is now too expensive.
Does anyone have a forth idea?
Old people by far use the most health care. So US medicine already is socialized. Gradually adding the remaining younger people to Medicare (while increasing Medicare taxation – Medicare is not a trust fund like Social Security) would be the most efficient way to provide health care to all, and make industry more competitive. Why should the big three have to compete against companies in other countries which pay no health care?
The insurance companies would be reduced to selling supplemental insurance policies, but these would be very popular. The govt would essentially cover catastrophic costs, supplementals would pick up the rest.
All else being equal, I’d rather see federal dollars spent on healthcare reform that helps all industries, retraining support for displaced workers, and infrastructure investments for communities devastated by the Not So Big Three’s implosion.
Obama’s economic brain trust is pretty broad-based and moderate for a Democrat, so I would anticipate a pragmatic approach will not appease ideologues on either side of the political spectrum.
Obama’s economic brain trust is pretty broad-based and moderate for a Democrat, so I would anticipate a pragmatic approach will not appease ideologues on either side of the political spectrum.
I guess you must believe that Obama is lying when he says there will be “fundamental change” in our country. His economic advisers may include moderates, but his own history and statements make it clear that he’s pretty much a redistributionist statist interested in “economic justice”.
Obama said on the stump that McCain may call him a communist because he shared his toys in kindergarten and his lunch in grade school. Either he’s deliberately conflating voluntary charity with gov’t confiscation, or he’s not the legal scholar his acolytes make him out to be.
Bozoer Rebbe:
Obama said on the stump that McCain may call him a communist because he shared his toys in kindergarten and his lunch in grade school. Either he’s deliberately conflating voluntary charity with gov’t confiscation, or he’s not the legal scholar his acolytes make him out to be.
Huh? You’re totally confused. This was a joke. Obama was making fun of McCain, because McCain and his troops call Obama a socialist.
Since Obama feels McCain is using false reasoning to compare Obama to socialism, Obama was joking that the same faulty reasoning could be used to compare Obama to Communism.
It’s strange, you seem to be a smart person – at least judging on your vocabulary. And yet the McCain campaign has duped you into thinking Obama is some kind of redistributive socialist dictator. The railing you do against “elites on the coasts” makes you sound like Josef Goebbels.
It’s strange, you seem to be a smart person – at least judging on your vocabulary. And yet the McCain campaign has duped you into thinking Obama is some kind of redistributive socialist dictator.
I don’t know where you get you self-righteous sense of precise understanding on who Obama really is, he certainly sounds like a socialist judging by his pre-campaign speeches.
And what would you call a person who used to surround himself with socialist and outright communist “friends” and radical contacts throughout his life?
But what would I know? After all, I’ve only been born and raised in the old Soviet Union.
I have great empathy for someone who lived in the old Soviet Union; from what I’ve read life wasn’t terribly easy for most folks. However, I still think that in order to have an intelligent conversation about the U.S.’ 2008 elections that we should clearly explain our terms. This will greatly reduce misunderstandings.
You think Obama is a socialist? Please explain what that means. How might that play out in an Obama administration? What’s the worst thing that could happen? And how does that compare with the socialism of, say, Germany, Sweden or the old Soviet Union?
$1,635 – $215 = $1420
I’d spend $1420 more for a comparable domestic car over a transplant car (perhaps because I’m a patriot, or a communtarian, or just plain nervous as hell about the state of the US economy); however, I well know that the true difference in cost is much greater due to depreciation, cost of repairs, lost work time while the car is repaired, etc.
Blaming health costs is management’s way of distracting the debate away from the true issue at hand: poor product.
If Rush Limbaugh, good Republican, can call women “feminazis”, and we have Republicans calling Obama a Socialist or Communist, is it not fair to toss the same overboard rhetoric back – lets call Bush and McCain fascists, and Limbaugh the Fuhrer of Reichwing radio. This of course is all in same spirit of gutter politics Republicans have resorted to. Would it bother the Republicans if Democrats ran ads calling McCain a Fascist? It is no more over the top than what we are witnessing from the Republican leadership.
Remember what the top tax rate was under Eisenhower, realize the Bush tax cuts are set to expire in 2010 even if McCain is elected, and it is hard for me to call Obama a Socialist, although I would take a Socialist anytime over a Fascist.
