by John Hawkins at Townhall.com
“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning. — Winston Churchill
Without question, people who zealously guard their freedoms, love their country, and want a better future for their children lost a big battle on Sunday. Yes, Republicans in the House fought skillfully and won the battle with the public, but the legislative chicanery, bribery, and utter disdain for the will of the people won the day for the Left.
Democrats in extremely red districts proved ready and willing to sacrifice their jobs in November to pass the bill. The Stupak block, which held firm for weeks, joined hands with the pro-abortion crowd to federally fund abortions for the first time in our history. The Democrats in Congress didn’t care about the rules, they didn’t care about the consent of the governed, and they didn’t care about what is good for the country. This is a socialist power grab, pure and simple, and a little bit of what has made this a great country died writhing on the floor of the House last night.
The Democrats are calling this a historic moment. So it is. Of course, the same could be said of the crash of the Hindenburg, the sinking of the Titanic, and the start of the Civil War…
Here’s a basic outline of what it will take to get it done:
- Fight the Democrats on Reconciliation.
- Challenge the bill in court.
- Win the public relations war.
- The Republican Party has to win big in the next two elections.
- Repeal, replace, and refuse to fund.
The Reverend Al Sharpton, recently appointed as President Obama’s new ambassador to the black community, says the American people “overwhelmingly voted for Socialism when they elected President Obama.”
Now we have it. Welcome, comrades, the the Union of Socialist States of America!
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You’re now the proud owner of yet another failed corporation!
The week between Christmas and New Year’s Day is usually a week when Americans slow down and take some time off. Kids are out of school, many companies are shut down or slowed down, and quite a few families are on vacation. Congress is even on vacation, minimizing the damage they typically inflict on the wallet of the American taxpayer.
This year the Obama administration took advantage of the holiday distractions to seize control of GMAC, the financing arm of General Government Motors Corp. This third bailout of the company that writes loans for Government Motors and Chrysler Corp. vehicles resulted in the US government increasing its ownership share of the company to 56.3%. This, of course, once more gives the Obama administration controlling interest in what had been a privately owned company.
When the Bush administration signed off on the first $6 billion GMAC received from the US taxpayer, officials in the former President’s Treasury Department considered it “part of a broader program to assist the domestic automotive industry in becoming financially viable.” But in May 2009, the Obama administration handed over another $7 billion in taxpayer wages to the beleaguered finance arm of what was soon to become the first US government owned auto maker.
The second bailout netted the Obama Treasury Department a 35.8% stake in the corporation, and an agreement GMAC would take on the additional liability of financing customers of Chrysler Corp. This followed almost immediately after the President took an 8% stake in Chrysler for the US taxpayer and handed over a 55% controlling interest to the unions.
Much of the initial money will go to help GMAC shoulder new lending responsibilities for Chrysler dealers and consumers after Chrysler’s government-orchestrated Chapter 11 bankruptcy filing last month. As part of the Chrysler reorganization, the government in effect dissolved Chrysler Financial and handed its business to GMAC, creating one big auto-financing arm that would service both companies.–WSJ, May 21, 2009
President Obama had already invested billions in Chrysler and plans to secure US government ownership of General Motors were in the works. Bailing out GMAC became an easy way to launder even more bailout cash to the President’s experiment with union and government ownership of former US industrial icons. As with other stones forming the foundation of Obama’s economic policies, funneling money to the automakers through loans to their customers didn’t prove too solid.
But that’s not something the President is willing to admit yet–that his policies for stimulating the economy have failed. No, his newest plan is to throw good money after bad and pile another $3.8 billion of YOUR money onto the still smoldering pile of waste known as GMAC.
The first $6 billion wasn’t enough to rescue the financial firm and its now-nationalized benefactors of its bad loans. The next $7 billion couldn’t save it, but did put Obama in control of 35.8% of the company. The second bailout also allowed the President to twist the arm of the company and force it to agree to loan more money to customers of GM, which Obama would soon nationalize, and Chrysler, which the President had recently handed over to his union backers.
