Dana considering layoffs as Obamacare costs mount

Dana Holding Corp., recently announced their third quarter results, reporting a 12% decrease in sales and net income of $56 million, compared to with $110 million for the same period in 2011.

The global auto parts manufacturer properly characterized their earnings as solid, and several media outlets covered the details.

Most of the news reports also mentioned the letter President and CEO Roger Wood sent to employees that called for continued vigilance in light of falling commercial vehicle demand in North America and continued economic uncertainty.

The uncertain global economic environment continues to put pressure on production in Europe, China, and Brazil. In North America, as evidenced not only by our earnings release, but by many other companies as well, there is a looming concern in the economy. The threats of a fiscal cliff, along with increasing taxes on small businesses, are holding down job creation and optimism for growth in the United States. These economic factors affect Dana in that we must always be sure that we are keeping our costs in line with our revenue changes.

But that's where most media coverage stopped. The next paragraph in the letter told the real story:

We must also offset increased costs that are placed on us through new laws and regulations. For example, the Patient Protection and Affordable Care Act, also known as “Obamacare,” is expected to cost Dana approximately $24 million over the next six years in additional U.S. health care expenses. This is a cost that our customers are not willing to cover, mandating that we reduce our overhead expenses to cover them.

Yes, you read that correctly: $24 million over the next six years. And they can't pass that along to their customers, so they have to reduce their overhead.

That means layoffs, because there's really no other way for a company to cover that much expense, especially in a recession.

In June, Dana employed 25,500 in 47 countries. By September, they'd shed 1,000 jobs, some of them from planned actions like their divestiture of their Fredericktown, Ohio, facility; the planned closures of their Longview, Texas, and Toledo, Ohio, facilities; and the consolidation of their Rochester Hills, Mich., and Milwaukee, Wisc., plants into other facilities.

But last Friday they laid off seven white collar staff at corporate offices here in the Toledo area. I've been told by company insiders that more are being considered.

So while President Barack Obama is campaigning on his auto bailout and the jobs it supposedly saved, his Affordable Care Act - Obamacare - is going to cost jobs ... in that same automotive industry.

Dana may be able to survive the increased costs of "affordable" care, but not without consequences for some of their employees. Other small businesses and their workers won't be so lucky.

Where will the jobs be then?


***Dana is a world-leading supplier of driveline, sealing, and thermal-management technologies that improve the efficiency and performance of passenger, commercial, and off-highway vehicles with both conventional and alternative-energy powertrains. The company's global network of engineering, manufacturing, and distribution facilities provides original-equipment and aftermarket customers with local product and service support. Based in Maumee, Ohio, Dana employs approximately 24,500 people in 27 countries and reported 2011 sales of $7.6 billion. For more information, please visit www.dana.com.

Here is the full text of the letter, confirmed as accurate and complete by Dana:

October 26, 2012

Dear colleague:

Today we announced earnings for the third quarter of 2012, and I want to thank all of you for your hard work in achieving solid results. We have seen volatility throughout the entire year, but in the third quarter we saw a rapid softening of demand in some of our key markets. Most significant was the decline in our North American commercial vehicle market, where production rates are now below those of last year.

Looking forward we see opportunity, and also continued headwinds. The uncertain global economic environment continues to put pressure on production in Europe, China, and Brazil. In North America, as evidenced not only by our earnings release, but by many other companies as well, there is a looming concern in the economy. The threats of a fiscal cliff, along with increasing taxes on small businesses, are holding down job creation and optimism for growth in the United States. These economic factors affect Dana in that we must always be sure that we are keeping our costs in line with our revenue changes.

We must also offset increased costs that are placed on us through new laws and regulations. For example, the Patient Protection and Affordable Care Act, also known as “Obamacare,” is expected to cost Dana approximately $24 million over the next six years in additional U.S. health care expenses. This is a cost that our customers are not willing to cover, mandating that we reduce our overhead expenses to cover them. On a positive note, we have made the decision to increase the investment in our global engineering spending to facilitate our growth plan. And we are committed to not allowing this increase to become an excuse for the earnings performance of our company. These challenges require all of us to be innovative and focused to meet the increased cost burdens with creative ways to accomplish our current performance expectations and future growth objectives.

To counter some of the challenges ahead, we have and are taking aggressive steps to manage costs in each and every aspect of the business. These actions include reducing material costs, taking the complexity out of our products and processes, and reducing our conversion and overhead costs. It is most difficult when our colleagues are affected, but we must take action now, with the outlook as we see it, to ensure that we are competitive in the future.

