Lutz: GM Deserving of Government Loans
As we follow the Volt’s progress there is always a palpable sense of urgency as GM remains unprofitable and continues to burn through cash at a considerable rate. Especially problematic for them has been the dramatic rise in gas prices and precipitous plunge in truck and SUV sales from which most of their profit comes.
Chairman Wagoner has told us GM will have enough liquidity to get through the end of 2009 and even “beyond that” even if US auto sales remain at the very low levels they have recently fallen to.
Of course a large infusion of government cash could help them get to and through the Volt launch and to hopeful better, profitable, days.
Ever honest and vocal GM vice chairman Bob Lutz told reporters that to make new efficient cars like the Volt, GM must retool their plants but probably can’t raise the cash needed to do so through tight private credit markets. He said “the American auto industry is deserving of government loan guarantees.”
A $25 billion automaker loan program was already created by last year’s energy bill, but congress has so far failed to authorize the $3.75 billion necessary to fund it. Despite that, automakers are now asking the government to double the loans to $50 billion.
Lutz said “don’t say bailout proposals, all the government is doing is underwriting the loan.”
Source (Detroit Free Press)
Popularity: 3%
Related posts:
- Automaker Loans Deferred to December and Will Only be Provided Based on Automakers Plans for Viability, GM Agrees
- Current Progress on GM Getting Emergency Government Loans
- Washington Likely to Give GM Loan To Help Build Electric Cars
- Poll: Should the US Government Fund the GM-Chrysler Merger?
- Poll: Should the US Government Give Emergency Loans to GM, or Let Them Fail?
(5 votes, average: 4.8 out of 5) 
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August 31st, 2008 at 8:16 am
Obama will provide $4 billion retooling tax credits and loan guarantees for domestic auto plants and parts manufacturers, so that the new fuel-efficient cars can be built in the U.S. by American workers rather than overseas.
http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf
(bottom of page 4)
Obama will also provide a $7,000 tax credit for the purchase of advanced technology vehicles
(also on page 4)
August 31st, 2008 at 8:17 am
Wouldn’t it be ironic if GM can’t finish what it started with the Volt!
August 31st, 2008 at 8:24 am
what a joke Obama wants to give them more then they need or even want. He never gets it.
August 31st, 2008 at 8:29 am
GMs CEO Rick Wagoner expects the Volt to be initially priced in the mid to high 30’s.
http://gm-volt.com/2008/08/19/gm-ceos-best-guess-volt-will-be-priced-in-mid-to-high-30s/
A $7,000 tax credit would bring the price of the Volt down to about $30,000.
August 31st, 2008 at 8:31 am
What they need and want today may be different then what they need and want tomorrow. Also, this to be split amongst auto MFG companies and suppliers. In exchange we could see a resurgence in US based jobs from auto suppliers.
Note: Doesn’t that picture look photoshopped?
August 31st, 2008 at 8:32 am
#3 Starcast,
Just to clarify, the $4 billion retooling tax credits and loan guarantees is for the entire U.S. auto industry, including all of the smaller manufacturers that supply the parts. This sounds about right to me.
August 31st, 2008 at 8:33 am
It’s a drop in the bucket compared with the amount of money that’s been flushed down the toilet of the middle east.
August 31st, 2008 at 8:42 am
#5 Adam
Wow, I didn’t see that. Now that I look at it closely, it does indeed look like it’s been photoshopped.
August 31st, 2008 at 8:58 am
“GM must retool their plants but probably can’t raise the cash needed to do so through tight private credit markets.”
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So, GM is now going to blackmail the govt? Lutz is basically saying “give us cheap loans, or we are not going to build new energy efficient cars”. What timing on Lutz’s part, with the elections in the throws. He knows the politicians will build this theme into their campaigns, and will guarantee he gets what he wants.
I can appreciate that the automakers are feeling the pinch. But, for GM to be spending money, hand over fist, on the Volt and other retooling, and knowing they will not have enough cash to finish it is irresponsible.
GM should have formulated a “get well” plan based on the current economics, not on some hope that the good ole US tax payers would come in and save the day. if that plan excluded developing the Volt, and instead retooling to build more traditional, fuel efficient cars, then would that not have been the right thing to do?
I understand the ramifications of letting GM and others fall to the economics of the situation, but do we ever stop bailing out the large, failing companies? I see plenty of small business’ that fail, and never get any special loans/hand outs.
I just do not appreciate the way Lutz is presenting this option. Unfortunately, the reality is that the US car manuf. lived high on hog during the good times, where to fat and happy selling those gas guzzlers, and invested little in developing efficient cars. Now, we either bail them out or they go under and take many of the jobs with them.
As usual the taxpayer loses.
August 31st, 2008 at 9:09 am
#5 Adam
No doubt it was photo shopped. Just look at the collar line around McCains neck. Someone cut/pasted his head onto some schmucks body.
A poor photo shop, at best.
August 31st, 2008 at 9:10 am
Socialism is a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done with the goal of creating a socio-economic system in which property and the distribution of wealth are subject to control by the community. This control may be exercised on behalf of the state, through a market, or through popular collectives such as workers’ councils and cooperatives. As an economic system, socialism is often characterized by state, cooperative, or worker ownership of the means of production, goals which have been attributed to, and claimed by, a number of political parties and governments. (from wikipedia)
August 31st, 2008 at 9:12 am
Jump the shark moment alert: “Ever honest and vocal GM vice chairman Bob Lutz told reporters….” hehe. I like it.
——
Lutz said “don’t say bailout proposals, ALL the government is doing is underwriting the loan.”
Couple things, GM doesn’t want it labelled ‘bailout’ because:
a) no oversight on the use of the money
b) bad for image
C) they can still go back to the well AGAIN for the ‘real bailout’ money
Imagine if the money did come with the condition (oversight) that in Bob ‘ever honest’ Lutz’s own words said it would go to–strictly for “retool(ing) their plants to (only) make new efficient cars like the Volt” All 3′big auto’ would scream murder. This money is 90% going to keep the lights on…I think that is not much of a assumption.
Also this is not simple backing of a loan. The only way to explain this is a father and son. Dad can go to the bank and get a loan for 50K at 4.75%, no problem. Son, who works as a pizza delivery guy, has bad credit and is over-extended, goes to the same bank and they tell him he is a big risk and they will only loan him $2,000 @ 14%. (I’m sure many of us have had this experience at one time or another, lol).
So son asked dad to get the loan for him. We know dad is really who the loan is to, but the son’s name appears on the paper…much like the famous ‘2nd credit card for the wife,’ who when the husband dies, she thinks she has build a credit history, but her name means nothing but a couple dents in some plastic.
GM is the son, they have limited access to facility…and the money they can access is at around 14%. The gov’t is not really backing this loan, they are the loan…GM’s name just happens to go on the second credit card.
August 31st, 2008 at 9:17 am
12 Statik
I agree completely with your analogy.
So what happens to the son when he does not payback his dad? Does he get a spankin’?
Maybe I would be willing to fork over my money to Lutz, if he was willing to take a televised, CNN spanking when he fails to repay his loans. The spanker would be either McCain or Obama, and would be over bent knee with trousers to the ankles
August 31st, 2008 at 9:18 am
#5 Adam, #8 Kyle, #10, JEC
Actually, it looks to me as if *BOTH* BO and JM are photoshopped into that image.
August 31st, 2008 at 9:23 am
if i hear any more about obama i might puke
August 31st, 2008 at 9:25 am
#9 JEC Says: “So, GM is now going to blackmail the govt? Lutz is basically saying “give us cheap loans, or we are not going to build new energy efficient cars”.”
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To be clear, GM is not asking the U.S. government to loan them any money. What they are asking is to have the U.S. government underwrite loans that GM would get from other banks. This is similar to co-signing a loan for for a family member or friend.
Now if GM goes out of business, then the U.S. government will be left holding the loan. But if GM goes out of business, the ripple effect on our economy would be huge, so the loan would be the least of our worries.