If our government had sense they would cut out these CEOs and top executives and put a SALARY CAP on new executives until these companies turn themselves around.
If they don’t agree with those terms, let them crash and burn.
Matt51: This of course is all in same spirit of gutter politics Republicans have resorted to.
I guess you’ve missed the commentary and criticism of Sarah Palin by Democrats and their supporting pundits and editorial writers. If that constitutes the “high road”…
The Democrats have hardly taken the high road in this campaign. Saying that Obama is “better” in this regard is like saying that the Citation is better than the Vega.
Matt51: Would it bother the Republicans if Democrats ran ads calling McCain a Fascist? It is no more over the top than what we are witnessing from the Republican leadership.
Sorry, but no. Facism has far more negative connotations to the average person than socialism.
Facism brings to mind images of Hitler, while socialism brings to mind images of college professors and student “activists” who happily advocate increased taxes (because they have never run a business) and desperately need a makeover from the Queer Eye for the Straight Guy cast.
Dr. Lemming: You think Obama is a socialist? Please explain what that means. How might that play out in an Obama administration? What’s the worst thing that could happen? And how does that compare with the socialism of, say, Germany, Sweden or the old Soviet Union?
Yes, it’s over-the-top to call him a socialist.
He did have a very liberal record in the United States Senate, and he came from an area where he could not have been elected to the Senate if he had been even a moderate Democrat. That’s not name-calling; that’s looking at his actual record and the environment from whence he launched his political career – something that even many of his supporters seem curiously reluctant to do.
He has tracked to the right since nailing down the nomination. So it’s hard to tell exactly WHICH Obama we will get if he wins. Remember that Bill Clinton initially “talked right” during the campaign, and after winning attempted to “govern left” until he was handed a Republican Congress in the 1994 elections. After that, two of his biggest achievements were welfare reform, and the repeal of the nationwide 65-mph speed limit.
Regarding foreign policy, once we get past Iraq, he doesn’t differ all that much from McCain. If anything, I would expect a replay of the Clinton years – despite the huffing-and-puffing during the 1992 campaign, Bill Clinton repudiated very little that the first George Bush had done on the foreign policy front.
On the home front, Obama has advocated increased taxes on upper income Americans, just to “spread the wealth around,” not to close the deficit. When CBS news – hardly a radical, right-wing organization – tallied up his spending proposals and the amount of money his tax increases would raise, it discovered that the increased taxes didn’t eliminate the deficit.
If anything, his proposals would probably make things worse, as the federal government has a record of continually underestimating the cost of new or expanded social programs.
I also wonder why people who don’t pay federal income taxes deserve a tax break. Everyone should help to pay for federal programs. John Adams was quite right to fear that the masses would all too happily vote themselves benefits from the public purse at the expense of others.
The ticking time bomb is that there aren’t enough “rich” to pay for the programs that we have now, let alone any new or expanded ones. The Obama campaign apparently knows this – depending on the source, the definition of who is really “rich” changes (and it changes by trending downward).
Regarding the auto industry, I believe that it is quite a stretch to think that he will tell the UAW to “take one for the team” in the name of eliminating overcapacity in North America. Unless he has a “Nixon Goes to China” moment, which I doubt that a Democratic Congress will let him have.
There is too much production capacity to serve the North American new-vehicle market; the problem is that virtually all of the overcapacity is at plants were UAW members work. The UAW has provided support and funds for his campaign. He is not going to tell them that no one is guaranteed a job, or that pricing oneself out of the labor market is never a good idea.
In the interests of “fairness” I’m sure that we will end up paying for some sort of bailout of one of the Big Three – even if the bailout takes the form of a government-brokered sale to a foreign company, which will then receive federal aid of some sort to keep plants open.
He will also sign into law the card-check system to make unionization efforts much easier. The UAW has been desperate to get into the transplant operations, and has failed miserably under the current system, in part because its leadership fails to realize that in Toyota, Honda and Nissan, it isn’t fighting Harry Bennett and his goons at the Overpass. The key, from the union perspective, is to short-circuit the election process. With an Obama presidency and Democrats in charge of Congress, this will be one of the first laws passed.
