THANKS, BUT…
Detroit, Michigan has been the focus of Washington, DC this week with the Detroit Three (formerly referred to as the Big Three) auto company’s executives coming before Congress to plead their case for a financial bailout. All three chief executive officers as well as the head of the United Auto Workers union testified before both the House and the Senate relating to their request for a $25 billion bridge loan.
The reaction from both sides of the isle was harsh. The auto makers failure to adapt to a changing economy and their agreements with the UAW have led to a belief that the leadership of General Motors, Ford, and Chrysler were asleep at the wheel for the past few years and the soon to be bankruptcy is a just reward.
All four leaders’ testimony was terrible. They were unable to explain what they would do with the money, how they came up with the dollar amount, how it would be split among the three companies, what changes to their business model they were in the process of implementing so that they would not be back before Congress in a year asking for more money. It wasn’t just Republicans demanding answers, but Democrats as well. In fact, certain Democrats asked the tougher questions. Senator Menendez of New Jersey and Representative Sherman of California both questioned the rationale for Congress providing a bridge loan to the companies. The failure of the executives to explain the need for the loan and what changes to their business model they were either implementing or about to implement basically determined their fate.
Two Republican Senators, Kit Bond from Missouri and George Voinovich from Ohio went to work on trying to come up with a compromise plan that would change some of the conditions to money already allocated to the automakers. Instead of using the $25 billion in Energy Department loans to focus on more fuel efficient automobiles, they proposed using that money in the short term for the bridge loan. Initially, Senate majority leader Harry Reid decided not to allow a vote on such a proposal. However, following the involvement of Michigan’s two Democratic senators, Levin and Stabenow, Senator Reid decided to allow a vote Thursday afternoon. Following a meeting with Speaker Nancy Pelosi, this vote was cancelled. Speaker Pelosi demanded plans for the money to be submitted by early December before a vote could take place. The plans have to be submitted to business leaders, Senator Chris Dodd of Connecticut and Representative Barney Frank of Massachusetts. Both of these men were involved in the credit crisis by their continued support of both Fannie Mae and Freddie Mac. These two “leaders” refused to allow any changes to the actions of Fannie and Freddie and when both institutions failed miserably over the past six months, they claimed ignorance. Now these two are going to be responsible for overseeing the automakers restructuring plans. The American people are now reliant on these two to protect our tax dollars and make sure that any plans submitted by the automakers are credible and a one time deal. Somehow, I am not confident that they have the capacity to even understand basic financial statements…
The other big news relating to Detroit out of Washington this week was the removal of Representative John Dingell as Chairman of the House Energy and Commerce Committee. Speaker Pelosi, unhappy with Dingell over the past several years for his “failure” to institute extreme environmental procedures that have caused the automakers so many problems, allowed fellow California liberal Representative Henry Waxman to challenge for the chairmanship. A secret vote took place (funny how Democrats support secret balloting when they have to make a decision but not for union considerations…) and Representative Waxman won by 15 votes. The longest serving Democrat in the House, is now no longer the Democratic leader of the Committee for which he has been the longest serving Democratic member since 1981. Since Representative Dingell has been removed in favor of another extreme environmentalist, one can only imagine how soon the automakers have higher café standards to deal with and individual state requirements.
Detroit should give a big thank you to Speaker Pelosi, since she is the driving force behind all the strings attached to any Detroit bailout. The Detroit area and the state of Michigan voted Democratic overwhelmingly this past November and now they get to deal with those results – the last one in Detroit can turn off the lights…
Friday, November 21, 2008
Saturday, November 15, 2008
NOW WHAT SHOULD WE EXPECT?
NOW WHAT SHOULD WE EXPECT?
With the election of Senator Barack Obama to be our country’s 44th President, a lot of the DC establishment is now trying to figure out what’s next? Most of these folks have nothing better to do than to offer their advice on how good/bad things are in the country. They are typically former journalists, academics, or campaign staffers. They have never created a job, made a payroll, or done much more than pushing some paper around. With the end of the campaign, in order to stay on tv or to be quoted in stories in the Washington Post, they offer their suggestions as to who should make up the new White House staff or cabinet, or what industry the taxpayers should bail out next.