August 31st, 2008 at 9:29 am
. . . . and more news on the U.S.A.’s transition to Socialism:
“Sen. John McCain, a longtime critic of Fannie Mae and Freddie Mac, believes the companies’ current management and boards of directors should be dumped if a bailout is necessary. Sen. Barack Obama, his Democratic opponent in the presidential race, says the government may soon be forced to decide whether to make the two either wholly public or private institutions.” (source, Baltimore Sun)
August 31st, 2008 at 9:32 am
#14 psklenar Says: “Actually, it looks to me as if *BOTH* BO and JM are photoshopped into that image.”
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Yeah - obviously. It looks so bad its humorous - made me chuckle. I think Lyle was aiming for humor here.
August 31st, 2008 at 9:33 am
Alright, let’s get ONE thing straight…
The “Government” doesn’t have any cash. Only Socialists & Communists think they do. It’s time we clear the fog of gov’t school and media “programming” and think straight for a change.
It’s MY tax money and the debt for generations yet to come. I’ll be happy to give them my money (representing my lifespan and labor) ONLY when they make a product worthy of my purchase.
“Wel-fare” corporate or otherwise only ENCOURAGES poor decision making, will not CURE the problem and will NOT make things “well”. This is NOT “fair” to those who are forced to pay for mistakes they did NOT make. “Welfare”, like “gov’t investment” is pure socialist babble.
Plus the 10th Amendment says the CAN’T give private money to “for profit” corporations because NOWHERE does the Constitution say they can. Just READ the Declaration of Independence, Constitution, Bill of Rights and the Federalist Papers.
If they can ignore ONE part of the supreme law, they can ignore ANY part of that law. Which of your rights do you fear they will ignore?
August 31st, 2008 at 9:37 am
While you’re talking about socialism, don’t forget the $15 billion bailout that the airline industry got from the REPUBLICANS.
August 31st, 2008 at 9:38 am
My own personal view is that one of the big three should be allowed to fail.
This is basically AMC, but in reverse. AMC got caught flat footed when gas got really cheap in a hurry in the mid 80s. They made all kinds of small cars…when America switched, and wanted large and powerful vehicles AMC could not fill that order because they were in financial trouble and they were late to the party, so they were dead. (Unless maybe they got a really, REALLY big loan to attempt to retool, lol).
Eventually Chrysler came in and picked thier bones, shutting down the unprofitable lines…no more AMC cars (or Renault in the US), but keeping the Jeep brand.
Ironically, a person by the name of Robert Lutz was president of Chrysler. “Chrysler’s acquisition of AMC was one of the all-time great moments in corporate serendipity” according to Lutz “that most definitely played a key role in demonstrating how to accomplish change”
I wonder how 80s/90s Crysler President/CEO Bob Lutz would see a bailout of a competitor? How would he react? “Profitability and change by attrition and acquisition” is how.
Let one of them fail…then one or both of the two remaining pick the parts of the dead that are still viable.
Now here is where the gov’t CAN intervene effectively without paying out 50-XXX billions of dollars–keeping out ‘foreign’ vultures under the banner of ‘nationalism.’
Instantly the domestic market is larger and the remaining two are stronger, having value added assets/product lines.
August 31st, 2008 at 9:40 am
#19. “If they can ignore ONE part of the supreme law, they can ignore ANY part of that law. Which of your rights do you fear they will ignore?”
How about my right to privacy?
August 31st, 2008 at 9:41 am
#16 Dave G.,
“Now if GM goes out of business, then the U.S. government will be left holding the loan. But if GM goes out of business, the ripple effect on our economy would be huge, so the loan would be the least of our worries.”
The old “too big to fail” mindset. Yeah, that’s great thinking there. You obviously have no faith in the free market whatsoever. You can’t even imagine a scenario where GM fails and life goes on (i.e. somebody else builds a series electric hybrid)?
I guess you either believe in the free market or you don’t. Apparently, a lot of people in this country don’t.
August 31st, 2008 at 9:42 am
Sorry to say this but If I was the President I would not help the auto industry in any financial way. For years they have been dangling high tech futuristic products never to get serious about manufacturing them. The only reason they are producing the Volt is because they realize the public has demanded this car by not buying anything else. I also feel if they can make one Volt for “Transformer II” they can start making others for the public. If they don’t get the loan, I bet we’ll see 2010 Volt’s on the roads by 2009. I also feel they have a lot more white collar $$ cuts they can institute.
August 31st, 2008 at 9:44 am
#12 statik Says: “Couple things, GM doesn’t want it labelled ‘bailout’ because:
a) no oversight on the use of the money
b) bad for image
C) they can still go back to the well AGAIN for the ‘real bailout’ money”
————————————————————————————–
Yes, I agree. However, I do think C) is something they will try to avoid at all costs. GM still has a lot of plants they can close in the U.S., and in Europe they are still profitable.
August 31st, 2008 at 9:51 am
This is a complicated issue. Many sides and angles to observe and dispute. For my part, I will try to be fair, although I don’t have the space or time to be complete. GM has relied heavily on large vehicles because that is where the profits were. Having said that over the last few decades GM has let quality slip and has cut corners to shave costs where they could all while sacrificing some quality and reliability while doing so. The unions have also strangled GM into some of this while demanding pay raises, health care, and threatening/and giving strikes. While no single reason has done them in, the most glaring problem facing GM right now is perception. I have been a strong critic of GM for many years now. For the most part, besides big trucks, they have let the Toyota’s and Honda’s of the world clean their clock in quality and reliability. GM, over the last few years, particulary this past ten years has started to recognize this and has taken steps to bring their vehicles up to or better than the Japanese. This has been a slow process, but for the most part “the newest vehicles …Malibu, GM trio of Enclave, Acadia, and Outlook for example” being offered are showing real promise and the quality and reliability gap or no longer an issue. I have always said that when GM built a vehicle as good as or better than the Japanese I would buy one. I have been true to my word as we now have a Saturn Outlook that replaced our Honda Pilot. It is superior in practically every way.
This brings me to my point of a long winded explanation. Many people have given GM a chance in the past only to be disappointed in quality and reliability. People do not like to get burned twice or more. Overcoming this fear of quality and reliability will not be easy for GM-even though it is no longer warranted! For me, perception is by far the hardest obstacle GM has going for them. Many people have had such great success with Toyota and Honda and others, besides GM, that they will still be critical of GM because of perception and past problems.
Does GM deserve the money? In a lot of ways, they put themselves into this mess, so I honestly don’t think they “deserve” it. But when you consider how far they have come, from where they were, it would be a shame to lose them now. I believe GM’s best years are in front of us, not behind us. And for America, that is a good thing.
Hawk
August 31st, 2008 at 9:54 am
Further to my post in #21:
Under that scenario (one automaker failing) you still get to drive a Volt…it might be a Ford Volt. Or you get to drive a Mustang…it might be a GM Mustang, etc.
This also allows for less impact on the economy as a whole.
When AMC folded into Chrsyler, the good/profitable lines (and emplyess) continued and some of the existing AMC lines converted over to make Chrysler brands that where in demand that Chrysler couldn’t pump out enough off (5th Avenue, Diplomat, etc.)…ala GM’s Impala, Malibu, Aveo, etc. A significant about of management was retained as well.
I’m not saying there was not alot of pain, about 60% of people with a AMC tag where gone…but it also enable Chrysler to immediately become more viable, gaining a edge on other manufacturers and they expanded rapidly afterwards.
Which is better in the long run? GM with 15 billion in their pocket…or going to your GM dealer and buying a GM Mustang, Pontiac Fusion, Chevy Focus and a GMC F-150?
August 31st, 2008 at 9:54 am
#23 Carcus Says: “I guess you either believe in the free market or you don’t. Apparently, a lot of people in this country don’t.”
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No, I don’t believe in pure capitalism. For example, under pure capitalism, all roads would be toll roads. You would have to look at advertisements to see who has the best deal for your daily commute.
I also don’t believe in pure socialism. I saw first hand how this worked in Moscow and East Germany. It’s worse than you can imagine.
So like most things, there needs to be some balance. Extremism rarely works. And the balance tends to change when big problems occur. So I guess you could call me a pragmatist.