@ Justin Berkowitz:
I’m going to have to disagree with your reply/rant toward Bozoer Rebbe. Obama makes it QUITE clear that his intention is exactly “economic justice”. In no way do his words or voting record (excluding when he neglected to attend, or only vote ‘present’) show him to be a ‘joker’, or ‘moderate’ in matters of economics. He is, in short, every bit the socialist that he says he is/will be. The ‘joke’ of toys and lunch, in an effort to call out McCain on attempting to place the socialist tag on Obama, actually does MUCH to cement the truth that Barack is not a man of deep intellect – sharing one’s own items is properly defined as friendship; giving is charity; taking from a third to give to the second is socialism. It is apparent that Obama does have the ultimate goal of taking MY lunch and giving bits of it to everyone else; this is no dupe. He intends it. Plain and simple.
No need for Josef Goebbel propaganda references here. For shame Justin. Don’t drink the Obama kool-aid so deeply that you dive into ‘Fascist’ and ‘Nazi’ rhetoric just because ‘your man’ gets called out. Let’s keep it civil – and pertinent.
As for car company bailouts in particular, I agree entirely with EJ_San_Fran. I just can’t trust the government (doesn’t matter which party) to make the right choice when it comes to spending my money.
I agree we should socialize health care for older retired auto workers. It should be a big government program with an appropriate, touchy-feely name. Perhaps we could call it something like, I dunno, “Medicare” or something like that. What a crazy idea.
Won’t somebody think of the oldsters!!!
If the United States is a free market economy, we need to let the auto industry do what they can without government help. I agree with the others who have posted about the real issue of quality. If the American automakers had focused on quality instead huge profit margins during the good times, they would not be in this mess. Toyota has proven if you deliver quality, consumers will keep coming back.
In these tight economic times you need to lower the risk of buying a low quality car because repair costs could kill you. That means Honda and Toyota are the best bets right now because they decades of providing quality.
So “DaPope” has enlightened us with the “facts” about Obama’s “socialist” agenda.
At least if you’re going to disagree with his political ideology, get something more concrete than your clever opinion to back it up.
Enlightenment away
“Barack Obama has offered a detailed plan to get America’s economy back on track, by creating new jobs and easing the burden on hardworking Americans by offering middle-class tax cuts three times the size of McCain’s.”
• How does taxing our ‘bosses’ create new jobs? Even left of center economists have noted that the increase from 35% to 40% for ‘the rich’ wouldn’t be nearly enough to aid in creating new jobs – either by direct creation, or by paying for the imposed ‘socialized healthcare’ that would supposedly take the burden off of employers to add new jobs.
• In short: Taxation and redistribution.
“Barack Obama puts children first by investing in early childhood education, making sure our schools are adequately funded and led by high-quality teachers, and reforming No Child Left Behind.”
• Funding is rarely the issue – well, at least to the school districts (generally). Specifically, the issue is getting the money into the classrooms. School districts often mimic governmental entities quite well, particularly with regards to spending poorly. Additional monies being thrown at schools will likely be haphazard and without proper checks-and-procedures as is de rigueur.
• In short: Taxation and redistribution.
“Barack Obama will invest in alternative fuels and renewable energy, including a plan to increase America’s energy efficiency and create 5 million new “green” jobs.”
• This site has railed against bio-fuels, and I am in agreement, but Barack has voted to extend the alternative fuel credits to 2012.
• He’s also wanting to, among an amazing amount of other items, ‘weatherize one million homes annually’. “I’m from the gummint, and I’m here to help you…”
• In short: Taxation and redistribution.
“Barack Obama’s health care plan will provide accessible, affordable coverage for all, and it will reduce health care costs for families.”
• Really? C’mon. Take a very serious look at western democracies with socialized medicine and tell me that this will be a bonus for us. Big Book of British Smiles, anyone? 12 month wait for chemo?
• In short: Taxation and redistribution.
“Barack Obama supports increased security measures for our airports, ports, and land borders, part of a national plan to protect American’s infrastructure and keep our communities safe.”
• This includes, ironically, bolstering our military to meet 21st century threats (no matter that they are from the 7th), but somehow is still against war in Iraq; although the one in Afghanistan is ok; and we may just have to jump into one with Pakistan (weren’t THEY surprised to hear that); but he’s willing to sit down and chat it up with Iran; etc…
• “Secure nuclear weapons materials in four years”: Really? C’mon, again. You’re pulling my leg Barack…
• In short: Taxation and not very likely to happen.