When I joined Dana 18 months ago, I saw the great potential of this company to move from a survival mode story to a profitable growth trajectory. We have made great strides in our vision to become the global technology leader in efficient power conveyance and energy management solutions. We are on our way to this vision, with a solid plan in place to get there. Working together as One Dana, we are becoming a lean, efficient, results-driven organization with a renewed sense of urgency. We are also investing in technology that supports our growth strategy.

This new Dana requires all of our ongoing diligence in reducing cost and complexity, which is essential to fueling our growth and mitigating mandated costs. Even amid volatile market conditions and increased cost mandates that are placed on our business, I am confident that continued discipline and flexibility will help Dana to remain strong. Consistent with our culture and operating model, I encourage each of you to bring forward your ideas to improve efficiency, eliminate waste, and move us forward.

Thank you for your cooperation, and I look forward to working with you as we meet these challenges together.

Sincerely,

Roger J. Wood
President and CEO

Confusing reporting or backtracking on outsourcing Jeeps?

Fiat, the majority owner of bailed-out Chrysler, told Bloomberg that they were going to re-start production of Jeeps in China and perhaps move all Jeep production to that nation.

Here is the actual quote from Mike Manley, chief operating officer of Fiat and Chrysler in Asia (emphasis added):

“The volume opportunity for us is very significant,” Manley, who is also president of the Jeep brand, said in an interview at Chrysler’s Auburn Hills, Michigan, headquarters. “We’re reviewing the opportunities within existing capacity” as well as “should we be localizing the entire Jeep portfolio or some of the Jeep portfolio.”

I read the Bloomberg article and thought they were saying they were considering moving "the entire Jeep portfolio" to China, and reported that here on this blog.

To be clear, I didn't think that meant they would idle all the assembly lines and the U.S. work force; my point wasn't about the loss of jobs, but the loss of the Jeep brand being 'made in America' and the campaign implications if the iconic Jeep was outsourced to China.

Apparently, that's not at all what they intended and they're now 'clarifying' after Mitt Romney mentioned the article in a speech in Defiance last night. The Detroit News reports:

The Bloomberg story, though accurate, "has given birth to a number of stories making readers believe that Chrysler plans to shift all Jeep production to China from North America, and therefore idle assembly lines and U.S. work force. It is a leap that would be difficult even for professional circus acrobats," Chrysler spokesman Gualberto Ranieri said.

"Let's set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China. It's simply reviewing the opportunities to return Jeep output to China for the world's largest auto market. U.S. Jeep assembly lines will continue to stay in operation."

The Bloomberg story, however, sparked the confusion in the first paragraph of the story, saying Chrysler planned to return Jeep output to China "and may eventually make all of its models in that country."

This may be a simple case of confusing reporting, but my distrust in this administration is so great that I couldn't help but wonder if someone didn't make a phone call to Chrysler to say 'hey - that's gonna hurt; make it go away.'

Jeep moving to China?

"Jeep, an Obama favorite, looks to shift production to China"

That's the Washington Examiner headline on a story that details the possibility that taxpayer bailed-out Chrysler might shift production of all Jeeps to China.

Yes, the iconic Jeep, symbol of Toledo, saying "Made in China" ...

So much for saving the auto industry in Ohio.

What possible comment could President Obama have if his campaign poster child outsources production to China???

Is this the push that moves Ohio out of 'toss-up' and into the Romney column?

The article says:

In another potential blow for the president's Ohio reelection campaign, Jeep, the rugged brand President Obama once said symbolized American freedom, is considering giving up on the United States and shifting production to China.

Such a move would crash the economy in towns like Toledo, Ohio, where Jeeps are made and supplied, and rob the community of the economic security they thought Obama's auto bailout assured them.

Obama is such a fan of Jeep that he included a picture of himself speaking at the Toledo plant in his newly released second term agenda binder. In his address to the plant in 2011, Obama said, "I just took a short tour of the plant and watched some of you putting the finishing touches on the Wrangler. Now, as somebody reminded, I need to call it the 'iconic' Wrangler. And that's appropriate because when you think about what Wrangler has always symbolized. It symbolized freedom, adventure, hitting the open road, never looking back."

Well it appears that the taxpayer bailed-out Chrysler is looking back and now considering cutting costs by shifting production of all Jeeps to China, which has a strong desire for Jeeps.

Read more...