August 31st, 2008 at 9:56 am
Totally photoshopped, lol. But it short of drives the point home.
The point: We all need to work together.
But if your curious, here is the real picture. At least, I’m assuming it is real.
“http://blogs.motortrend.com/6230445/corporate/where-is-gm-really/index.html”
August 31st, 2008 at 9:57 am
I think we do need to help the electrification of the automobile. It’s almost impossible to compete with the entrenched petroleum infrastructure if we don’t. We will literally have to wait for the price of gas to get so high that people will pay $40,000 for a compact electric car. It will happen, eventually. However, I think it’s a very good idea to get this transition happening earlier. Much less pain will be felt by everyone.
I think GM is going to need some help. Our country’s financial situation is so bad that bailouts are going to be par for the course. A few government underwritten loans will probably be needed to keep GM out of bankruptcy.
Also, If we must all chip in I hope we do it in the best way that motivates the manufacturer to make the best cars. A per-car tax break allows the cost of the battery to become somewhat reasonable. The higher volumes they get on the batteries and the more development money they throw at the problem the cheaper they will get. We need cheap, quick-charge electrical storage before the BEV will take off. It should be job one for this country.
August 31st, 2008 at 10:05 am
If they need to raise money to build the Volt, start taking Deposits on the Volt. Most of us will line up. Let the market do this.
August 31st, 2008 at 10:07 am
#28 Dave G.
I didn’t say pure capitalism, nor did I say anarchy, for that matter. I said FREE MARKET.
As far as tax dollars are concerned it should primarily be roads and schools, roads and schools, roads and schools. Have you ever heard that before?
A car company’s profitability is not a governmental concern. Making it a governmental concern is not pragmatism, it’s socialism.
August 31st, 2008 at 10:11 am
#27 statik Says: “Under that scenario (one automaker failing) you still get to drive a Volt…it might be a Ford Volt. Or you get to drive a Mustang…it might be a GM Mustang, etc.”
————————————————————————————–
I’m not sure I agree. All 3 American car manufacturers are hurting right now. The more likely scenario is that Toyota or Honda would absorb some of GM’s assets.
I’m not a GM fan boy. I own both Japanese cars and American cars, and I can see some advantages in each. Japanese car makers seem to be much better at innovating smaller evolutionary design changes. American car makers tend to be better with revolutionary new designs.
Since the Volt is a revolutionary new design, I would not expect something like this from Japan, at least not for a while.
So if GM goes out of business, the Volt may well go with it.
August 31st, 2008 at 10:12 am
Dear Uncle Sam,
I am having some issues currently, meeting all my economic household goals. I would like to add a $50,000 solar panel on my home, but because I have spent most of my money on a new Harley and speed boat, I currently have little excess cash available.
If you would be willing to send me about $40,000 in cash, I would be willing to pony up the remaining $10,000, so I can get those solar panels installed. If I am unable to repay this loan, I am sure you understand my situation, and will forgive my past loan history.
I do appreciate all the help, and in the future I will try to actually plan for expenses that I may incur.
Have a nice day
August 31st, 2008 at 10:16 am
#32 Carcus Says: “A car company’s profitability is not a governmental concern. Making it a governmental concern is not pragmatism, it’s socialism.”
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I believe unemployment is the government’s concern. If that makes me a socialist, fine - I’m a socialist.
August 31st, 2008 at 10:16 am
firehawk72 (#26)
“This is a complicated issue.”
No it’s not. The Constitution FORBIDS it.
It’s a very SIMPLE issue with a very simple answer…
NO.
August 31st, 2008 at 10:21 am
JEC Says: “Dear Uncle Sam, I am having some issues currently, meeting all my economic household goals. I would like to add a $50,000 solar panel on my home, but because I have spent most of my money on a new Harley and speed boat, I currently have little excess cash available.”
————————————————————————————-
Uncle Sam replies: If you don’t get your $50,000 solar panel, will you go out of business? How many people do you employ? How much tax income would I lose if I don’t co-sign your loan?
August 31st, 2008 at 10:22 am
#30 Texas
“I think we do need to help the electrification of the automobile. It’s almost impossible to compete with the entrenched petroleum infrastructure if we don’t. We will literally have to wait for the price of gas to get so high that people will pay $40,000 for a compact electric car. It will happen, eventually. However, I think it’s a very good idea to get this transition happening earlier. Much less pain will be felt by everyone.
I think GM is going to need some help. Our country’s financial situation is so bad that bailouts are going to be par for the course. A few government underwritten loans will probably be needed to keep GM out of bankruptcy.”
——–
I’d rather see GM be forced to sell the ‘Volt’ program for cash to someone that can really develop it…rather than the gov’t try to prop up a whole dinosaur just to see it’s egg hatch. GM is using ‘the Volt’ as it’s crutch to justify why the whole company should be saved.
For that matter, have the gov’t give Tesla and Zenn even a billion each (I use them because they have ‘wheels on the road’ now, and they are both underfunded but seem to have a reasonable fiscal outlook with fresh cash). Lets see how far they would get with the “electrification of the automobile,’ with just a billion dollars in each of their pockets…I’d wager it goes alot farther than 50 billion to the ‘Big 3′
August 31st, 2008 at 10:25 am
I’m on the fence about a government loan. I have to ask myself this question: Will we be better off without American automakers?
There are a lot of foreign automakers in this country now. They will gladly fill any void that is created from losing the Big 3.
There are Americans that will lose their jobs, but Americans will be hired back to operate the plants the foreign automakers take over.
I don’t want to see the Big 3 disappear. But I can’t help but wonder if that is a nationalistic feeling.
We are spending billions and billions in the middle east right now.
Is this necessary? Will it be necessary to do it again in the future?
I would rather give the billions to the Big 3 to build something that keeps us out of the middle east.
JEC #34. Your point is well taken.
August 31st, 2008 at 10:26 am
#33 Dave G (in response to #27 statik)
“I’m not sure I agree. All 3 American car manufacturers are hurting right now. The more likely scenario is that Toyota or Honda would absorb some of GM’s assets”
————
Hi Dave, thats why I added the part about gov’t intervention in my earlier post in #21
“Now here is where the gov’t CAN intervene effectively without paying out 50-XXX billions of dollars–keeping out ‘foreign’ vultures under the banner of ‘nationalism.’
Meaning that the gov’t would stop non-American companies from absorbing the failed company by virtue of their deeper pockets. Sorry, I should have re-iterated that in post #27.
August 31st, 2008 at 10:28 am
#35 Dave G.
“I believe unemployment is the government’s concern. If that makes me a socialist, fine - I’m a socialist.”
I’m glad we’ve got that straight. Personally, there’s a lot of things that scare me more than unemployment. Things like living in N. Korea or Cuba, or Laos. Someplace , I guess, where you live. Or where I hope you live.
August 31st, 2008 at 10:32 am
#39 Rashiid
I don’t want to see the Big 3 disappear. But I can’t help but wonder if that is a nationalistic feeling.
We are spending billions and billions in the middle east right now.
Is this necessary? Will it be necessary to do it again in the future?
I would rather give the billions to the Big 3 to build something that keeps us out of the middle east.
————
I like where your train of thought is going here. I don’t mind a bailout as much if it is a fiscal tradeoff on paper.
Meaning the government decides to cut/withdraw some other expenditure (Iraq, cleaning sidewalks, Medicare…I kidd) of equal value, because it feels a greater return on the money would be gained in supporting it’s domestic automakers.
That makes it a fiscal decision for the benefit of itself and its people…I can appreciate that.
Good thought…a compromise I can live with/appreciate it.
August 31st, 2008 at 10:52 am
#39 Rashiid Amul Says: “I’m on the fence about a government loan. I have to ask myself this question: Will we be better off without American automakers?
There are a lot of foreign automakers in this country now. They will gladly fill any void that is created from losing the Big 3.”
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Two points:
1) No one is talking about a government loan. See my post #16.
2) If GM goes, serial hybrids like the Volt may go with it. See my post #33.
August 31st, 2008 at 10:59 am
Dave G #43.
For me, I think it comes down to the following statement:
I would rather the government give billions of dollars to the Big 3 to build vehicles that get us off of oil, than to spend billions of dollars on a war over oil.