Though neither of these bailouts accomplished their (supposed) goal, our omnipotent, omniscient oracle Obama, in his infinite wisdom, has determined the solution to the problem is to pour more of your hard-earned tax dollars into the bankrupt corporation, $3.8 billion more. But don’t worry! The President who brought us $1.4 trillion deficits and a $12 trillion national debt has traded our greenbacks for a controlling interest in the company.
That’s right. We now own 56.3% of a company that can’t attract private capital because it can’t manage to stem the flow of red ink from its books. A company that cannot, on its own merits, attract private capital. President Obama is forcing all American taxpayers to borrow money to purchase a portfolio of profitless companies controlled by politicians and bureaucrats.
So congratulations taxpayers! Like it or not, you own yet another failed corporation run by Chairman Obama.
Well, it’s finally official. We predicted it from the day Bush first loaned GM $13 billion, and now it’s reality. General Motors has collapsed under the weight of gross mismanagement and an uncompromising UAW. GM’s incompetent management team managed to lose $38.7 billion in 2007, a period that saw record revenues for the company. No matter how you slice it, that’s mismanagement! We’re hearing the latest UAW concessions don’t cut the ~$70 per hour cost of GM’s labor, but freeze it. In reality, the union hasn’t given up anything.
Now the American taxpayers are the not-so-proud-owners of this bankrupt, inefficient, ineffective corporation. President Obama is convinced this is a good investment, even though Americans have consistently been opposed to the bailout of the auto industry. He’s convinced he’s going to turn GM around by hiring consultants who’ve never worked a day in the auto manufacturing business, including a 31-year-old law student with no background in business or economics who’s become the primary decision maker in the process.
Recall that Obama, immediately following Bush’s decision to abandon any semblance of free market capitalism in the US, was previously convinced a GM bankruptcy “would have devastating consequences for our economy and our workers.” Now that he has ascended to the White House throne, and inked a deal to make him the de facto CEO of the former industrial icon, he’s “confident that they can emerge [from bankruptcy] and take advantage of that new market and actually be very profitable and thrive.”
In other words, the former community organizer who, as New York Mayor Rudy Giuliani puts it, “has never led anything, nothing, nada,”1 is narcissistic enough to believe he can take the reins of this monstrosity that was once the very symbol of American capitalism and make it profitable again. With our tax dollars, of course.
If this company were such a great investment, why didn’t left-leaning billionaires like George Soros, Warren Buffet, Michael Bloomberg, and Obama’s Auto Czar Steven Rattner place their bets on this gamble? The answer is simple.
Regardless how often Obama refers to the bailout as an investment, it’s really one great big experiment–an experiment in Socialism. The fear tactics employed by the President and his cronies–basically screaming that life as we know it would cease to exist if the banks, Chrysler, and GM were allowed to fail–were used to foment a paranoia in the American citizenry that would allow him to force feed us a Socialist economic system that we would never have otherwise approved or endorsed.
In a recent Fox News poll, only 46% of Americans will even consider purchasing a GM product when they go to buy their next vehicle. Compare that to the 54% who will consider buying from Ford Motor Co., the only American auto manufacturer who refused government money, and we see the citizens of this country are quite put off by this whole idea of taxpayer financing of failed corporations. These numbers are even more impressive when you consider that GM has long been the dominant domestic manufacturer in terms of US market share. Ford has gained an edge by simply insisting on standing on its own.
And how is Obama’s Socialist experiment going so far? What innovative management decisions has the President made that will save our way of life and perhaps the world?
The closure of more than 1,100 dealerships nationwide will surely alienate customers. Never a smart move if you’re seeking to grow market share. Not only will loyal customers be forced to go elsewhere when purchasing a vehicle, but vehicle prices are also certain to increase with diminished competition among dealers. This trick wasn’t designed to streamline GM. It was intended to help them survive while maintaining much of the structure that made them unprofitable in the first place.