Quote of the Day - auto bailout and drunk drivers

The bolded sections are my own emphasis:

‎Calling the bailouts “successful” is to whitewash the diversion of funds from the Troubled Assets Relief Program by two administrations for purposes unauthorized by Congress; the looting and redistribution of claims against GM’s and Chrysler’s assets from shareholders and debt-holders to pensioners; the use of questionable tactics to bully stakeholders into accepting terms to facilitate politically desirable outcomes; the unprecedented encroachment by the executive branch into the finest details of the bankruptcy process to orchestrate what bankruptcy law experts describe as “Sham” sales of Old Chrysler to New Chrysler and Old GM to New GM; the costs of denying Ford and the other more deserving automakers the spoils of competition; the costs of insulating irresponsible actors, such as the United Autoworkers, from the outcomes of an apolitical bankruptcy proceeding; the diminution of U.S. moral authority to counsel foreign governments against similar market interventions; and the lingering uncertainty about the direction of policy under the current administration that pervades the business environment to this very day.

In addition to the above, there is the fact that taxpayers are still short tens of billions of dollars on account of the GM bailout without serious prospects for ever being made whole. Thus, acceptance of the administration’s pronouncement of auto bailout success demands profound gullibility or willful ignorance. Sure, GM has experienced recent profits and Chrysler has repaid much of its debt to the Treasury. But if proper judgment is to be passed, then all of the bailout’s costs and benefits must be considered. Otherwise, calling the bailout a success is like applauding the recovery of a drunken driver after an accident, while ignoring the condition of the family he severely maimed.' ~ Dan Ikenson's testimony to Congress

Obama's big lie

President Barack Obama was in Toledo for the Labor Day weekend and during his speech at Scott High School, here's what he had to said about the auto bailout which he, and other Democrats, call a 'rescue plan':

"We weren't going to give up on your jobs and your families and your communities. We weren't going to let Detroit go bankrupt. We weren't going to let Lordstown go bankrupt. We weren't going to let Toledo go bankrupt."

GM did go bankrupt!

And they may end up in bankruptcy - AGAIN!

If the company had gone directly to a bankruptcy reorganization instead of first getting billions of taxpayer dollars in a bailout and then going bankrupt anyway, the American public wouldn't be saddled with thousands of shares of a company that is likely to go bankrupt again and a debt that probably will never be repaid..

All the bailout money did was delay the inevitable - and it is a complete lie when Pres. Obama says that he "wasn't going to let Detroit go bankrupt."

Sadly, Obama is aided and abetted by a press too eager to let the lie stand, since no one bothers to include even a single sentence that states "GM did file for bankruptcy."

Where are the fact-checkers on this one?

Only thing auto bailout did was protect the union, not the industry or the taxpayer

President Barack Obama is in Maumee this morning, beginning his bus tour of Ohio and Pennsylvania, two key states in the November election.

He plans to tout the auto bailout as the primary reason for Ohio's recent economic success. But this summary from the National Center for Policy Analysis proves that the so-called auto bailout was nothing more than a union bailout, preserving high-paying union jobs to the detriment of other creditors - and at a huge loss to the American taxpayer.

Auto Bailout or United Auto Workers Bailout?

The government bailout of General Motors (GM) and Chrysler between 2008 and 2009 will cost taxpayers approximately $23 billion, as estimated by the Treasury Department. President Barack Obama emphatically defends his decision to subsidize the automakers, arguing it was necessary to prevent massive job losses, say James Sherk and Todd Zywicki of the Heritage Foundation.

Even if one accepts this premise, the government could have executed the bailout more efficiently with no cost to taxpayers had the administration required the United Auto Workers (UAW) to accept standard bankruptcy concessions. Instead, the Obama administration gave special treatment to the UAW above and beyond what other creditors and unions received:

•Bankruptcy typically brings uncompetitive wages down to competitive levels, yet existing UAW members did not take pay cuts at General Motors.
•The administration could have kept the automakers running without subsidizing the UAW's above-market pay and benefits.
•Subsidizing UAW compensation cost $26.5 billion -- an amount that exceeds the estimated taxpayer losses on the bailout program.

When GM and Chrysler each ran out of cash, the Obama administration forced the companies into bankruptcy as a condition of receiving government support and funded them through the bankruptcy process. Even in this regard, the president shamelessly ignored standard bankruptcy protocol in order to dole additional favor upon the UAW.

•A cornerstone of bankruptcy policy is the requirement that creditors' priorities are preserved in bankruptcy in the same order as they are preserved outside bankruptcy.
•Specific to the auto manufacturers, priority should have been given to paying secured lenders in full before paying unsecured lenders (like the UAW).
•Instead, the plan imposed by the government forced Chrysler's secured creditors to accept only 29 cents on the dollar, while the UAW recovered most of the value of its claims.
•Another standard element of bankruptcy proceedings is that similarly situated lenders should be given equal priority.
•However, the UAW's fellow unsecured lenders received no such special treatment by the government's bankruptcy process.

