Four Points to consider from today’s House Hearings:

On C-Span today, Thad McCotter stressed that this is NOT a new appropriations of money, but a reallocation of money already appropriated.  He suggested that half come from the DOE $25b fund for fuel-efficiency improvements, and half come from TARP given the role of the financing arms of the automotive corporations.

So this isn’t any new money.  It’s money that is already allocated; that battle is already lost.  The only question is how to distribute the money.  But remember, the money is already as good as gone.

Secondly, a question concerning pension plans was brought up during the house session.  I don’t know all the details of who owes what, but Wagoner did mention that GM’s pension obligations are currently fully met (meaning there is no advantage to be gained there with bankruptcy).  I take this to mean that if liquidation occurred, those pension funds would be at risk.  Perhaps someone with knowledge of this aspect could enlighten me here: Wouldn’t some of the pension obligations then fall to the government if GM ceased to exist?

Third:  Concerning health care obligations; an agreement is already in place to transfer those from GM’s books, and that agreement has been modified to allow GM to extend those payments to the trust.  Eventually, the UAW will be responsible for managing that trust.  If GM ceased to exist, wouldn’t those costs all be transferred to the government in the form of Medicare for retirees?

Fourth: We are experiencing unprecedented decreases in sales.  This is important to consider.  All of the automakers are scrambling to reassess their business plans in light of the new economic environment.  No one foresaw a drop of 40-50% in year over year sales, just like no one could have predicted an increase in gas prices of over 100% over the course of two years, then a reduction back to 2006 levels in a few months.  No business plan can accommodate this.

How We Got Here (Recent Pressures that Exposed the Weaknesses of the Domestic Manufacturers)

Government meddling in the housing and mortgage industry contributed to the collapse of the credit market and housing prices.  This eliminated most sources for funding for vehicles (either auto loans or equity).  Then the price of energy skyrocketed over a short term, increasing foreclosures further and putting pressure on the economy as a whole.  As a result, people quit buying cars, exposing the underlying weaknesses in the domestic auto industry.  Bankruptcy became imminent, so more people quit buying cars.  No one knows how this is going to pan out.  However, none of this has been the result of a failed business model or the free market.

GM, Chrysler, and to a lesser extent Ford are not on the verge of failure because of failed business models; they are on the verge of failure because they are broken socialist experiments.  If it takes a reallocation of existing funds to bridge the automakers through to March, that is the best solution.  By March, the extent of the failed socialism will be plain to see, and in March we will be discussing either more money continuing things as “More of the Same”, or we will be discussing additional funding to bring about much needed change.

Impact on the Foreign Automakers Located in the U.S.

(Successful Foreign Companies will Pick up the Slack)

Here is an example of how close the auto companies are linked:  I recently rented a Dodge Caliber.  I hated the steering column, as I banged my knee repeatedly on the molding.  Two weeks later, I rented a Toyota Corolla; and I hated the steering column, as I banged my knee repeatedly on the molding.  It was then I noticed:  The instrument panel, steering column, and nearly the entire dashboard were identical between the two vehicles.  If Chrysler closes its doors, whoever makes this instrument panel is going to have a dramatic decrease in sales, and will most likely shut down as well.  Toyota will not have the instrument panels needed to make their Corollas, and they will have to shut down production until new panels can be found.

The questions here are complex, with no easy answers.  “Let ‘em fail, Shut ‘em down” sounds good, all principled and hard-core.  But it’s not feasible.  That approach will bring down the international manufacturers here in the states too.  Barring a deep, long, and severe recession, there will ultimately be a shortage of cars, or we will be importing more cars than ever.  The international companies do not have the capacity in the states to meet demand domestically, and won’t for a number of years.  There is no way the international companies would buy up the current assembly plants, slap a Toyota or Honda nameplate on them, and continue to build the same perceived lower quality vehicles without massive (and expensive) retooling of those plants.  Parts suppliers will fall left and right, cutting off the domestic supply of components to the foreign manufacturers.

Turning the Bridge Loan to a Benefit:

Reallocation of existing money to bridge the domestic automakers to March 2009 will provide time to formulate solid, free-market changes needed to strengthen the entire US auto industry.  It will provide time set plans in motion for organized quasi-bankruptcy, where contracts can be renegotiated and solutions found.  Remember, we are dealing with economic circumstances that are unprecedented.  There is no business plan that can accommodate wildly fluctuating fuel prices, dramatic drops in home equity, and a near-freezing of the credit market.  This plan has to be developed.

In the meantime, stress to your representatives that while re-allocating money already appropriated to keep the automakers afloat can be swallowed, you will in no way accept any additional expenditures of NEW money without dramatic changes to the way the domestic manufacturers are organized.

GM is a perfect example of failed central planning.

