Obama’s Bailout Bingo: The Winning Numbers And The Letters U.A.W. (by Sean Flynn)
By Corey Thompson, filed in Guest Features, Sean Flynn on Nov.17, 2008
***(Editor’s Note: Sean Flynn is a Columnist and Political Commentator for “The Thirsty Quill.” This is Mr. Flynn’s second contribution to the site.)***
“Obama’s Bailout Bingo: The Winning Numbers and The Letters U.A.W.”
By: Sean Flynn, Columnist
Bailouts…. Get ‘yer bailouts!
Much like ‘pink’ is the new ‘black’ this fashion season, I guess ‘President Elect’ is the new ‘President’ a mere two weeks after the 2008 Election. Ignoring his own acknowledgement that there is “only one President of the United States,” Senator Obama has certainly cozied up to the idea of pushing policy through Congress and onto the American people…a solid two months before he takes the Oath of Office.
I have watched countless news clips of the pseudo-President urging Congress to act on a new stimulus package or the recent bailout plan. Of particular interest to me is the “Prez Light’s” push to bailout the American Auto Industry. The initial $750 Billion dollar TARP has been “debated’ and passed with much consternation from both sides of the political table. Although I don’t think our esteemed Congress has a damned clue what they did, why they did it, or what it will actually accomplish, what’s done is done.
On top of the $750B stimulus, why do we need even more funds to bailout Detroit? Why have Bush and the current Congress been challenged by “Prez Light” to act? Simple politics, nothing more, nothing less.
Just to be crystal clear, I want the American automakers to be profitable, and I don’t like seeing imports outnumber our red-blooded domestics. But let’s be honest, the reason Detroit is dying is because they make cars that are less appealing to the average consumer in regard to efficiency, reliability, and affordability. Will a stimulus or bailout foster more innovation? Will it improve reliability? Will it increase fuel efficiency? Will it make a better-looking car? Sadly, the answers are a resounding “no, no, no and no.”
As with many of our banks, inefficiency is being enabled and risk is being socialized. We (us, the tax payers) should not be ‘footing the bill’ for inefficiency…in any industry. The supposed ‘beauty’ of our system is the ‘risk vs. reward’ that Capitalism presents the entrepreneur. The ‘strong’ survive, yet failure gives way to new ideas, and ultimately opens the door to future prosperity for others.
As we sit here about two months from “the coronation,” I have heard the arguments that the economy can’t handle the “Big Three” going under. True, it might cripple the economy, but I hope we can all agree that throwing good money at a bad situation is never wise. We have $350B of the $750B already working to free up the credit markets. Why is an automobile company “rescue package” necessary?
If the President-Elect really wants to send a message to Detroit, and if those workers REALLY want to make their cars, then it is time to challenge those who actually prop up the “Big Three:” the UAW.
According to the Wall Street Journal in September of 2006, “on average, GM pays $81.18 an hour in wages and benefits to its U.S. hourly workers.” On the contrary, non-union based Toyota pays total hourly U.S. labor costs (with benefits) that are close to $35 per hour. That’s a difference of over $46 an hour!
Saving over $1,000 per car will certainly give you a cost advantage, right? On average, an assembly line worker in a Toyota, Honda, or Nissan plant in America makes almost $100,000 a year in wages and benefits (not including overtime). More simply stated, Japan is kicking Detroit’s collective butt in U.S. plants, yet is spending far fewer U.S. Dollars to do just that. Seems to me like they have the right idea.
Bailing out Detroit makes about as much sense as a bailout package for VCR manufacturers. The free market has spoken, yet Union-run shops (where $2 gets you $1 worth of work) are continuing to run amuck with few limits and little oversight.
Seems to me like Detroit, after years of poor management repeatedly producing horrible results (sort of like their hapless Lions of the NFL), now sees the bright lights of government dollar signs and has their hands cupped and outstretched for some government ‘goodies.’
President-Elect Obama can implore President Bush and Congress to bail Detroit out, but I hope they hold firm in denying his request. Obama is sitting in the catbird’s seat on this one: he can take credit for forcing immediate action, knowing he isn’t the guy signing-off on a horrible piece of legislation. Or, if all goes well and cooler heads prevail, Obama will have the opportunity to do one of the following:
1. Don’t give any U.S. automaker a nickel before they get the Unions to end the “gravy train.” The Japanese showed us that it can be done safely, affordably, and efficiently in the U.S., even without Union interference. I see no need in paying ‘Morton’s’ prices for ‘Sizzler’ quality.
2. He can acquiesce to the threat of alienating Union voters over a common sense and fiscally responsible decision.
We all know what the answer to that equation will be…
Look forward to owning a share of GM, Ford, and Chrysler, my fellow Americans.
***(Editor’s Note: Sean Flynn is a Columnist and Political Commentator for “The Thirsty Quill.” This is Mr. Flynn’s second contribution to the site.)***
GM in 2009: "General Motors" or "Gimme"???
November 18th, 2008 on 4:30 am
I really couldn’t agree more, well said…
November 18th, 2008 on 9:42 am
Why are ‘we’ so quick to bail out the banks because of the economy, but are not holding them to the same degree of scrutiny as we are the Big 3? With the UAW finally coming to its knees after years and years of making more an more for the hourly employee, they now see what they’ve done - layoffs, no money for benefits, job losses, etc, and now are screaming for the government (ahem… US taxpayers) to help bail them out. Since the bail-out is first and foremost coming from the American taxpayer, why is it that we don’t get a say as to how the money is used? More specifically aiming this to the pork-barrel spending that was included within the bill.