Thus, while the Obama administration may sell this program as being necessary to stem the hemorrhaging of jobs, the Detroit bailout was little more than a UAW bailout.

Source: James Sherk and Todd Zywicki, "Auto Bailout or UAW Bailout? Taxpayer Losses Came from Subsidizing Union Compensation," Heritage Foundation, June 13, 2012.

Fact-checking Obama's Toledo speech on auto bailout

I didn't do the leg work, but Glenn Kessler, The Fact Checker, at The Washington Post did. In his column he starts with this:

"With some of the economic indicators looking a bit dicey, President Obama traveled to Ohio last week to tout what the administration considers a good-news story: the rescue of the domestic automobile industry. In fact, he also made it the subject of his weekly radio address.

We take no view on whether the administration’s efforts on behalf of the automobile industry were a good or bad thing; that’s a matter for the editorial pages and eventually the historians. But we are interested in the facts the president cited to make his case.

What we found is one of the most misleading collections of assertions we have seen in a short presidential speech. Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.

Let’s look at the claims in the order in which the president said them."

Read the entire analysis and educate yourself about the truth versus the spin.

Campaigning on financial - not auto - bailout makes more sense

U.S. Representative Marcy Kaptur (OH-9) is in Toledo today with President Barack Obama celebrating the 'success' of the auto bailout by touring the local Chrysler Group Llc plant.

First, repaying one loan with the proceeds of another one isn't really that much of an accomplishment, though some might say that being able to obtain private loans to pay back the public - taxpayer-sponsored - ones might be a step in the right direction.

In fact, Chrysler CEO Sergio Marchionne called the trip 'tacky':

"It's incredibly tacky stuff. I'm being brash. You pay them back and you shouldn't be celebrating. Cut them a check and send them home. And say thank you."

And the sentiment at General Motors is similar:

“No one at GM is happy” that it is “going to be used as one of President Obama’s success stories,” a source familiar with the internal dynamics of GM’s business told The Daily Caller, adding that the car company is not exactly on the same page as the White House in terms of declaring victory.

GM’s “not hanging a ‘Mission Accomplished’ banner and they shouldn’t either,” the source told TheDC, citing current economic and industry woes.

“GM is not in a position to declare victory,” the source added.

And they have a valid point. By the President's own admission, the auto bailout is going to cost taxpayers $14 billion. The spin, though, is that since this is less than expected, it's a good thing.

Think about it - the government decided to bailout two companies expecting to lose more than $14 billion in the process. There's a reason no private investors wanted a part of that!

Instead of touting the bailout, why aren't Obama and Kaptur touting the success of Ford which didn't need a bailout and in April reported their largest first quarter profit since 1998??? Perhaps because there is no political gain to celebrating the success of a company that isn't dependent upon government largess? But I digress....

If the 'success' of the auto bailout is worth campaigning on, will Kaptur and Obama campaign on the actual success of the bank bailouts?

According to this article in The Atlantic,

In fact, taxpayers fared far better through their "investment" in the banking industry than they did in the auto industry. As of the Treasury's March bailout program update, the auto bailout is expected to cost taxpayers $15 billion. Meanwhile, the non-housing-related financial industry bailout is expected to provide the government with a net gain of $157 billion. Obviously, the taxpayers were far better off rescuing the banks than they were rescuing out the auto companies.

Wow! The bailout of the financial industry is going to result in taxpayers having a PROFIT of $157 billion. From both a jobs and company profits standpoint, the financial industry has performed much better since its bailout than the two auto companies.

Isn't that something to celebrate? Isn't that a 'success'? Isn't that worthy of bragging and use on the campaign trail? Especially since the President's number 1 concern is jobs?

Apparently not.

You see, these two auto companies failed because of "flawed business and strategy decisions that had built up over decades" - but they employ union workers - a key constituency of Democrats.

Compare that to the image of 'fat-cat' bankers, as Kaptur and the Dems so demonize, and it's no wonder the average American might react better to the ploy of claiming success on the auto, rather than the bank, bailouts. But as The Atlantic article points out:

If the U.S. suffered the collapse of its financial infrastructure, the economic damage would have been far more catastrophic than if a few large auto manufacturing firms had failed. Moreover, it wasn't just the Wall Street high rollers who were rescued: hundreds of thousands of employees working at small banks and at big bank regional branches across Main Street America were spared.