Now if the government is only guaranteeing loans, then so be it. My choice is the same.
August 31st, 2008 at 11:01 am
Either way, the government will be bailing. If they don’t help GM, then there will be tens of thousands of people unemployed immediately. They will be followed by thousands more that were employed by businesses that serviced GM. These will be followed by more that work for businesses that serve communities where those GM workers live.
As these unemployed people face some pretty poor employment opportunities, they will look to the government for assistance. The more the ranks of these people grow, the more the Democrats will promise them. The Democrats will eventually win more seats and dominate. Greater welfare benefits will be extended and taxes raised. Many of the new jobs available to people will be with the Government working new positions created to manage new bureaucracies. Many others will simply learn to live on the dole. America’s annexation into the European Union will almost be complete. Don’t think this could happen? Ask the British.
I say give them the money NOW!
August 31st, 2008 at 11:05 am
I love all this patriotic talk about how socialism is so evil. We are socialists! We have welfare, Social Security, unions, Medicaid, shelters, drug rehab, etc.
Do you posters who so arrogantly reject all forms of socialism really want to live in a pure capitalistic, free market society? A society where your fellow citizens, including women and children, are living next to the garbage dumps sifting though the goods thrown out by more fortunate citizens? Children dying of dysentery like we see in third world countries? Come on. You sure talk tough but if you really want to live in that kind of system you should just cash out and go retire to one of those third world countries. Since you have the money you will live like a king and have all the privileges you desire. Maids, cooks, a huge plantation, etc. What say you?
August 31st, 2008 at 11:15 am
August 31st, 2008 at 8:24 am
what a joke Obama wants to give them more then they need or even want. He never gets it.
******************************************************************
Form Joe
I agree. Obama never gets it.
August 31st, 2008 at 11:20 am
Texas Says:
August 31st, 2008 at 11:05 am
I love all this patriotic talk about how socialism is so evil. We are socialists! We have welfare, Social Security, unions, Medicaid, shelters, drug rehab, etc.
Do you posters who so arrogantly reject all forms of socialism really want to live in a pure capitalistic, free market society? A society where your fellow citizens, including women and children, are living next to the garbage dumps sifting though the goods thrown out by more fortunate citizens? Children dying of dysentery like we see in third world countries? Come on. You sure talk tough but if you really want to live in that kind of system you should just cash out and go retire to one of those third world countries. Since you have the money you will live like a king and have all the privileges you desire. Maids, cooks, a huge plantation, etc. What say you
Wow you have no trust in your fellow Americans. We can and would do the right thing if the Government would get out of the way. We the Government to do less not more.
August 31st, 2008 at 11:21 am
Reminds me of the joke where farmer approaches the outhouse and finds a socialist throwing twenty dollar bills down the outhouse hole . . .
“Why are you doing that?”
“You didn’t think I was going down there just for a five, did you?”
August 31st, 2008 at 11:23 am
#23 Carcus
We haven’t had a “free” market for decades. Government has intruded more and more into the daily business affairs of companies at the expense of that free market theory. And what of the 1980’s and the 2008’s bail-out of the banking industry? I don’t see anyone deriding the government’s bail-out there. Is it because we have money “invested” in the banks in the form of checking, savings and investment accounts and we don’t want to see the banks fail and see our money go down the drain? I would not like to see banks or the automakers fail. If the automakers fail we would be left to the tender mercies of foreign automakers who would treat our consumer how? Do you think we would be a captive market?
I do not see as much wrong with guaranteeing automaker loans as I do with the banking industry. Bankers are supposed to know how to make loans and control their accounts. Instead they make bad loans to cronies knowing they will not ever pay and the government will step in and keep the bank solvent.
Maybe we can keep our automakers strong and keep our taxpayers from doing too much at the same time. I believe in the tooth fairy also.
August 31st, 2008 at 11:31 am
>> Does GM deserve the money?
They fought intensely against hybrids for years, causing a fierce resistance for Prius to struggle with. Rather than helping promote new technology, they focused heavily on monster-size traditional vehicles instead. Now to make matters worse, they are promoting the SERIES hybrid at the expense of the FULL hybrids.
How does any of that help the general population?
Waiting another 6 years before Volt is able to reach high-volume availability at affordable prices is totally unrealistic. And that’s just the first E-Flex vehicle. What in the world are people going to buy if they require a larger, yet still efficient hybrid?
GM has no plans to offer midsize FULL hybrids with 4-cylinder engines. In fact, it doesn’t even appear that Two-Mode can support a configuration that favors efficiency over power. That lack of flexibility in design reveals where this automaker’s priorities have been.
What would change if they were provided with loan/bailout money?
Clear deliverables must be stated. They must be held accountable for meeting emission & efficiency objectives. Timelines must be strictly adhered to.
August 31st, 2008 at 11:40 am
I think the government ought to do whatever it can to get a resurgence of AMERICAN industry going instead of blowing multi-billions on Iraq and the Middle East. $50 billion is just a few months of military expenses in Iraq. No joke. Iraq is bleeding the country’s budgets dry. For what?
Iraq has a high liklihood of being a financial rat hole. Iraq might go right back to their tribal gang banger thug rule ways just as soon as the troops pull out. Then we’ll have a “new Saddam” we’ll have to deal with.
I think maybe the people in the Middle East actually LIKE “thug rule” for some strange reason. That’s all they’ve ever known for hundreds if not thousands of years. Trying to tranform the Middle East into modern democracies like America and the rest of the world might be a lost cause. Maybe try again in another 100 years.
August 31st, 2008 at 12:01 pm
I think it’s the American people who do the providing. Obama just wants to take their money and give to who he wants.
August 31st, 2008 at 12:05 pm
This post has drifted too much into the political realm. I agree with many of you about the direction our country seems to be going. I realize a pure capitalist society is not completely desirable or achievable. I don’t want to drift further into a socialist society either. As far as Iraq is concerned, I was not completely in agreement about taking on that task when we did or for the reasons we did. If we use the same justifications of removing weapons of mass destruction from the hands of a demonic government then we need to start invading Iran today. At the same time, I realize we can not allow governments like Iran’s and North Korea’s to gain nuclear weapons with out some type of response that insure the removal of those weapons.
I don’t like the war in Iraq or Afghanistan anymore than any one else, especially us veterans of past wars (Vietnam in my case). But we are there and we have contributed to the conditions on the ground. We need to do our best to insure a strong government and military in Iraq and then get the hell out as soon as possible. I don’t want to see the type of withdrawal the Democrats have been screaming about for four and a half years, but neither do I want to be there a day longer than necessary. I do believe we need to tell the Iraqi government in private, if possible to keep it private, that we will be out by a certain date. We should give them bench marks to gain and see that they meet or exceed them. If they don’t, then it will be their problem. I believe the Iraqis have met most bench marks set for them and have exceeded some. I see this as an opportunity to turn more and more over to them and start further troop withdrawals, but not by political decree as some want, but by the military commanders recommending such withdrawals. I see that happening now. I can only say “Thank God, its about time”.
We need to keep our economy strong. If that means helping GM, Ford and Chrysler, then let’s do it. The economy is still growing, regardless of what the Democrats and the media (is that an oxymoron?) say. They are trying to get Obama elected so the socialist secular society can be further achieved. I understand all that, as do most of you, if you stop to think about it. But no matter who is elected, he will be our president and we must pray he will work for the betterment of our country.
August 31st, 2008 at 12:12 pm
If GM is forced to sell off assets, such as the Volt, I am sure “big oil” would be happy to buy it. That would certainly do our country terrible damage. We may need to help the American automakers develop electrical cars and other vehicles. We would certainly not be the first government to “invest” in a high priority enterprise to insure the continued development of automobiles made by their countrymen.
August 31st, 2008 at 12:13 pm
DaveG
“Uncle Sam replies: If you don’t get your $50,000 solar panel, will you go out of business? How many people do you employ? How much tax income would I lose if I don’t co-sign your loan?”
___________________
Will I go out of business?
I guess I might if I am not financially sound.