“Barack Obama is committed to ensuring Social Security is protected and viable for this generation and the next. And Obama will eliminate income taxes for seniors making less than $50,000 — benefiting more than 7 million seniors.”
• I’m 41 and I don’t imagine seeing a penny of my contributions. Especially if you throw in eliminating taxes for seniors (starting at age 50, right?). Great. No, that’s not socialism…
• In short: Taxation and redistribution.
“Barack Obama provides a middle class tax cut for 95 percent of American workers. Middle class families will get three times the tax relief from Obama than they would from John McCain.”
• Highly unlikely. And why would these two battle for who’ll ‘give’ more. The money will have to come from somewhere, and when the rich ‘shut-down’ to keep what they have we’ll be in worse trouble than what this current credit crunch and lack of fiscal responsibility is already throwing at us.
• In short: Taxation and redistribution – with the ‘rich’ becoming a smaller and smaller number – $50k, anyone?
“Barack Obama supports our troops – both in combat and at home. He voted to provide armored vehicles and body armor for our troops fighting abroad, and will fully fund veterans’ medical care and restore competence to VA planning to ensure our veterans have the resources they need when they return home.”
• 05/24/07 he didn’t think so, as he voted against a bill that supplied our troops AND the VA with additional funding to provide medical care to injured troops.
Sounds quite socialist to me.
Yuck. I’m sick of thinking about this. Time for some Miles Davis and less talk of politics.
I don’t have time to argue every point right now, but…
There is no way in hell I can say either man is perfect for the job but I think Obama has better advisers and better countenance to handle our problems. His ideas make more sense and have been analyzed by many people.
http://www.ontheissues.org/Barack_Obama.htm
Taxes aren’t going to create new jobs–I’ll give you that. However you’re arguing that 4 percent higher taxes immediately means that every single boss is going to cut people? How will he explain that to his employees?
At the same time, how does lowering taxes on your boss help you? When has a corporate CEO raised salaries or highered a bunch of new people based on his or her lower taxes?
http://www.nytimes.com/2008/08/31/business/31view.html
http://www.ontheissues.org/2008/Barack_Obama_Jobs.htm
http://www.latimes.com/news/printedition/asection/la-na-campaignecon2-2008nov02,0,6682525.story
and some info from the debates
–lower taxes on middle class so that they can buy more goods
–trying to stop jobs from going overseas
–renewable energy jobs
–reform the trade agreements
–perhaps bail out some of these huge failing companies and changing their leaders
http://www.factcheck.org/elections-2008/health_care_spin.html
http://www.cato.org/pub_display.php?pub_id=6293
http://politicalticker.blogs.cnn.com/2008/10/31/fact-check-would-mccain-tax-health-benefits-for-the-first-time-ever/
He wants to create competition in a more meaningful way than McCain talking about taxing health insurance benefits. It’s been said numerous times that McCain’s idea could lead to less healthcare coverage.
How can you say funding is rarely an issue in education? Some schools clearly have too much money than they know what to do with and others are falling through the cracks.
http://www.nea.org/newsreleases/2004/nr040714.html
http://www.barackobama.com/issues/education/
Pay for college education for those who commit to teaching.
$4,000 college tuition for 100 hours’ public service a year.
Emphasis on early childhood education.
Troop Funding:
http://voices.washingtonpost.com/fact-checker/2008/09/lieberman_misleads_on_obamas_r.html
http://blog.cleveland.com/openers/2008/09/promise_ad.html
It was over the lack of a time table for getting troops out of Iraq.
And you think if we cut a few billion from the defense budget the terrorists will win or something?
http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#Comparison_with_other_countries
And so on…
Any bailout is wrong for this reason:
We are highly adaptable creatures. Future human decisionmaking will draw upon past and present experiences.
Future behavior will “count on” today’s philosophies and policies still being there; still being adhered to and followed.
If we coddle them with money taken from the taxpayer, then ALL management of ALL manufacturing companies (not just the D3) will see this, learn from it, and adapt to it for long term decisionmaking.
If instead, we tell them that we love them, but the answer is an emphatic (but loving and caring) “NO”, then other companies’ managers and boards will also see this. Over time, they will begin to make adjustments to their business models.
This is not just conjecture. Humans are adaptable. We’ll adjust our behaviors upward OR downward, whichever is the more sensible or efficient way to go.