The article says the proper response to the campaign claim of success in the bailout is to ask how success is defined:

The fact is, you can save just about any company if you throw enough money at it. In the case of most banks, this money really just served to provide funding until the panic subsided, after which time many banks promptly repaid the government, with interest. Ultimately, the bank bailout will turn a profit for taxpayers. If there is any sort of bailout that could be called a success, it's that sort.

Meanwhile, the auto bailout is expected to cost taxpayers $15 billion. The auto companies were not on the verge of collapse due to anything having to do with the financial panic or the housing bubble. Instead, they failed due to flawed business and strategy decisions that had built up over decades. So the government threw a huge wad of cash at some companies with fundamental problems. They recovered after revamping their operations and using that cash to plug some holes. Is that really so impressive?

It's not. But since Rep. Kaptur has made a point over the past several years of painting banks and Wall Street as the enemy, she certainly can't let facts get in her way.

And we cannot expect the local daily newspaper to question her on this. Can you imagine Blade Politics Writer Tom Troy asking Marcy to explain why a program that lost $14 billion of taxpayer dollars is good while a program that made taxpayers a profit of $157 billion - and saved more jobs - is bad? I didn't think so.

But at least Kaptur's position is consistent in her hypocrisy. She - correctly, in my opinion - voted against the bailout of the financial industry. Yet she - incorrectly and inconsistently - voted in favor of the auto bailout. As far as I can tell, she's never been asked by any main stream media outlet to explain her contradiction in principle.

So I suppose her celebration of her special interest today should come as no surprise - while I expect she will continue to smear, malign and insult the industry that is actually making money on behalf of all Americans.

She is NOT representing us. A true 'representative' would share with us the cost consequences of the bailouts and stand firm, based upon the evidence, that one (financial) was clearly better for the nation than the other (auto). But Kaptur is acting contrary to what the facts of the issues are and only acting on behalf of the minority of her constituency who benefit from her types of decisions. That's what gets her elected.

It's a shame that it's come to this - our founding fathers would be appalled.

***Side Note: Also today, they'll be celebrating the fact that Fiat, an Italian company, is purchasing the government's share of stock in the company. From politicians and a political party that routinely focus on American companies and how foreign companies are stealing all our jobs - doesn't that strike you as more than 'a bit' hypocritical as well?

Think the media will ask them to reconcile this particular aspect with their previous positions? Or will they go along with the spin about how this is really good for America - and Obama, Kaptur and the Democrats in particular?

And what in the world will all those union members do with their "Out of a job yet? Keep buying foreign" bumper stickers???

How did GM get my email address?

This was in my in box yesterday:

From: "Your GM Team"
Sent: Sunday, April 25, 2010 4:57 PM
Subject: Important Announcement from General Motors Company


Dear Maggie,

We are proud to announce we have repaid our government loan – in full, with interest, five years ahead of the original schedule. We realize we still have more to do. Our goal is to exceed every expectation you've set for us. We're designing, building and selling the best cars and trucks in the world. Like the award-winning Chevy Malibu, the all-new Buick LaCrosse, the versatile Cadillac CTS Sport Wagon and the innovative GMC Terrain, just to name a few. We invite you to learn more about the new GM and join our community, by visiting gm.com.


Susan E. Docherty
Vice President, U.S. Marketing

This is an e-mail advertisement.
If you prefer not to receive any unsolicited marketing e-mails regarding GM products and services, please click here.
To view our privacy statement, click here. We cannot reply to all responses to this e-mail.
©2010 General Motors | 100 Renaissance Center | 482.A00.MAR | Detroit, MI 48265

Now, I know that the only reason they paid off their loan was because they had TARP money. So they borrowed money from the government to repay a loan made by the government and are thinking people will be glad about this, as if it's some sort of major accomplishment?

That works so well for people with credit cards, so why shouldn't GM try the same thing? (sarcasm)

But to be so blatant as to advertise this fact in commercials and unsolicited emails is pretty brazen. Do they not realize how many people actually know the truth? Or are they just betting on the ignorance of the public to believe what they hear and not investigate.

Sorry - I know the answer to that question.

However, I do wonder how I got on their mailing list, considering that I've not signed up for anything from them. Conspiracy theorists would probably have a field day with this, being 'government motors' and all...

Oh - and my next vehicle will not be a car from GM, no matter how many emails they send me.

Does this make sense to you?

The other day I read Dan Kennedy's column about the initial outrage over the closing of the automotive dealerships and the subject of whether or not the decisions were politically motivated.