President-elect Obama’s first personnel announcement was that Representative Rahm Emanuel would be his chief of staff. This announcement was met with some questions from Republicans and leading conservatives. Both Minority leader John Boehner and conservative advocate Sean Hannity thought it was a bad signal to send if the Obama administration was serious about all the bi-partisan claims that they announced during the campaign. I think the pick of Emanuel is a great choice. Representative Emanuel spent a lot of time in the White House during the Clinton Administration. He understands the workings of the White House and understands the workings of the federal government. He also has extensive relationships and experience on Capital Hill. This knowledge should help the administration push its agenda and potentially get things done. While Emanuel is a democratic partisan, who did the Republicans think the Obama administration would pick? A Republican? Representative Emanuel was a supporter of welfare reform and free trade during his time in the Clinton Administration. Aren’t these priorities of the Republicans? He has shown an ability to get things done in Washington and isn’t afraid to go against some of the Democrats largest contributors.
As the Obama administration starts to announce their choices for certain staff positions within its administration, I think it would be wise of the Republicans in Congress and conservative pundits to study the policy positions they have but not to denounce the pick without any examination.
One big issue that is currently being debated here in Washington is the potential “bail out” of the Detroit Three. The former Big Three auto companies claim that they need federal support in order to stay out of bankruptcy. Already the Congress has approved $25 billion to help them convert to more fuel efficient cars. They are also asking for as much as $50 billion more to allow them to stay in business. The biggest problem facing the automakers is the incredibly high legacy costs associated with each car produced. Some estimates value these costs at as much as $1,500 per vehicle. These costs include health care and pension liabilities for the workforce. Many retired auto workers do not have to pay a co-pay on their prescriptions or doctor visits. Everyone else pays a small co-pay for these services. Would it be too much for the UAW to agree to have its members pay a small co-pay to reduce some of the health care costs of the Detroit Three?
The big issue surrounding the debate in Washington is if the taxpayers provide the funds to keep them out of bankruptcy, what changes in the business model will they implement so that they don’t run into these problems in a year or two? Most of the conditions being discussed on Capital Hill have to do with executive compensation and bonuses. Nothing about restructuring their contracts with the UAW, nothing about issued such as the job banks that allow workers to not work, but still take home their salaries. Without a complete restructuring of their business models, the Detroit Three are not likely to be successful. Foreign automakers are building cars throughout the US, particularly in the south. Whether it’s Toyota, Honda, or BMW, foreign automakers are building cars more suited to today’s economy. They have less overhead costs to pass onto the buyer of their products.
Folks in Detroit are worried about their futures, and they should be worried. For too long, Detroit’s automakers did not believe that foreign competition was actual competition. Once Toyota and Honda became legitimate alternatives, the Detroit Three decided on the strategy of blaming the American public for not buying their products, then making bigger cars that do not get very good gas mileage, and now begging Congress to bail them out. Not once have they looked at their business models and decided to take the hit now to eliminate some of the problems facing it.
Do we really want Congress to be making decisions as to the business models of the automakers? They have a hard enough time trying to pass a budget, how are they going to make the needed, hard decisions to try and make the auto companies more competitive? The Detroit Three need to look at themselves and decide what they should do to make themselves competitive. They are the only ones that can do this. They should know the business and their customer needs better than anyone else. They have to adjust their products to fulfill the needs of the American public. The taxpayers should not be responsible for the failure of the auto companies to make the tough but needed decisions.
With the election of Senator Barack Obama to be our country’s 44th President, a lot of the DC establishment is now trying to figure out what’s next? Most of these folks have nothing better to do than to offer their advice on how good/bad things are in the country. They are typically former journalists, academics, or campaign staffers. They have never created a job, made a payroll, or done much more than pushing some paper around. With the end of the campaign, in order to stay on tv or to be quoted in stories in the Washington Post, they offer their suggestions as to who should make up the new White House staff or cabinet, or what industry the taxpayers should bail out next.