The biggest beneficiaries of this strategy are UAW workers. By increasing the price of GM products, Obama believes he can make the company profitable without demanding any real concessions from his supporters in the UAW. We the American people are not only being forced to fork over our hard-earned tax dollars to keep this behemoth afloat, but will also be forced to pay more for its products if we purchase them. The UAW’s over-generous compensation and benefit packages, a major source of GM’s inability to compete with foreign competitors, will be borne by consumers as a result of this move.
The new Government Motors has also announced the closure of several manufacturing and assembly plants. So, far this sounds like it might actually be a good decision. But what if the plants to be closed aren’t chosen for profitability, but for political payback? That certainly appears to be the case in the closing of the Spring Hill, TN assembly plant.
Obama has called for GM and Chrysler to move away from their large, gas-guzzling models so you would expect plants manufacturing these vehicles to be shuttered. But the Spring Hill plant was actually built to manufacture GM’s smaller vehicles to better compete with its foreign competitors. The plant shut down for retool to produce the Chevrolet Traverse, which claims to have the “best fuel economy of any 8-passenger crossover.” According to Mike Herron, chairman of UAW Local 1853’s bargaining committee, “There’s a billion dollars worth of equipment put in this place over the last 18 months.”
A billion dollar investment in the last year and a half for a vehicle that boasts the best fuel economy of its class and the doors are closing. Not because GM is discontinuing the Traverse…production of the model will be shifted to Lansing, MI. And therein lies the rub. Erich Merkle, an auto analyst based in Grand Rapids, MI recognized the danger to the Spring Hill plant in early April.
At current sales levels, all four vehicles could be built at either plant, but politics could give the Michigan plant the edge, Merkle said. “Spring Hill could be on the bubble because it’s in a red state, and Michigan is a blue state,” Merkle said. “The governor of Michigan is a Democrat, too, and she needs all the plants she can get.”2
I would love to see a per-unit cost comparison between the Michigan and Tennessee plants, but somehow I doubt the “most transparent administration in history,” which now manages GM, will be offering the American public such information. I would have to bet, though, that the plant in conservative Tennessee is cheaper to operate than the one in liberal Michigan. If it’s obvious to a Michigan-based analyst though, it should be obvious to everyone that Obama’s management decisions at the helm of GM will be based more on politics than on practical business concerns.
Don’t expect it to get better from here. The President has stated he wants to make GM a “leaner, meaner” company, more efficient and more competitive. This from a President who quadrupled the national deficit in his first 100 days in office. He’s pointed out that he doesn’t want to run GM, but now his administration holds 60% of the voting shares of the company. He’s told us he wants to bring the country together, but his management decisions appear to be based largely on blue state vs. red state lines.
Government Motors, the new GM, the Obama Socialist Experiment…bought and paid for with your money. Enjoy.
1From former New York Mayor Giuliani ‘s address to the Republican National Convention Sept. 3, 2008.
2Union worries about GM plant in Spring Hill–Oakridger.com
So say the Russians in their flagship newspaper, Pravda.
Read this article on Pravda
Hat Tip: Lorrie on AmericaC2C
by Larry Kudlow on Townhall.com
Get ready folks: America is about to own a car company. As of Monday, we the taxpayers will own more than 70 percent of GM. Whether the company will be formally renamed Government Motors remains to be seen. But that’s what it will be.
Instead of putting the failed car enterprise into bankruptcy six months ago — where Carl Icahn or Wilbur Ross could have bought it — the Bush administration chose Bailout Nation. Under Team Obama, that bailout has morphed into full-scale government ownership. Twenty-billion dollars of TARP money is already invested in GM, with another $50 billion on the way. And that number could easily double unless GM car sales miraculously climb back to 14 million this year. That’s highly unlikely, with car sales presently hovering around 9 million a year.
In other words, taxpayers are not going to get their money back. Yes, we the people will be left holding the bag for the mistakes of GM’s management and labor leaders over the last four decades.