ZoomZoom That was one of the best reasons I have seen to show how the bailout and all these bailouts is horribly wrong for our long term future. I wish I had said it myself. Unfortunately this country doesn’t think long term and how current actions will effect future actions, it’s really sad.
Geeber,
at least you gave me a good laugh today. If the Dems had wanted to beat up Palin, they would have run non stop ads about her hubby belonging to the Alaska Independence Movement, which she herself has addressed. Peggy Noonan, Mike Murphy, various McCain aids, George Will, and various Republicans have done a far better job on Palin than any Democrat ever could. You reach the absurd when the Republicans, especially Palin, make false statements about Obama “palling around with domestic terrorists” that the Republicans have run anything but a filthy campaign, including trying to incite racial fear.
Must be all the feminazis Reichwing Fueher Rush is afraid of, are getting to you Republicans.
Ultimately,
The Democrats will bail out Detroit for fundamental reasons. A domestic industry is essential to industrial production, which is an essential part of our national defense. If the big three fail, there will not be a new domestic company to take their place. So yes they will be saved, in some form.
Eight years of hell are over!
Let the bailout begin.
matt51: If the Dems had wanted to beat up Palin, they would have run non stop ads about her hubby belonging to the Alaska Independence Movement, which she herself has addressed.
Frist, if she addressed it, then the issue was dead, and the Democrats had no fodder for ads. That is why you didn’t see any ads on this issue. Not because the Democrats took the high road.
Second, she was not at the top of the ticket, so the Democrats were going to focus on John McCain, not Sarah Palin.
matt51: You reach the absurd when the Republicans, especially Palin, make false statements about Obama “palling around with domestic terrorists” that the Republicans have run anything but a filthy campaign, including trying to incite racial fear.
Except for the fact that he was officially rolled out as a candidate for his first race (not the presidential one) in the living room of those two terrorists, and he worked with Ayres on several iniatitives. All of which are certainly indicative of a close relationship – at least, to those who understand how this works.
matt51: Ultimately,the Democrats will bail out Detroit for fundamental reasons. A domestic industry is essential to industrial production, which is an essential part of our national defense.
No, they will be bailed out because the UAW gave lots of bucks to the Obama campaign, and he owes them.
As for the Big Three being necessary for our national defense effort – this is not true. It’s not 1941 anymore. Defense hardware requires specialized, high-tech production facilities dedicated solely to that particular hardware.
The days of converting production lines from the making of Cadillacs or Chryslers to the making of tanks or airplanes are over.
GM, Ford and Chrysler are not essential to our defense effort.
They are essential the survival of the UAW, but the last time I checked, car buyers obviously didn’t care whether the UAW survives one way or another, so why use their tax dollars to keep it around?
matt51: If the big three fail, there will not be a new domestic company to take their place.
So what? Last time I checked, there were companies with names like Honda, Toyota, Nissan, Hyundai, BMW and Mercedes all producing vehicles in the United States and Canada for Americans to buy.
And, judging by the trends in market share, they are doing a superior job of meeting the automotive needs of American consumers than the home team.
I find it amusing that those who wail about the need for change apparently want to change things by dailing back the clock to 1955. Well, it’s not 1955 anymore. We don’t have to buy a vehicle from a domestic company anymore. The world will not collapse if one or more of the Big Three goes under. The U.S. will survive. If anything, the collapse of Chrysler, for example, would strengthen Ford by diverting the diehard “buy American” types to Ford.
Maybe Obama will use our tax dollars to revive Studebaker-Packard and AMC, too.
matt51: Let the bailout begin.
Yes, because the sensible thing to do is take money from people who have signaled how much they care about GM and Chrysler by buying a (superior) product from the competition, and use it to prop up those two failing companies. Which will ensure that the U.S. automobile market continues to be plagued by overcapacity issues.
And also use that money to make sure that a union that brings nothing to the table for the new-car buyer can continue to demand that its members receive 95 percent of their pay to watch Judge Judy.
Remind me of why I should be happy about this…?
If one or more of them can’t compete, then let them go under. And maybe the UAW and management will learn a hard and badly needed lesson.
Hi Geeber,
Nothing personal, but we won, you lost, so I don’t really care if you are happy or not.
I have worked the defense industry all my life, much of what we buy is leveraged from basic mass production in the civilian world. So, rather you like it or not, it will happen.