How many people to you employ?
Well, the kids in my family depend upon me. I think that is more important than unemployment.
How much tax income would I lose if I don’t co-sign your loan?”
It’s all relative, right. No one would notice the loss of my income tax because its just one person, but if I am a BIG employer, then people feel the effect. This is exactly the point. So, if you are big, you can get the govt to bail you out, otherwise you actually have to take responsibility for your financial decisions! The big business’s rely on the govt providing handouts, and the more you do it the more they expect it. So when is enough, enough?
So tell me when should Uncle Sam NOT help an employer, and let them fall? Never? Our only if they have a worth > $x?
August 31st, 2008 at 12:18 pm
N. Riley -
I agree that we have not had a free market for a long, long time. If you give money to oil companies you are altering the free market. If you give money to the trucking industry you are favoring it over rail which is more economical and altering the free market. Paying farmers not to farm, alters the free market. Paying farmers to plant more corn for biofuel alters the free market. The nail in the coffin for me was the Bear Sterns bailout. Now we are likely to see a bailout of Fanny Mae and Freddy Mac and this by the party who usta preach free market, until they got in power.
Why are they doing this? Because the recession that would normally happen, after all the stupid, greedy actions come home to roost, would wipe out most of their constituents net worth.
I was ready for it, but I am glad to be out of this market anyway.
I’m with Static, let them fail and let the buzzards pick their bones.
August 31st, 2008 at 12:29 pm
#57 Len
I’m with Static, let them fail and let the buzzards pick their bones.”
I wonder whose bones would be picked clean. Maybe some of our own families’ bones. No one wants a bail-out. But neither have we wanted bail-outs of the banking industry (several times), the housing industry (of which the banks are in the midst of those problems) and give-away programs to the oil companies in the guise of tax credits or development grants to aid them in developing “clean” energy. When you get the government giving “grants” (not low interest loans) the ones receiving the grants become dependent on future grants to continue their “developments”. We can use the health care industry as another example. The American people have seen trillions of dollars given to research labs to help develop treatments and cures for many diseases. It is my belief these grants will insure no cure will ever be found for many of these diseases. That would end the need for further grants. But, maybe I am being just pessimistic. I hope so.
August 31st, 2008 at 12:41 pm
One of the main reasons that GM needs to find good terms for loans is because Wall Street and the mortgage industry got sucked into this giant scheme with mortgage backed securities. The banks are proposing higher than usual loan terms to companies like GM because of their losses. They are doing the same thing with people’s credit cards by raising their interest rates for frivolous reasons.
This mortgage backed securities mess that blew up in everyone’s faces was kind of of a “pass the buck (and the risk)” ponzi scheme. Guess who ultimately got left “holding the bag” … US …. the taxpayers … for a lot of the losses. This mortgage mess just ticks me off. It seems like there is one about every 10 years or so that the government has to bail financial companies out for. Remember the “S&L scandals” when GW Bush’s father was the President?
Meanwhile, the mortgage company executives and Wall Street hotshots who dreamed up these schemes are probably already retired to their private island in the Caribbean and enjoying mai tais and yachting around. They probably couldn’t care less about the economy these days.
It’s OBVIOUS that Wall Street needs to be monitored closely by the government to protect the whole financial system. The government HAD to bail out these Wall Street firms or it might have caused a domino effect in the whole financial system … a la the Depression in the 1930s. Wall Street can do a lot of good for growing the economy but if they aren’t monitored all the time by SOMEBODY, they can do a lot of bad. The Depression that started in 1929 had a lot to do with Hitler and the Nazis coming to power and causing WWII.
There’s plenty of people on Wall Street that only care about their OWN financial status and couldn’t care less about the welfare of the country as a whole if their schemes create havoc. When these people get caught they ought to do HARD TIME in the big house with the other hardened criminals. They can play all sorts of games with accounting, legalese and numbers. Just look at the Enron schemers. They can create a LOT more problems in the world than you think … way more than some guy holding up a convenience store.
August 31st, 2008 at 12:42 pm
#4 $7,000 tax break that’s great if you pay that much in tax but I don’t, I’m retired and live on a fixed income like millions of other senior citizens. I spent most of my life working for a retirement and can’t afford $30,000 for a car, it took me years to get my diesel truck and 5th wheel that I cant even use anymore, but I want an EV too. “but I don’t want a golf cart”
August 31st, 2008 at 12:49 pm
This might sound dumb but why can’t they bring the rear axle back and put a string of alternators on it to run the car after it gets going?
August 31st, 2008 at 1:03 pm
To everyone who thinks a government bailout would “Keep America Strong” by saving U.S. manufacturing. How about this scenario:
1. After government loan backing, GM survives, but is still very weak. They then look like they’ll have to go into default on the loans
2. The dollar has continued to decline due to runaway federal spending,( the fed continues to print up what it can’t collect through taxes).
3. Now the weak dollar induced u.s. business fire sale continues. A foreign company agrees to buy GM, make the necessary cuts and sell offs in order to repay part of the loans to the banks, as long as the u.s. government agrees to absorb the rest of the loss.
There’s a million other scenarios that are possible. The point is that no one person or government is smarter than the free market. And that the “use tax dollars to save u.s. manufacturing” could very well blow up right in your face, especially if the dollar continues its unprecedented decline.
There’s just no way in heck I trust Politicians to be able to invest my money (tax dollars) successfully into the very competitive automobile industry.
From the Herald Tribune:
Foreign investors buy U.S. holdings at a record pace
http://www.iht.com/articles/2008/01/20/business/20invest.php?page=1
August 31st, 2008 at 1:41 pm
#13 JED said:
“So what happens to the son when he does not payback his dad? Does he get a spankin’?”
We need a specially designated spanker. Maybe Jesse “The Body” Ventura. He’s an independent and more that capable of spanking Wagner, Lutz, et al.
A couple of other points.
Some say we should get of Iraq and spend that money on bailouts, loan guarantees, whatever. Problem is the money being spent in Iraq is borrowed money, we really don’t have it to spend. Furthermore, if we got out of Iraq and quit borrowing that money then interest rates would naturally fall, money would flow back into the US economy, and much of the need for the bailouts/guarantees would be eliminated.
To guarantee a loan without oversight is stupid. If the dad cosigns for his son he generally makes sure the son and and will make the payments. If he gets a late notice he calls the boy to “remind” him to make the payment. If the boy guits his job then the dad is on his butt to get a new one so he can continue to make the payments. If the government were to guarantee these loans then the same type of oversight should be provided for, at the expense of the company, not the taxpayer.
Jese Ventura…Secretary of Spanking. You gotta love it.
August 31st, 2008 at 1:42 pm
To claim GM is deserving of loans is ludicrous. None of the US manufacturers are. They spent all their time fighting the CAFE standards rather than adapting for the inevitable rise in gasoline prices. That’s when they weren’t suing California to delay the Zero Emissions Standards rather than developing the Volt ten years ago. (GM has said it could have done this). Lutz keeps saying that no one could have foreseen the rise but there are a ton of people who did. If in doubt look at when the peak oil page when up on Wikipedia.
On the other hand we’re spending $12B a month in Iraq when the government of Iraq has a $80B dollar surplus. We put the taxpayer’s on the hook for billions with the Bear Sterns bailout. We’re talking about trillions, not billions, for a bailout of Fannie and Freddie. Basically we have one giant clean up effort after eight years of a disaster. A puny $25B - $50B in loans doesn’t seem to warrant a lot of discussion. Personally I fail to see why some are so willing to constantly bail out the financials and so resistant to bailing out the manufacturers. We keep hearing about the Chrysler loans, which provided a positive return, but never the S&L bailout which was a thousand times more expensive and only resulted in losses. Somehow Wall Street is always deserving and Main Street is never deserving.
(Note to N. Riley — the Iraqi government is insisting we get out on a timetable. It’s the Bush administration which is resisting. No need for a private message telling them we’d like to get out).
FWIW this is a done deal. Obama signed on. McCain said no but has recently reversed himself. Now he also says yes. The only question is the terms. Hopefully the government will get it’s due and will structure the loans so they can only be used to retool for fuel efficient cars — Chrysler’s shifting production from SUVs to CUVs doesn’t impress me. Some cap on management pay might also be in order.