He used an example of a Stow, Ohio, dealership whose new car sales were up 57% in 2009 (prior to cash for clunkers) despite a 40% decline in the national market - and wondered why this businessman could get no explanation for the decision to close him down.

And then I remembered an Automotive News editorial I read (opinion piece of 8-24-09, subscription may be required) that talked about General Motors and Chrysler taking applications for new distribution points:

"During bankruptcy, each automaker described the need to build a rational distribution system by closing some dealerships and shifting franchises, and the bankruptcy judge agreed.

But if what was achieved in Madison, Wis., is an example of Chrysler's new strategic distribution plan, there was too much suffering for too little gain.

In Madison, Chrysler fired the east-side dealer and the west-side dealer. Then the automaker hired the west-side dealer to be the east-side dealer and the east-side dealer to be the west-side dealer. The company handed out additional franchises so each dealership will sell Dodge, Chrysler and Jeep.

And what did Chrysler accomplish? It lost sales for several weeks and disrupted two profitable businesses.

In hindsight, Chrysler's precipitous rejection of 789 dealerships looks ill-advised, ill-planned and poorly executed. It still is not clear what standards were used to determine which dealerships to reject. But the process appears random and arbitrary. And there are still rejected dealerships that are stuck with unsold inventory that is difficult to unload.

Those were cruel moves, even if necessary. And Chrysler has yet to prove the necessity of closing all those dealerships, even though the cruelty is evident."

I guess I don't get it. If they need new distribution points, could some of the existing dealerships have been relocated or moved instead of shut down? Will they look for another dealership in Stow and, if so, what kind of loyalty will those area customers have if they lost the oldest Chevy dealer in the county, costing 80 jobs, only to have another open shortly thereafter?

If new dealerships open where old ones were closed without justifiable reasons, people will be more inclined to agree with Kennedy's conclusion:

"To their shame, the media has let this story go, even though there's good chance there's a Watergate buried in it somewhere. Killing the successful auto dealers, while sparing the less successful, is most likely a political rather than equitable or rational decision."

Sunday morning - catching up on my reading

* I'm so glad that Indiana pension funds have challenged the bailout/bankruptcy of Chrysler in the U.S. Supreme Court.

For weeks people have been questioning under what authority the federal government is acting when it comes to the automobile companies. While the administration says their authority derives from the TARP funds, Congress only authorized that funding for financial institutions - not auto makers. Complicating matters is Congress's rejection of an auto bailout plan after the approved TARP. If TARP allowed the administration to address the car companies, then why was separate legislation even introduced, much less defeated?

I was opposed to the bailouts in the first place and hope the Supreme Court rules in favor of the Indiana pension funds.

* The stimulus isn't working and April figures prove it. At least, that's what Dick Morris and Eileen McGann say in their latest column:

1. Household personal income (inflation adjusted) rose, but every penny -- and then some -- went into savings or paying down debts. Consumer spending, on which Barack Obama is betting to stimulate the economy, actually fell. None of the stimulus money was sent. None.

2. Meanwhile, to pay for this stimulus spending that didn't stimulate, Obama had to borrow so much money that long-term interest rates have almost doubled since he took office, forcing postponement or abandonment of business expansion and hiring across the board.
...
The stimulus package was a total and complete failure. As predicted, as happened with Bush's 2008 tax cut, as happened with the Japanese stimulus packages of the '90s, fearful consumers sat on their money and wouldn't spend it. Keynesian economics didn't work. Again.
...
Consumers are not idiots. They know that when their paycheck is fatter -- either because of tax cuts or government spending -- that it is not the beginning of Nirvana, but just a short-term, one-shot respite from hard times. They know the difference between standing in front of an electric fan and a windy day.

Barack Obama has fatally undermined our currency, our solvency, our financial stability and -- ultimately -- our economy, all to spend money that has had no economic effect!

* According to Rich Tucker, 75% of Americans live in suburbs, but the government thinks that's a bad thing. And if government thinks you're doing something you shouldn't they'll create rules and laws to make sure you do what government wants.

We’d all like to think Washington has bigger problems to worry about than whether we make one trip or two to pick up, say, groceries and prescription medicine.

But, just for the sake of argument, consider the fact that it’s much easier to “combine errands” in suburbia than it is in Manhattan. With one trip to the Super Target, one can pick up everything from food to clothing to entertainment. That would require at least three separate stops in a city, imposing a much higher cost in both time and money.

Still, if Washington gets its way, we’ll have more people packed into smaller spaces.

Tucker also details how the Energy Department’s 2008 Buildings Energy Data Book, which purports to show how apartment living is better than owning a home, failed to take into account the energy costs of common areas including lobbies and parking lots. When those shared areas are included, apartment living is far less efficient than the report claims.