Palin,Palin,Palin. Well at least she took McCain down for us.
Matt51:
It’s people like you that are bankrupting the former USA, now Soviet States of America. I hope you’re quite happy with the Bolshevik Revolution.
Hi Honda Lover (sounds kinda kinky),
Well the national debt went from 5 T to 11 T under W. Total cost of two wars is 5T. Wonder where the debt came from. Total war costs includes cost of borrowing money, caring for crippled soldiers the rest their lives, replacing worn out equipment, and so much more.
Well, we have borrow and spend Republicans pretending to be fiscally conservative but you can Google search and find plots of national debt vs year.
I had an uncle pass away last year, he was a Captain in the US Army in WWII, and had been a prison guard at the Nuremberg Trials. Guess what we hung the Nazis for – Pre-emptive War – they said they struck first before Stalin could invade Germany – Pre-emptive war was held to be a war crime. Gee, guess what the Bush Doctrine is.
Anyway, the Republican Faithful are always ready to pull out the Communist label. Should I pull out the Fascist label? Pre-emptive war?
The Republican Brand has died the past two elections.
Did sucking 5 Trillion dollars out of our economy for two wars remove money which should have been available for investment in our economy? Does a bear shit in the woods?
Matt51: The 2 wars only cost about 1T to date. Is lying something Democrats are fond of?
HondaLover-
The cost of the wars is not the sum of the direct appropriations for the wars. It also includes the interest on the money borrowed to finance the wars, as the Administration never raised taxes to pay for the wars. Veterans care is separate, as is the CIA budget which is not published. Books have been published on the subject, anyone with an open mind can find the true cost of wars with a simple Google search. You can also do an Amazon search and find the books, I have seen them at Barnes and Noble. But you know better, you listen to Rush!
You can whine all you want, but the US has rejected Republicanism the last two elections, 2006 and 2008. Not only have they led us into pre-emptive war; torture; massive increase in national debt; but their economic theories have failed. Tom Delay blames it on the cost of the wars, but who knows, it has not worked.
So, to end my discussion with you, you need to do your homework.
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030702846.html
Should be mandatory reading for all Americans to understand the true financial costs of the wars. This should provide some understanding as to why Americans cannot afford homes or cars.
matt51: Nothing personal, but we won, you lost, so I don’t really care if you are happy or not.
The front page of our local paper – which endorsed Obama, by the way – noted that his agenda faces rough going in Congress. A lot of those Democrats are of the “Blue Dog” variety. Meaning that they were elected by conservative-leaning districts.
While President-elect Obama’s stimulus package will be relatively easy to enact, the union card check legislation and other bills near-and-dear to the heart of liberals face rough going. There will be a honeymoon, but Blue-Dog Democrats aren’t going to risk antagonizing their constituents.
The simple truth is that the domestic auto industry is no longer limited to Ford, GM and Chrysler.
The only reason to bail out one or two of them is to preserve a sclerotic and dying union, or allow the hysterical “buy American” types to continue to delude themselves into thinking that because they buy a Chevy instead of a Toyota, the money somehow “stays here.”
Never mind, of course, that the Chevy is built in Mexico or South Korea, while the Toyota is built in Kentucky or Texas.
It’s silly and downright reactionary to limit the domestic auto industry to GM, Ford and Chrysler.
Educated, sophisticated consumers – not to mention voters – have moved beyond that narrow way of thinking.
We’ll be fighting every step of the way.
I remember the euphoria when President Clinton won. He and his liberal supporters soon received a very rude awakening.
matt51: I have worked the defense industry all my life, much of what we buy is leveraged from basic mass production in the civilian world.
So, you’ll buy it from a Toyota plant located here in the U.S.A., not one owned by GM.
And it still doesn’t change the fact that GM, Ford and Chrysler are not necessary for defense production. It’s not 1941 anymore….
Even if all of the Big Three collapse – which is highly doubtful – there is still plenty of “basic mass production” occurring in the United States. This is exactly what Honda, Toyota, Nissan and Hyundai are doing in their North American plants.
Of course, they aren’t using union members to build those products, which is the real “problem.”
This isn’t about saving America’s production base; it’s about bailing out dumb management and a spoiled, out-of-touch union with taxpayer dollars.
The “we need to save the Big Three to save our industrial base” doesn’t wash with those who are better informed.