August 31st, 2008 at 1:48 pm
It’s a loan folks it’s not a give away. If our country loses GM or Ford it will be a sad day for us all. My gut wrenches everyday when I look at their stock price. The knowledge base, engineering and manufacturing skills just cannot be allowed to go away. We will never be able to rebuild the intellectual knowledge base of our auto industry. We will end up being a welfare country hoping for handouts from China and the Middle East. The US American auto industry should be and is our generation moon shot! We all may not get another chance. Let’s not be stupid on this.
On another significant note, Congress is about to let the alternative energy tax expire once again shooting ourselves in the foot. What is wrong with our elected officials? Please write your congress person and tell them to extend this credit so we the people have a choice not to use Middle East oil!
August 31st, 2008 at 1:54 pm
#59 GM Volt Fan
I could not agree with you more about people doing hard time for the financial mess they have caused. Most of the cause was purpose driven with the knowledge that good ole Uncle Sam would step in and bail them out.
August 31st, 2008 at 1:55 pm
“…but congress has so far failed…” so typical, they can find money for bridges to nowhere, etc. but they can’t find money for worthy projects.
August 31st, 2008 at 2:10 pm
Congress acts out of self preservation. If you threaten their re-election and they believe it is possible to defeat them, they will act accordingly. But, you can never again trust someone who acts in their own self interest and the interest of their close allies. I say congress (both house and senate) should be on term limits. The length of service should be changed to four years for both house and senate members with a two term limit. A person could run for re-election to the house or senate, after term limits, only after sitting out for one term. One other thing I would like to see and that is if you are in the congress and you register for another elected office, you must resign your current office within 30 days of registration for the new office. One thing I don’t like is for a person to get elected to the senate, then spend 95% of his time running for president. Especially after only serving, what, two years or so. We do not owe these politicians a free paycheck while they spend all their time running for a higher office.
One other thing while I am on this kick. All government employees (elected or not) should be on the same retirement plan as do a day laborer. If Social Security is good enough for that person, it damn well should be good enough for our senators, congressmen, president and everyone else in the U.S. government. I bet it would not take long to fix Social Security, then.
August 31st, 2008 at 2:14 pm
But we are diverting our discussion to the more mundane issues of politics. I say GM, Ford and Chrysler should be given as much help to insure we reach independence from foreign oil. We, the American people, deserve that much help from our government. God knows we don’t get much help otherwise.
August 31st, 2008 at 2:14 pm
For thirty years I have watched management outsource the work and reward themselves. Somehow this has made sense because it hasn’t slowed a bit. We have the industry managers of the country saying “We can’t find enough American engineers to hire, we need to bring in engineers and scientists from other countries so we can compete.” Meanwhile I have seen engineers have to take up other jobs to feed their familys. It is all about greed people. Industry didn’t want to pay the going rate, so they plead and get to bring in foreign employees to hold down the wages of our own people. Now we have the same industries asking the American people, who they turned their backs on, for a bailout. Bunk. We have created some kind of short sighted monster that looks at todays bottom line and seems to be incapable of seeing what these actions will bring a few years down the road. Nothing in the market place punishes this kind of behavour like bankrupcy.
August 31st, 2008 at 2:15 pm
Ed M Says:
August 31st, 2008 at 1:55 pm
“…but congress has so far failed…” so typical, they can find money for bridges to nowhere, etc. but they can’t find money for worthy projects.
It took an outsider to kill the bridge to nowhere!
Someone named Sarah Pailn?? WOW we could use someone like her in Washington!
August 31st, 2008 at 2:33 pm
What do you do if your major foreign competitors like Toyota don’t play fair by the pure capitalism rules that you expect? What if their government pours billions into auto industry research and development and gives out rock bottom low interest loans to certain companies? I hear that the Japanese govenment did this for the R&D for the Toyota Prius in the 90s. What do you do, just let certain countries take over entire whole industries if that’s what they want to do?
People don’t realize how intertwined the Japanese government is with a lot of their industries. They have this huge “keiretsu system” where the government and big companies all get together to scratch each other’s backs. A lot of countries are like this. China does that’s for sure. It reminds you the 5 families of New York in the Godfather movies. It’s not just the Asian countries either. The governments in Europe all intervene with their private sector all the time. In a global economy with intense competition, what do you do when everyone else doesn’t play by the rules you expect? Maybe the U.S. auto companies are going to have to start playing the game more like THEY do … just to compete and survive.
August 31st, 2008 at 2:55 pm
71 Starcast,
Thanks for interjecting a political textbite for us all. You could have mentioned “she’s real pretty, too.”
For the record, Palin originally supported the Gravina Access Project, until federal funding fell through and the project became a lightning rod.
How about this. Lets all try to move out of soundbite mentality and actually do some reading and thinking for a change?
Gravina Access Project Redirected
http://web.archive.org/web/20071214143302/http://www.gov.state.ak.us/archive.php?id=623&type=1
By the way, this isn’t an anti-Palin/anti-Republican post. It’s a let’s educate ourselves before we believe it post.
August 31st, 2008 at 3:01 pm
#72 GM Volt fan,
“What do you do if your major foreign competitors like Toyota don’t play fair by the pure capitalism rules that you expect?”
The way we used to. . . . tariffs.
August 31st, 2008 at 3:17 pm
Statik at a very early post said:
“…GM is the son, they have limited access to facility…and the money they can access is at around 14%. The gov’t is not really backing this loan, they are the loan…GM’s name just happens to go on the second credit card.”
Isn’t (as Dave pointed out) the Gov’t (read us) just guaranteeing the loan, not lending the money?
tim@36 said:
“…The Constitution FORBIDS it. …”
Actually the Supreme court is there to “decide” what the Constitution says or doesn’t say. If that was not the case, there’d be no income tax, because the Constitution doesn’t say that either. So, unfortunately, it’s NOT that simple. I wish that it was. All the more important as to who becomes the next president - likely two Supreme Court appointments to a currently 5-4 panel.
Whoever commented about “It’s not the Govt’s money - it’s ours. I totally agree. That’s why we vote. Ours is not a perfect system. It’s just the best system.
Be well,
Tag
August 31st, 2008 at 3:28 pm
Carcus@73
I agree on the education post, but I also think that Palin is a breath of very fresh air. And she’s pretty too. There’s a huge backlog on the biography of Palin, so it’ll be three weeks until I get my hands on a copy. In the meantime, I know that she was a whistle blower on her own party’s ethics deficit, that she increased the taxes on oil and gave the money to every man, woman and child in Alaska (not that I like big taxes, but I think the move was classy - no pun intended. And I’m pretty sure that her favorite food is moose stew. I’ve also heard her say (back in June) that we need to use an “all of the above” approach to getting our oil independence.
Be well,
Tag
August 31st, 2008 at 3:38 pm
In an old socialist country like the USSR the government gave out money for everything and where did it get them ? In socialist countries like Canada the government gives out money for almost everything and the standard of living has plummeted.
There’s some positive things about socialism but without capitalism the US wouldn’t be as wealthy as it is. Its important to stay as capitalistic as possible for the betterment of everyone.
I believe that we should have incentives to try new technologies but there should be a cut off point. GM should get some money to keep the company from going under, but there should be a time line to pay it back and then there’s no more. It shouldn’t be a Freddie Mac situation. Capitalism makes companies and individuals make the hard choices in order to be competitive.
August 31st, 2008 at 3:46 pm
What the hell do you know about Canada? We had a major bout of deficit spending with Trudeau (we spent it on poorly thought out social programs, not wars), but to compare Canada to the USSR is incredibly stupid. I’m convinced that Americans don’t even know what socialism is. Hint: Cuba and the USSR are BAD examples of EXTREME socialism aka communism.
The standard of living in Canada has not “plummeted.” I’d like to know where you got that idea. In fact, I’d say we’re a lot better off than Americans. For example, getting injured in a car accident in Canada doesn’t leave you millions of dollars in debt to a corrupt insurance industry. Canada has its share of problems, but please don’t write us off as a failed communist state like the USSR. That’s just ludicrous.