You might recall that in December, we were told bankruptcy of any one of the Big 3 auto companies would take down the entire economy. So then-President Bush shoved the bailouts of GM down the throats of Americans in spite of the fact Congress refused to do so legislatively. The US Treasury made a $4 billion loan to Chrysler along with $13 billion to GM.
Many of us predicted the loans couldn’t cure the auto companies’ ills, and we were slandered and maligned by left-leaning pundits and politicians of both parties. We recognized these loans would simply subsidize failed business models and encourage a continuation of the same failed strategies that put them in this position to begin with.
We said at the time, bankruptcy was the way to go. A court-ordered restructuring would have allowed Chrysler to negotiate concessions with its creditors and unions under the court’s protection and direction. Now, we’re $4 billion poorer and Chrysler’s right where we knew it was headed from the start.
It wasn’t ESP that allowed us to see these months into the future. No crystal ball, no special powers.
The administration, the unions, and management at Chrysler and GM like to blame the current economic crisis for the auto industry’s woes, but it goes so much deeper than that. If the credit crunch was truly the spark that started the fire that burned down the American auto industry, why are foreign companies with manufacturing facilities in the US not closing down too?
The problem with the American giants was smoldering long before the current economic crisis flared up. GM posted record sales in 2007, but also record losses that same year. Figures are harder to come by for Chrysler because it’s not a publicly traded company, but its former owner Daimler has released some figures that show its problems began long before the current downturn. The company lost $3 billion in 2007 and $1.6 billion in 2006. In May of last year, GM was burning cash at a rate of $1 billion a month. All of this before the economy crashed!
Now that our $4 billion have been squandered, the Obama administration is promising another $8 billion in aid in exchange for an 8% stake in the company. The UAW will take a 55% stake in exchange for money owed to its pension plan. So 63% of Chrysler shares will be owned by a partnership of the inefficient UAW and the inefficient US government. Is that likely to result in a streamlined, efficient, and profitable business model. I doubt it.
With the Obama administration preparing to take control of GM, we may need a new bureaucracy (the Department of US Auto Manufacturing?) in DC. Hell, UAW employees may well be integrated into the federal employees’ pension system before it’s all said and done.
This whole ordeal reminds me of a gambler whose lost everything and borrows to “double down” thinking surely he’s due to win. All too often though, the house takes what he’s borrowed as well.
No, not United States Marine Corps. United States Motors Corporation.
That’s right. GM, the former icon of American capitalism, could well be the first icon of American Socialism!
GM is offering over 50% of its stock–a controlling interest–to Uncle Sam to cover the ill-advised multi-billion dollar bailout initiated by Bush and exacerbated by Obama. After all the promises that government loans would save the company, the US government just bought itself a car company!
Let’s see, the same government that’s bankrupting Social Security, hemorrages cash through the USPS, forced FRE and FNM to back bad loans, and forecasts trillion dollar deficits as far as the eye can see is somehow going to bring this manufacturing giant back to profitability? Right!
Oh, but Uncle Sam will have plenty of help running this behemoth even deeper into the ground
The automaker also proposed that the United Auto Workers take GM stock for at least half the $20 billion the company owes to a union-run trust…Combined, the union and government would own 89 percent of the century-old automaker
Though we saw it coming, this is truly a sad, sad day in the
USA USSA–United Socialist States of America.
I received an email from a colleague with the following story today. No source is cited, but it’s worth as much if it’s a parable as it would be if it’s factual.
Only the totally naive will fail to see this tale illuminates the inherent weakness of a Socialist economic system–lack of incentive creates a subsequent lack of productivity on the part of the populace.
Excellent Lesson In Economics
An economics professor at Texas Tech said he had never failed a single student before but had, once, failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said ok, we will have an experiment in this class on socialism.
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around the average was an F.
The scores never increased as bickering, blame, name calling all resulted in hard feelings and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great; but when government takes all the reward away; no one will try or want to succeed.
Ronald Reagan once said “It’s not that my liberal friends are ignorant, it’s just that they know so much that isn’t true.”
John Allison III
Dr. Bill Smith
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