Special interests rule again…so tell me, how does this represent change?
matt51: Guess what we hung the Nazis for – Pre-emptive War – they said they struck first before Stalin could invade Germany – Pre-emptive war was held to be a war crime.
We also hung them for war crimes and crimes against humanity. There were four main charges brought against the defendants. And please note that Stalin was hardly innocent – he had signed a non-aggression pact with Germany in 1939, which allowed BOTH of them to carve up Poland. He was hardly a complete innocent before the Germans invaded the Soviet Union in 1941.
And there is a considerable difference in facts and circumstances that surrounded Europe in 1939-41 versus those that surrounded Iraq in 2003. Which may be why Hillary Clinton and other prominent Democrats initially supported the war.
Sorry, but no dice on that one. It’s considerably more complicated than that.
matt51: Not only have they led us into pre-emptive war; torture; massive increase in national debt; but their economic theories have failed.
Except that Senator Obama’s proposals, even with the revenue from his proposed tax increases, would not decrease the national debt, and do nothing to solve the looming crises with Social Security and Medicare.
Was Rush Limbaugh my source?
No…it was CBS News…the well-known source of right-wing thought.
matt51: You can whine all you want, but the US has rejected Republicanism the last two elections, 2006 and 2008.
McCain was actually doing quite well in the polls until the dominoes began falling on Wall Street. While the public blame the Wall Street fiasco on Bush (which is quite natural – he is the central figure of our government), the simple fact is that the root causes are considerably more complicated than that, and stretch back to decisions made in the early 1990s.
matt51: This should provide some understanding as to why Americans cannot afford homes or cars.
Yes, it should be mandatory to show that even people at Harvard can fail miserably at attempting to blame “problems” on a totally unrelated government action that they oppose.
At least, to those of us who are actually informed about the issues and recent history.
As was explained in another thread, people can still afford new cars. They just can’t afford $40,000 SUVs and near-luxury sedans, but that has nothing to do with the Iraq war.
They never really could those vehicles, but they used home-equity loans and cheap leases to buy them. Now that those sources of credit have dried up, people will have to re-think what they can really afford in a new vehicle.
There is still a healthy market for vehicles in the $18-24,000 range.
Of course, the problem is that GM, Ford and Chrysler can’t make much money from sales of vehicles in that price range, but that is not the Bush Administration’s fault.
Unless George W. Bush personally forced them to sign lavish union contracts, skimp on product development for smaller and medium-size cars, and retain too much capacity for their market share (thus necessitating the reliance on sales to rental car companies).
Regarding housing, the reason people can’t afford houses is because of a run-up in housing prices that began in 2000. One cause of this boom was the repeal of taxes on capital gains from the sale of homes (which was signed into law by…President Clinton – was he a Republican?) and the loosening of credit standards for mortgages.
We’ve had a classic bubble for eight years, this time in the real estate sector. Both parties have been happy to encourage it, and please note that it was DEMOCRATS that blocked efforts to tighten control over Fannie Mae, and it was Democrats that initially strong-armed banks and mortgage companies into lending to less credit-worthy customers through a revamped Community Reinvestment Act.
Housing prices are now coming back down to earth. We don’t need to bail people out of bad mortgages (which both parties have proposed), or listen to people who think that we need to prop up the values of their homes to save their balance sheets. We need to let prices slide, which will bring them back into line with incomes. THIS is what will bring about affordable housing.
Geeber – I doubt we are talking to anyone but each other at this point. I am saying, you can’t suck 5T out of the economy without a negative economic impact. Just doubling interest on the national debt from 250B per year to$500B per year is a huge economic drag.
Yes they were hung for pre-emptive war.
Now, think of signing statements – now that Bush has made this popular, just imagine a Democratic President removing any Republican backed parts of bills. Remember in 2005 Frist wanted to remove the filibuster, which was kept only if the Democrat agreed not to do it.
No, we do not need support from Republicans to support our agenda. Many may sign up, but Republicans are not driving the car. You get another chance in four years.
Our machine tools are leveraged from automotive suppliers, our composite materials, our electronics components, and so much more. From a national security standpoint, there is a difference between US companies, and foreign companies with US plants. It is the entire supply chain, not just the big 3.
You may not like the bailout, but I never liked the Iraq war. None of us can get all we want.
Best regards (many of my friends and relatives feel the same way you do).