* George Will has a great column on the contradiction between the words and the actions when it comes to President Barack Obama's statements regarding General Motors. Despite saying he doesn't want to run the car company, that's exactly what he's doing.

And Congress will be sure to be part of the act, as well, as they insist upon adding their own dictates under the guise of a 'responsibility' to oversee how public dollars are spent. After all, this approach has been sooooo successful with Amtrak - right?

* If Chrysler gets bought out by Fiat, is it still an American company? Honda builds cars in Marysville, OH, and local UAW members will tell you the cars built there are 'not really' American cars since they're owned by a foreign company. Will that claim still be true when Fiat buys Chrysler? Or will they conveniently change their definition of 'American company'?

'Don't know where Obama gets legal authority,' Hoyer says

Great! Here's the House Majority Leader saying he hasn't got a clue where the president gets the authority to order the restructuring of General Motors, but if he doesn't have the legal authority, Congress would give it to him after the fact.

Don't you think the legal authority to take an action should have been addressed PRIOR to actually doing it?????

CNSNews is reporting:

House Majority Leader Steny Hoyer (D-Md.) told CNSNews.com on Tuesday that he does not know where President Barack Obama gained legal authority to oversee a restructuring of General Motors and Chrysler. But if authority is a question, he said, then Congress will grant it to the administration.

However, when Congress tried to enact an auto industry bailout plan in December, the legislation was approved by the House but failed in the Senate where, under the rules, it needed 60 votes.

Senate Banking Chairman Chris Dodd (D.-Conn.), meanwhile, toldCNSNews.com he was somewhat surprised that the administration did not consult with him at all about its auto industry plan despite his key committee chairmanship and that he had “been reading about it in the papers basically.”

Hoyer was similarly candid about his inability to cite the administration’s legal authority for the plan.

“The administration clearly believes it does have the authority to use some of the remaining TARP funds for the automobile industry,” Hoyer told CNSNews.com Tuesday.

“I don't know, technically. I would be kidding you to mouth some words on that, because I don't know technically where that authority would be,” Hoyer said. “But my own view is that if it is perceived they don't have that authority and it is perceived by the Congress they need to have that authority, the Congress would probably be willing to give that authority. But I don't know technically the answer to that question.”

GM CEO resigns at Obama's request

Give them an inch and they'll take a mile...

Politico is reporting:

The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.

Wagoner's departure is one of the remarkable strings attached to a new aid package the administration plans to offer GM.

The White House confirmed Wagoner was leaving at the government's behest after The Associated Press reported his immediate departure, without giving a reason.

So now the chairman and CEO no longer reports to the board of directors - or even the shareholders. The President - who's never run an organization anywhere near the size and complexity of GM - is deciding who is best to lead that company.

And it's not like Obama has such a stellar reputation with selections of people to lead agencies....

But in taking the government money, the company becomes subject to the whims of politicians, including the president.

We all knew this would happen - now my only question is: who's next?

(via Twitter: think they'll rename it Government Motors?)

What the bailouts cost you

Are you even remotely curious as to exactly how much the corporate bailouts have cost you? (Remember - they were signed and passed by Presidents Bush and Obama and the last and current Congress.)

It's a significant amount, especially in light of the tough economic times.

Over at Right.Org you can precisely calculate your 'donation' to the those who were irresponsible with the money they had. Let me warn you though, it’s not pretty.

The median household income (half make more and half make less) for Lucas County is $43,527 per Census.gov. According to the calculator, the total cost for each Lucas County household is $53,337.

Think 4 Chevy Aveos. Two college degrees. A Toledo police officer. Or this 2007 27-foot Sportcraft 272 Express fishing boat.

Currently the total the U.S. has committed to failed corporations is $8,439,120,000,000. That's nearly three times the size of Congress' total budget last year and nearly two-thirds of what the entire U.S. economy produced last year.

Scary, isn't it?

Automakers to get their bailout money

From the Wall Street Journal:

The White House on Friday unveiled a $17.4 billion rescue package for the troubled Detroit auto makers that avoids bankruptcy.

"Allowing the auto companies to collapse is not a responsible course of action," President George W. Bush said.

Speaking from the White House, he said that a bankruptcy was unlikely to work for the auto industry at this time and would deal "an unacceptably painful blow to hard-working Americans" across the economy.

The deal would extend $13.4 billion in loans to General Motors Corp. and Chrysler LLC in December and January, with another $4 billion likely available in February. The deal is contingent on the companies' showing that they are financially viable by March.