President-elect Obama’s first personnel announcement was that Representative Rahm Emanuel would be his chief of staff. This announcement was met with some questions from Republicans and leading conservatives. Both Minority leader John Boehner and conservative advocate Sean Hannity thought it was a bad signal to send if the Obama administration was serious about all the bi-partisan claims that they announced during the campaign. I think the pick of Emanuel is a great choice. Representative Emanuel spent a lot of time in the White House during the Clinton Administration. He understands the workings of the White House and understands the workings of the federal government. He also has extensive relationships and experience on Capital Hill. This knowledge should help the administration push its agenda and potentially get things done. While Emanuel is a democratic partisan, who did the Republicans think the Obama administration would pick? A Republican? Representative Emanuel was a supporter of welfare reform and free trade during his time in the Clinton Administration. Aren’t these priorities of the Republicans? He has shown an ability to get things done in Washington and isn’t afraid to go against some of the Democrats largest contributors.
As the Obama administration starts to announce their choices for certain staff positions within its administration, I think it would be wise of the Republicans in Congress and conservative pundits to study the policy positions they have but not to denounce the pick without any examination.
One big issue that is currently being debated here in Washington is the potential “bail out” of the Detroit Three. The former Big Three auto companies claim that they need federal support in order to stay out of bankruptcy. Already the Congress has approved $25 billion to help them convert to more fuel efficient cars. They are also asking for as much as $50 billion more to allow them to stay in business. The biggest problem facing the automakers is the incredibly high legacy costs associated with each car produced. Some estimates value these costs at as much as $1,500 per vehicle. These costs include health care and pension liabilities for the workforce. Many retired auto workers do not have to pay a co-pay on their prescriptions or doctor visits. Everyone else pays a small co-pay for these services. Would it be too much for the UAW to agree to have its members pay a small co-pay to reduce some of the health care costs of the Detroit Three?
The big issue surrounding the debate in Washington is if the taxpayers provide the funds to keep them out of bankruptcy, what changes in the business model will they implement so that they don’t run into these problems in a year or two? Most of the conditions being discussed on Capital Hill have to do with executive compensation and bonuses. Nothing about restructuring their contracts with the UAW, nothing about issued such as the job banks that allow workers to not work, but still take home their salaries. Without a complete restructuring of their business models, the Detroit Three are not likely to be successful. Foreign automakers are building cars throughout the US, particularly in the south. Whether it’s Toyota, Honda, or BMW, foreign automakers are building cars more suited to today’s economy. They have less overhead costs to pass onto the buyer of their products.
Folks in Detroit are worried about their futures, and they should be worried. For too long, Detroit’s automakers did not believe that foreign competition was actual competition. Once Toyota and Honda became legitimate alternatives, the Detroit Three decided on the strategy of blaming the American public for not buying their products, then making bigger cars that do not get very good gas mileage, and now begging Congress to bail them out. Not once have they looked at their business models and decided to take the hit now to eliminate some of the problems facing it.
Do we really want Congress to be making decisions as to the business models of the automakers? They have a hard enough time trying to pass a budget, how are they going to make the needed, hard decisions to try and make the auto companies more competitive? The Detroit Three need to look at themselves and decide what they should do to make themselves competitive. They are the only ones that can do this. They should know the business and their customer needs better than anyone else. They have to adjust their products to fulfill the needs of the American public. The taxpayers should not be responsible for the failure of the auto companies to make the tough but needed decisions.
Monday, November 3, 2008
PLEASE VOTE!
The polls open in just a few hours and soon we will have a new President-elect. So many things have contributed to this being an interesting race, but one that could go down as the biggest mistake in history. All we have heard about in the past few weeks is that this election is over and Senator Barack Obama will be the 44th President of the United States. This may in fact happen, in fact it is likely to happen. However, it is not guaranteed to happen.