August 31st, 2008 at 3:46 pm
Tag (#75)
It’s about time the Supreme Court started APPLYING the Constitution like they are SUPPOSED to (and used to) instead of “interpreting” to meet their political activist ends.
By the way, we ALL know that our “best system” is seriously broken. It WAS and could be again MUCH better. When a computer program becomes corrupted, you start by purging the system and rebooting with the ORIGINAL program code. Read and apply the Constitution, Declaration of Independence, Bill or Rights and Federalist Papers.
This is the ONLY way to get back sound money, honest statesmen, faith in gov’t., full natural rights & freedoms and once AGAIN become known worldwide as the shining star of freedom instead of the country that forces “democracy” on others at the point of a sward.
By the way, pure “democracy” (Mobocracy) is 2 wolves and 1 sheep deciding on what’s for dinner. A “Constitutional Representative Republic (USA) has a Constitution and a Bill of Right designed specifically to LIMIT the reach and power gov’t so that the citizen’s NATURAL rights are protected FROM gov’t. Our founders studied history and they knew that gov’t always devolves into an oligarchy which is what the US has become.
August 31st, 2008 at 3:52 pm
>> What if their government pours billions into auto industry research and development…
The US did exactly that.
PNGV was federally funded for the Big-3 to develop hybrids. Toyota was refused the opportunity to join in. So, they found their own way… which resulted in Prius. The Bush administration cancelled the PNGV program, leaving the Big-3 dry at the prototype stage.
Poor decisions were made and efforts were abandoned.
How will things be different this time?
August 31st, 2008 at 3:59 pm
Tim@79
Is there anything that you can state that’s not an ABSOLUTE? For example, stating that ” … We ALL know…” anything is A) wrong and B) condescending, at best. The world (at least the one I live in) is not purely painted in black and white. Your passion is obvious, but seeing things that simply is, well, silly.
And now back to our previous discussion of the Volt.
Be well (and take a deep breath),
Tag
August 31st, 2008 at 4:02 pm
#75
“…there’d be no income tax, because the Constitution doesn’t say that either”
Actually the constitution did forbid a federal income tax and the Supreme Court reiterated that in it’s decisions. The constitution was amended before the current federal income tax went into effect.
#74
“The way we used to. . . . tariffs.”
I agree, and tariffs can also be used against foriegn countries that pollute, use child and slave labor, etc. But tariffs are risky. They tend to provoke retaliation, which leads to a tariff war. That’s where having a world class diplomatic corps comes into play, and the US hasn’t had that for years. That’s why we get screwed in all our trade agreements.
The American taxpayer shouldn’t be asked to cosign for any company to get a loan unless there is proper oversight. I bet that if a company knew that accountability came with the loan guarantee it would think twice about asking for the guarantee.
August 31st, 2008 at 4:07 pm
WK4P
Can you help me out with which constitutional amendment was passed to allow income tax?
Thanks,
Tag
August 31st, 2008 at 4:18 pm
#83 Tagamet
It was the 16th Amendment which states:
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
August 31st, 2008 at 4:18 pm
The U.S.A. & the auto industry, what a mess. Unions want this, the EPA wants that, consumers not satisfied. . . Not to mention the all powerful oil industry. I read that the USA has 53 trillion dollars in liabilities over the coming decades. Then mix in the globalization of the economies and global environmental concerns. We need leadership in Washington that can get a handle on this big picture situation. You would think that is the case already and that it is always of the upmost concern. But when you see the constant banking/loan problems over the decades, you wonder. But they sure keep a tight grip on the minimum wage that could never possibly be keeping up with inflation. I appreciate Mr Lutz’s point of view and I hope they get at least 50 billion in loan guarantees. But asking anything of a country that is 53 trillion dollars in the red is kind of short sighted. I think Ross Perot needs to get on TV and take the American public thru the reality of the math again. Perhaps we should take that 53 trillion dollar debt and proration it out and balance the Federal accounting books at zero and insist that it stay at zero, no ifs, ands or buts. I’ve come to realize that personal responsibity is the only solution, for our government is totally incompetent. Reality needs to be fully brought to life before it is to late, if it isn’t to late already. ( I hate to bum the board out with this kind of a post but in a way feel it needs to be expressed and not oppressed.)
August 31st, 2008 at 4:22 pm
Estero@84
Thanks! I KNEW it was in the teens (g). Between that one and the 19th we really got scrawed (g)(Just kidding, jan!).
Be well,
Tag
August 31st, 2008 at 4:23 pm
#83
“Can you help me out with which constitutional amendment was passed to allow income tax?”
Sure. The 16th amendment, enacted in February, 1913. It reads as follows:
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
Before this the income tax had been passed by Congress and signed into law, but was struck down by the Supreme Court. I’d have to research the specific decision, but it was the reason for the 16th amendment.
Peace and 73
Adam WK4P
August 31st, 2008 at 4:33 pm
jan@85
I agree and I really wish that someone, sometime soon, decides to get our financial house in order, BUT (I think) the only way to do that is to cut entitlement programs, and it’s almost impossible to get elected with a platform that stresses “personal responsibility”. Just ask Ross Perot. You mean I’m not entitled to a house? And if I don’t work, I shouldn’t get paid? Geepers. You’re tough!
Well, back to the Volt (maybe the Gov’t should just GIVE those out…)
Be well,
Tag
August 31st, 2008 at 4:34 pm
Thanks also to WK4P@37! See my post @86.
Be well,
Tag
August 31st, 2008 at 4:35 pm
#87 WK4P
#83 Tagamet
The Sixteenth Amendment (Amendment XVI) of the United States Constitution was ratified on February 3, 1913. This Amendment overruled Pollock v. Farmers’ Loan & Trust Co. (1895), which greatly limited the Congress’s authority to levy an income tax. This Amendment allows the Congress to levy an income tax without regard to the States or the Census.
August 31st, 2008 at 4:46 pm
To Continue #90
Pollock v. Farmers’ Loan & Trust Company, 157 U.S. 429,[1] aff’d on reh’g, 158 U.S. 601[2] (1895) was an important Supreme Court of the United States case in which the court ruled that the unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and were unconstitutional because they violated the rule that direct taxes be apportioned.
August 31st, 2008 at 5:07 pm
#86 Tagamet - “I agree and I really wish that someone, sometime soon, decides to get our financial house in order.”
Look no farther than Bill Clinton. Record budget surplus. Record growth. Of course that was all completely erased by the “let’s cut taxes and wage a war” plan. Getting out of a ditch is more difficult than getting in, but hopefully we’ll be able to restore some semblance of fiscal prudence in the next few years.
Your comments on Palin were interesting though you have some details wrong. She did push for increasing taxes on the oil companies but the additional revenues went to general government operations. The checks to individuals you’re referencing were checks drawn from part of the gains in the Alaska Permanent Fund, which is something different altogether.
No matter. My question is: if taxing oil companies and sending the money raised by those taxes to individuals is a good thing, do you support proposals to tax the oil companies to fund the electrification of transportation? The principle seems the same but if I remember correctly you thought this not to be a good idea. Perhaps my memory fails.
August 31st, 2008 at 5:10 pm
Why don’t they just follow the Obama model?
Instead of pursuing a big loan underwritten by the taxpayers as a whole, just launch a program where millions of Americans can voluntarily deposit in low dollar amounts toward the eventual purchase price of their E-Flex vehicles (plus special contributor perks) and fund the expedited development of the E-Flex program.
There are psychological barriers to traditional public funding. We don’t like to pay for stuff we don’t think we need, and we get scared by the combined size of the tax across the population. Both of these factors mean that people will pay more for something they specifically want, and they’ll pay more if they are asked to pay individually instead of considering the millions or billions that will be paid in total.
GM gets capital up front, but more importantly, they establish direct contact with very-likely E-Flex buyers. They can send them email updates, direct them to online communities such as this one, and develop a solid core of brand loyalty.
I believe that this form of elective-collective investment (sometimes called communitarianism) is the future of capital allocation in free market systems, made possible by information technology and social networking.