November 18th, 2008 on 2:27 pm
I completely agree! In my opinion, unions started off doing a great job by improving the working environment for ‘powerless’ blue collar workers, but it seems like more and more the unions are just looking out for themselves no matter how much damage is done to the company.
November 18th, 2008 on 2:50 pm
That was great -
“Will a stimulus or bailout foster more innovation? Will it improve reliability? Will it increase fuel efficiency? Will it make a better-looking car? Sadly, the answers are a resounding “no, no, no and no.””
Oh, why oh why can we not have leaders who understand this??!! Thanks for a good read!
November 18th, 2008 on 9:23 pm
While GM pushes the Hummer…H2…AND H3, Toyota is trying to keep up with demands for the Prius. I agree with Michelle, 25 Billion will not improve management and will not create ideas. Esentially, we are bailing out the Unions more than we are bailing out the Automotive Industry.
Don’t forget that some of these employees recieve pension from GM and if GM goes under they will loose their retirement. BUUUUUT at what point does it become a business issue and at what point should this become a tax payer issue?? http://www.freerepublic.com/focus/news/1582844/posts This article talks about (If you are too lazy to click it) GM’s “Work Banks” created by the Unions to allow auto workers with no work to still make 31 dollars an hour for literally doing NOTHING!! They sit all day, go to work at 7 in the morning, and do crosswords until it’s time to go home. For any of us who have ever done sales or even in my construction profession now, do you know how much I get or would get paid for doing nothing?
In my opinion bankruptcy and restructuring of Union contracts is the best thing. Sure it’s gonna hurt. But this could be the slap in the face American automakers need to wake up to 2008.
For the record, and excuse my french, but where the hell is all this money comming from? I hope other people agree with me on this. My mind is racing with frustration about just throwing huge amounts of money around. I know the treasury cannot come even CLOSE to backing this money up, but we’re just gonna toss $700,000,000,000 like its nothing and HOPE it sticks to something. That’s enough money to give every American $1 million dollars. I bet THAT would stimulate the economy. Inflation, sure. Anyways, lots of frustration about the way this whole thing is going down. What’s even worse for me is the fact that we are supposed to have a Republican president but it seems to me that lately he’s been doing a lot to appease the left more than the right. I’ve heard mixed reports about the White House’s support of the $25 Billion but I wish we Republicans could make a strong stand against this proposal.
/rant off
November 19th, 2008 on 11:22 am
Thanks for the feedback: Here is some food for thought from SC Governor Mark Sanford in a recent Letter to the Editor at the Wall Street Journal- not Detroit specific, but it speaks volumes:
I find myself in a lonely position. While many states and local governments are lining up for a bailout from Congress, I went to Washington recently to oppose such bailouts. I may be the only governor to do so.
But I suspect I’m not entirely alone, as there are a lot of taxpayers who aren’t pleased with Christmas coming early for politicians. And I hope these taxpayers make their voices heard before Democrats load up the next bailout train for states with budget deficits.
Several questions led me to oppose bailing out the states. They are worth asking, even if you supported bailing out Wall Street.
Who bails out the “bail-outor”? Washington is short on cash these days and will borrow every dime of the $150 billion to $300 billion for the “stimulus” bill now being worked on. Federal appetites may know no bounds. But the federal government’s ability to borrow is not limitless. Already, our nation’s unfunded liabilities total $52 trillion — about $450,000 per household. There’s something very strange about issuing debt to solve a problem caused by too much debt.
Do you now have to be a financial “bad boy” to win?
Community bankers tell me that they are now at a competitive disadvantage for being careful about who to lend to, because others that were less disciplined will get a federal bailout. This is also true for states. Those that have been fiscally responsible will pay for or lose out to the big spenders. California increased spending 95% over the past 10 years (federal spending went up 71% over the same period). To bail out California now seems unfair to fiscally prudent states.
Was the economist Herb Stein wrong when he said that if something cannot go on forever, it won’t?
Medicaid grew 9.5% annually over the past 10 years. That’s unsustainable. But if Congress opens the checkbook now, there will be no reform.
Isn’t government intervention supposed to be the last resort and come only when it can make a difference?
In 2008 bailouts became the first resort. Over the past year the federal government has committed itself to $2.3 trillion (including the tax rebate “stimulus” checks of last February) to “improve” the economy. I don’t see how another $150 billion now will make a difference in a global slowdown. We’ve already unloaded truckloads of sugar in a vain attempt to sweeten a lake. Tossing in a Twinkie will not make the difference.
However, there is something Congress can do: free states from federal mandates. South Carolina will spend about $425 million next year meeting federal unfunded mandates. The increase in the minimum wage alone will cost the state $2.6 million and meeting Homeland Security’s REAL ID requirements will cost $8.9 million.
Based on what I saw in Washington, the bailout train is being loaded up. Taxpayers will have to speak up now to change its freight, tab or departure.
Mr. Sanford, a Republican, is the governor of South Carolina.
This is a guy I can get behind… I’m glad he is my Governor, not Bev Perdue… Glad I moved south!!!