It is argued repeatedly that GM doesn’t make products that consumers want; they make what the producers want. That sounds like a central planning committee.

It is argued that they maintain a bloated workforce, paying people to sit idle. That sounds like “To each according to their needs” to me.

It is argued that those who do work don’t know what they are doing, aren’t properly trained, and don’t have the expertise to install and maintain today’s hi-tech manufacturing equipment. That sounds like “From each according to their ability” to me.

They offer health-care for life and a generous pension plan for 269,000 GM retirees and 69,000 surviving spouses on the backs of 73,000 workers.

GM is not a failed business entity; GM is a failed socialist model.

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After Obama’s victory yesterday, I have had to swallow my bitterness and look to the future. The most urgent issue to confront is card check, but that involves a lot of political wrangling and knowing who to pressure to keep it from passing, or mounting the proper legal challenges if it is passed. The proper response to card check is above my pay grade.

I would, however, like to solicit opinions on the following idea:

(Note: This entry assumes that Obama’s tax cuts that he campaigned on are enacted)

I would propose that any excess tax savings by the middle class be used to directly pay down the national debt. As we well know, taxing the producers means less production. Giving money to consumers means more consumption. Put the two together, and you get inflation. I realize that it’s a lot more complicated than that, but that’s the gist.

Any other thoughts on how to properly use Obama’s promised tax cuts?

It really seems to me that McCain has been more than inside the “decision loop”, as they say… He is playing Obama like a fiddle, or something.

It appears to me that McCain decided on Palin a long time ago, and held it very close to his chest. Here’s why…

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So, CNN is crying foul about Senator McCain cancelling the Larry King Live interview excerpts because of a hard-hitting interview with Campbell Brown.

Cnn also replayed the interview with Campbell Brown that the campaign found so tough. ThinkProgress is all over this controversy, and here’s the link.

Note this from the web site:

CNN also replayed the interview between Brown and Bounds. Watch Blitzer’s announcement and the interview.

Note in the video where Campbell Brown attacks Palin’s judgement regarding putting her daughter smack in the spotlight during a very challenging time:

1:32 Putting this young woman, Bristol Palin, smack in the media spotlight at what’s already gotta be a very challenging time
in her life, I mean how do you respond to people who wonder why her mother would’ve subjected her to this kind of scrutiny by accepting this high profile position?

And as Tucker’s answer tries to bring focus back to the candidates actually running for office, Ms. Brown continues questioning the sort of mother that would agree to this job here:

2:37 You do risk putting her through an incredibly difficult process by accepting this job if you’re her mother

Oh, wait, that part of the interview isn’t included in the ThinkProgress/CNN story.

Well, for those who didn’t see the entire interview, here it is, since CNN has omitted the first 3:23 of the interview…

I’m sure the first 3:32 had nothing to do with the campaign slamming the door on CNN, though…

Now, I’m not going to expand on the functionality of this network, as Michelle Malkin has already done so.

And I couldn’t find the exact wording of the Social Investment Fund Network in the Democratic Platform (warning, pdf!), but I did find this bit at Barack Obama’s Plan for Universal Voluntary Public Service:

**Social Investment Fund Network:**

Obama will create a Social Investment Fund Network to use federal seed money to leverage private sector funding to improve local innovation, test the impact of new ideas and expand successful programs to scale.

Doesn’t this sound an awful lot like a siphon?

Oh, wait, it is a SIFN…

So I was browsing through the USA Today today, where DeWayne Wickha(ck)m floored me with his outstanding insight into the Presidential race.

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[Full Disclosure: I have been working in the auto industry for 8 years now, and I intend to continue working in it. I am not employed by a major auto manufactuere; I am not UAW. I am not involved in vehicle design. I assist in equipment installation and set-up for manufacturing. Once the vehicle is launched, I move on to the next launch.]

Toyota announced last week that it will begin producing the Prius hybrid in Blue Springs, MS, by 2010. It is fortunate that Toyota was already building a plant there, as announced last year.

As the articles show, Toyota was building a plant to produce over 100,000 Highlander SUVs per year, starting just one year ago. That they are reacting instead of ceasing construction is a good thing for the auto industry here in the states.

Last month, GM hinted at future production of a 45 mpg car in Lordstown, OH, where they currently build the Cobalt.

The new car, a Chevrolet as yet unnamed, will be powered by a 1.4-liter engine (or about 85 cubic inches, for purposes of comparison to the 454 Impala muscle car of 1966). But that’s OK. People don’t talk much these days about how fast a car gets from zero to 60 mph; they’re more inclined to talk about miles per gallon. And the new car is likely to get 45 mpg.

This is scheduled to go into production by 2010, in addition to the well-publicized Chevy Volt.

GM is scheduled to add a third shift at Lordstown (Cobalt)and Orion Township (G6) early this fall.

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