It’s no more a departure from capitalist ideology than hedge funds, dark pools, and other innovations for tapping capital markets. But by going direct to ordinary people, we bypass the special interests that control the huge centralized pools, many of which might not be so fond of automotive innovations that reduce the demand for petroleum.
August 31st, 2008 at 6:18 pm
One reason why I think the volt might not save GM (or my tax dollars, in the event of govt. backed loans). Ultimately, consumers will vote with their checkbook.
If you make 2 assumptions:
1. Gas won’t skyrocket completely out of control i.e. greater than $8/g.
2. Gas will be available at the pump.
Then, the technology on the road today (45mpg parallel hybrid) is too much competition for a volt that could cost twice as much.
This is evidenced by the following graph:
Quick mileage annual cost summation. At 15,000mi/year and the following mpg (numbers rounded for simplicity)
Mpg gal/yr $5 to $8/g then:
10: 1500g $7,500 to $12,000
15: 1000g $5,000 to $8,000
25: 600g $3,000 to $4,800
35: 430g $2,000 to $3,500
45: 330g $1,500 to $2,500
55: 270g $1,500 to $2,000
65: 230g $1,000 to $2,000
75: 200g $1,000 to $1,500
85: 180g $1,000 to $1,500
95: 160g $1,000 to $1,500
As you can see. Somewhere around 45 mpg the cost factor for fuel flattens out substantially. This will probably be the most significant discriminator when consumers go shopping for a fuel efficient vehicle.
I personally, might still consider purchasing the volt. I relish the technology. But the masses. . . . I think economics (purchase price and operating cost) will be the biggest factor.
I also think this is why Toyota drags their feet on the plug in. They assume factors 1 and 2 listed above are correct, and they don’t want to spend $ on production changes for something that doesn’t inspire the balanced check book oriented consumer.
August 31st, 2008 at 6:53 pm
DonC@92 said in part
“…Your comments on Palin were interesting though you have some details wrong. She did push for increasing taxes on the oil companies but the additional revenues went to general government operations. The checks to individuals you’re referencing were checks drawn from part of the gains in the Alaska Permanent Fund, which is something different altogether…”
Technically you are correct, BUT it’s actually six of one, half dozen of the other.
See
http://www.tax.alaska.gov/programs/documentviewer
I’m not going to retype all that, but there’s an unrestricted fund and a restricted fund, but it’s in from Oil and out to the citizens.
And if you check back to my earlier post I prefaced the taxes remark with a “Not that I’m in favor of taxes” or something close to that. I’m a “let us spend our money - not the govt” person. In a thumbnail, I want govt to protect me and build roads. (shrug).
Be well,
Tag
August 31st, 2008 at 7:18 pm
>> the technology on the road today
That’s not constructive.
Averaging 50 MPG is totally realistic a year from now, well before Volt becomes available.
August 31st, 2008 at 7:20 pm
Carcus # 94
That is very very interesting.
Personally, I believe economics always plays a part when someone buys a car. Is a person who buys a Porsche really that different from someone that buys a Hyundai Accent? The difference may very well be the level of income.
But not always. Take me for instance. I can afford the Porsche.
But I’m married. And my wife is extremely cheap (she prefers the word frugal) so I drive a Hyundai Elantra. I am driving her nuts with Volt information and with all the time I spend on this site. But I aim for the Volt to be my next car. But that is because I can afford it.
Economics will play a very significant role when it comes to purchasing the Volt.
August 31st, 2008 at 7:23 pm
john@96 Siad:
>> the technology on the road today
“That’s not constructive.
Averaging 50 MPG is totally realistic a year from now.”
Dude! He came to praise Prius, not to bury him…. That’s from Billy Shakespeare..
Be well,
Tag
August 31st, 2008 at 7:32 pm
Don’t forget a bit of (recent) history. The US Government bailed out both Lockheed and Chrysler back in the late 70s. Uncle Sam actually made money on the Chrysler bailout.
Also, FNMA and Freddie Mac were creations of Congress. They were privatized years later but retained lines of credit from the US Federal Reserve. This created an “implied” guarantee by Uncle Sam. The US Congress bailed out both FHLB and the Federal Farm Credit system in the 80s. It is natural to assume that they would do the same for FNMA and Freddie. Sect’y Paulson has already worked out a plan to guarantee the liabilities of FNMA and Freddie but not compensate the stockholders. FNMA and Freddie Mac have never been run as true stand alone enterprises. Their leverage is many time larger than that of a truly private organization. Their high leverage ratios came about because the implied Federal guarantees.
Domestic and Foreign governments and institutions are the largest holders of FNMA and Freddie debt. The implications of failures would make the 30s depression look like childs play
August 31st, 2008 at 7:36 pm
I feel, if there is some type of government intervention, weather it be, backing loans, or providing cash. It should insure, this money will not only be used to re-tool, but to ensure jobs are created here in America.
The big reason we are hurting (my own thoughts), is because most of all the hi-paying technical, and engineering jobs have been, either out sourced or out right moved out of the US of A. We need them back to get the country moving again
August 31st, 2008 at 7:40 pm
#94 carcus gives a table of cost v mpg and gas price
Thank you for the table. It seemed to me to have too much rounding toward the end. 95 mpg really has significantly lower cost than at 75 and 65. But your general point is a good one.
August 31st, 2008 at 7:50 pm
#94 carcus says “But the masses. . . . I think economics (purchase price and operating cost) will be the biggest factor.”
What you are saying is true, in that people are looking for the best prices for whatever they want to do. But what you are saying is not true if it implies that people just want transportation at lowest cost. Last weekend I was in Vancouver and it seemed to be the BMW capital of the world. This weekend I was at the mall, and it seem to be covered in SUVs. All of these people could have been driving Cobalts or Toyota Corollas, but they were not.
“The masses” (are these people you look down on?) have specific goals (whether performance, pride, size, family, comfort) that they are trying to meet in what they purchase.
August 31st, 2008 at 7:52 pm
#70 Len
I know what you mean, but some of your comments are directed at the wrong reason for the demands of business to cut cost. We, the American people, have what I call the WalMart syndrome. We demand more and more goods at smaller and smaller prices. Business, like WalMart and others to numerous to name, try to meet that demand by buying foreign made goods from China. Other businesses try to cut cost by out-sourcing jobs. I agree it is a bad idea. We will live to regret it. But, we the American people are primarily to blame. We say we want more Americans working and making our products, but we are unwilling to pay the higher cost associated with those American made products. It did not help that at the same time foreign companies were coming across our shores to compete with reasonably priced and reasonable product quality, American workers were demanding more income, more health care and larger pension coverage while at the same time producing shoddy goods that no one wanted. We all need to take a good hard look in the mirror and realize where much of the blame lies. The same is true with the automakers. We demanded SUVs and large pick-ups. American automakers gave us what we demanded. Even the Japanese, those wonderful economic, gas miser, quality assured Japanese were no better than the American automakers. They all have been giving us bigger and bigger cars, SUVs and trucks for the past 10 years.
There is plenty of blame to go around. We were all part of the problem. Now we need to become part of the solution.
August 31st, 2008 at 8:00 pm
#72 GM Volt Fan
Why do you think the Japanese companies are referred to by the name “Japan Incorporated”? The government of Japan and the Japanese companies, especially those producing goods for overseas markets, are very closely inter-twined. Money flows from the Japanese government into company coffers and the government does research and development in partnership with the Japanese. I do not place blame on the government or the companies in Japan. It works very well for them. When you compete against a Japanese company, you are competing against Japan Inc. We do not have that depth of “backup and support” in American companies. In America, government is in competition with our companies. They are antagonists and will fight the company to its death then celebrate their “victory”.
August 31st, 2008 at 8:02 pm
N. Riley #103.
You must have read Robert Reich’s book; Super Capitalism. That is his take on it too.
August 31st, 2008 at 8:05 pm
Ken JW Says: “The big reason we are hurting (my own thoughts), is because most of all the hi-paying technical, and engineering jobs have been, either out sourced or out right moved out of the US of A. We need them back to get the country moving again”
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