Maybe I've missed it, but all I've heard is claims that a Chapter 11 bankruptcy won't work for the auto companies - and no one has explained why that statement is true.

Bankruptcy reorganization has worked for other companies - why are the automakers different? And if all Bush is going to do is require them to reorganize, why not let a judge oversee that instead of administration or treasury officials who obviously haven't got a clue?

Here's the $64,000 question - what happens if they're not "financially viable by March"??? Do they get MORE money or will they be forced into bankruptcy after having squandered our tax dollars?

Of course, this also means Treasury needs the second half of the $700 billion released. Also from the Wall Street Journal:

"Treasury Secretary Henry Paulson said he wants Congress to release the second half of the $700 billion financial rescue package, setting up what is expected to be a bruising dialogue with lawmakers from both parties who have expressed frustration with the way he has navigated the financial crisis.

Mr. Paulson said the $17.4 billion the Treasury committed to provide General Motors and Chrysler means that the government has "effectively" allocated the first $350 billion that Congress authorized in early October for the Troubled Asset Relief Program to stabilize the financial markets. Mr. Paulson said he has "confidence" that "we have the necessary resources to address a significant financial market event.""

Have auto makers tried this?

The Wall Street Journal is reporting that FedEx is "... cutting nonunion workers' salaries by 5% and plans deeper cuts for CEO Frederick W. Smith and senior executives, citing "some of the worst economic conditions" in the company's history. It is also eliminating bonuses and suspending company matching for its 401(k) plan."

I can only wonder if the Detroit 3 have made similar decisions before going to the American taxpayer with their hands out.

How Ohio reps voted on the auto bailout

Yes, I know it's a bridge loan, but regardless of the name, it's still the federal government bailing out a failing industry. I'm in favor of Chapter 11 Bankruptcy reorganization - not rewarding them with tax dollars so they can just buy time until they need to do the inevitable.

Anyway, according to GovTrack, here are how the votes from Ohio were cast:

Ohio
Nay OH-1 Chabot, Steven [R]
Nay OH-2 Schmidt, Jean [R]
Nay OH-3 Turner, Michael [R]
Nay OH-4 Jordan, Jim [R]
Nay OH-5 Latta, Robert [R]
Aye OH-6 Wilson, Charles [D]
Nay OH-7 Hobson, David [R]
Nay OH-8 Boehner, John [R]
Aye OH-9 Kaptur, Marcy [D]
Aye OH-10 Kucinich, Dennis [D]
Nay OH-12 Tiberi, Patrick [R]
Aye OH-13 Sutton, Betty [D]
Aye OH-14 LaTourette, Steven [R]
No Vote OH-15 Pryce, Deborah [R]
Aye OH-16 Regula, Ralph [R]
Aye OH-17 Ryan, Timothy [D]
Aye OH-18 Space, Zachary [D]

Two Ohio Republicans joined their Democrat colleagues to vote in favor of the measure.

Sadly, my representative, Marcy Kaptur, voted in favor of bailing out the auto industry after having voted against the $700 billion bailout for the financial industry. I had hoped she was taking a principled stand on the concept of bailing out industries, but it turns out she just opposed the focus of the bailout. And I'm sure her strong support from the UAW didn't matter at all.

Did Voinovich misrepresent Hensarling's position on the auto bailout?

Today I received the following email from Sen. George Voinovich's office:

According to this Bloomberg story, the head of the Republican Study Group in the House, a staunch conservative, Rep. Jeb Hensarling, has endorsed using sec. 136 money to provide a bridge loan to the American auto industry – essentially the Voinovich-Levin-Bond bill:

Representative Jeb Hensarling, a Texas Republican, said he is “more than happy” to allow the automakers to use the energy-bill funds to avoid bankruptcy. “If this is such a dire emergency,” he said, the Democrats could waive or delay requirements in the 2007 legislation that the money be used exclusively to develop more fuel-efficient vehicles.

This seemed completely out of character for Rep. Hensarling, so I called his office to clarify his position.

I spoke to Debbee Keller who explained that Rep. Hensarling is in favor of allowing the $25 Billion already passed by Congress to be used to help the Big 3 with their financial issues. The funds were supposed to be for certain purposes, and he agrees that Congress can re-purpose those funds to be used for their operational expenses.

He does not support allocating any of the $700 Billion to the automotive companies. According to Keller, Rep. Hensarling has not taken a position on the Voinovich-Levin-Bond bill.

So you tell me - is this a misrepresentation of Rep. Hensarling's position on the auto bailout?