Tomorrow evening is going to be pretty interesting in seeing how the different networks call each state. Are they basing their calls strictly on exit polls? Are they making calls before all the polls in the state have closed? Let’s hope that the media does not act as they have in previous elections. Following the 2004 election, the networks examined how the exit polls had over-estimated Senator Kerry’s support by about 5.5%. If this years exit poll sample is as wrong as in 2004, do you think that might make a difference in a state such as Virginia, Pennsylvania, Ohio, Missouri, or North Carolina? All of these states have been labeled toss ups at one point in the campaign. If exit polls give Senator Obama wins of 3-5 points in some of these states, and the networks call the race his, what happens if they are again off by 5.5% and Senator McCain in fact wins those states?
A lot of talk has also focused on the fact that the toss-up states are mostly states that President Bush won in 2004. Of course they are. President Bush won more states than needed and if Senator Obama is going to win, he has to win some “red” states. Senator McCain does not need to win all of the Bush, “red” states in order to be elected President. McCain can lose some Bush states, such as New Hampshire or Colorado, Iowa, or New Mexico and still be elected. He can’t afford to lose too many of these states, but he can lose one or two of them.
I feel that the race is going to be a lot closer than the pundits predict. I am not sure if Senator McCain is going to be able to over come all the negative coverage that he has had to deal with from the national media and more importantly all the money that Senator Obama has spent on his campaign for President. The one thing that I am sure about as a result of this election is that public financing of Presidential campaigns is over. Any candidate that takes public money will be so far behind and have such limited resources that it will put their campaigns too far behind before they even start. This is a good thing. Let viable candidates raise their own money and spend it in anyway they choose. If they determine that the state of Ohio is the only toss up state in an election and they want to spend $100 million on ads, personnel, mail, and phones in Ohio, so be it. Let them do whatever they want to do.
If you don’t vote tomorrow, you have no right to complain if your candidate does not win or if the President and the new Congress act on positions you don’t agree with. If you don’t vote, you only have to blame yourself.
Tomorrow evening is going to be pretty interesting in seeing how the different networks call each state. Are they basing their calls strictly on exit polls? Are they making calls before all the polls in the state have closed? Let’s hope that the media does not act as they have in previous elections. Following the 2004 election, the networks examined how the exit polls had over-estimated Senator Kerry’s support by about 5.5%. If this years exit poll sample is as wrong as in 2004, do you think that might make a difference in a state such as Virginia, Pennsylvania, Ohio, Missouri, or North Carolina? All of these states have been labeled toss ups at one point in the campaign. If exit polls give Senator Obama wins of 3-5 points in some of these states, and the networks call the race his, what happens if they are again off by 5.5% and Senator McCain in fact wins those states?
A lot of talk has also focused on the fact that the toss-up states are mostly states that President Bush won in 2004. Of course they are. President Bush won more states than needed and if Senator Obama is going to win, he has to win some “red” states. Senator McCain does not need to win all of the Bush, “red” states in order to be elected President. McCain can lose some Bush states, such as New Hampshire or Colorado, Iowa, or New Mexico and still be elected. He can’t afford to lose too many of these states, but he can lose one or two of them.
I feel that the race is going to be a lot closer than the pundits predict. I am not sure if Senator McCain is going to be able to over come all the negative coverage that he has had to deal with from the national media and more importantly all the money that Senator Obama has spent on his campaign for President. The one thing that I am sure about as a result of this election is that public financing of Presidential campaigns is over. Any candidate that takes public money will be so far behind and have such limited resources that it will put their campaigns too far behind before they even start. This is a good thing. Let viable candidates raise their own money and spend it in anyway they choose. If they determine that the state of Ohio is the only toss up state in an election and they want to spend $100 million on ads, personnel, mail, and phones in Ohio, so be it. Let them do whatever they want to do.
If you don’t vote tomorrow, you have no right to complain if your candidate does not win or if the President and the new Congress act on positions you don’t agree with. If you don’t vote, you only have to blame yourself.
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