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

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???

I'm bitter and resentful over the bailout and its cost

Politics and Law has an interesting analysis of the bailout bill, including this chart, detailing the total estimated costs to American households:










Note that this doesn't include the costs of emergency loans to California.

If all these financial entities, states, automotive companies and homeowners in foreclosure can get bailed out, who's next?

Certainly not me and my family! Nope - families like mine who pay our bills on time, work hard to obtain and maintain good credit, don't buy a house we can't afford, don't buy luxuries on credit, snip coupons and compare prices in order to find the best bargains, keep our a/c off in the summer and our heating temperature low in the winder (62 degrees), cut back on non-essentials to pay for increased gasoline prices - we're the ones who will foot the bill for others' mistakes and bad decisions, including those in Congress who will never admit that their social engineering mandates (can you say Community Reinvestment Act) precipitated this whole mess, even while they stand there grinning and praising each other for 'saving' us from the disaster they caused.

Furthermore, while the bailout is supposed to take care of the problem, it only addresses the symptoms. The defective structure, regulations, rules and laws that created the mess still exist. What happens when the next unqualified home buyer shows up to get a loan and is told they don't meet the standards? Some 'community organizer' will be there with lawsuit in hand.

Am I bitter about this? Absolutely - and I'm not the only one. Interference in the market is what caused the mess, with Congress telling banks and institutions to make loans to people who would never have qualified for them otherwise. Congress - with mandates to Fannie and Freddie - told banks and lenders that unemployment and welfare payments could count as income! Have you ever heard such an absurdity in your life?

Common sense alone tells you that someone who is unemployed and getting a temporary source of money should not be given a loan for a new home. And if you are so poor and destitute that you need welfare support, how does anyone in their right mind think you can afford not only a mortgage, but the additional costs of maintaining a new home???

Only the idiots in Congress like Barney Frank, Chris Dodd, Charlie Rangel and ... Barack Obama. Even though he was not in Congress at the time, Obama was intricately tied to this scheme when he worked on behalf of ACORN, to sue Citibank in an attempt to force them into making such bad loans.

And President Bush, who thinks the government needs to save the markets, is also to blame for insisting on this approach instead of letting the market contract, make the necessary adjustments and then begin to rebuild. Even Wall Street didn't like the bailout plan, as stocks plummeted to a 52-week low following its passage.

Would the alternative of government not doing anything have been painful? Yes, for a short period of time and then it would have recovered and we would all be better off for having done so. As a Sun Tzu taught, "That which does not kill you only makes you stronger."

So I'm bitter over this decision, and resentful too. Suffering the consequences of bad decisions helps you learn to make better ones in the future. People who lose their home because they borrowed when they shouldn't have will be much more careful about what they buy in the future. If the banks had to eat the bad loans they never should have made in the first place, they'd be less eager in the future to accept a government program that looks too good to be true. If Fannie and Freddie - and their executives who lied to Congress about the solvency of the institutions just before being fined millions for cooking the books - had to face the same kind of special prosecutor reserved only, it seems, for Republicans, the public would see just how 'special interests' could manipulate the system in their favor. And if members of Congress are held accountable by the voters of their district for such dereliction of their oaths of office, it would prevent (or at least deter) such actions in the future.

But all this requires that we, the voting public, understand what has occurred, how much it's going to cost us and then be willing to throw the bums out. Sadly, I've been in politics too long to expect such a thing to happen. People who are the recipients of such government largess will continue to elect those who provide it, while the rest of us foot the bill. And the media and those same elected officials will gleefully tell us how much better off we are now that government has saved us, while we sink further into socialism and a government-dependent society.