What deficit?

The first morning cup was sucked down listening to Obama economic advisor Governor Jennifer M. Granholm of Michigan babble on CNBC. She wants a bailout for the auto industry now. She wants an economic stimulus package now. She wants tax cuts promised to the middle class now.

Three times she dodged the question as to how America would pay for all that.

It bothers me a lot that Obama’s so unwilling to poke his little head into reality. He’s elected. No one can take that away. He needs to pull down from the clouds and start admitting to a few things in the same speech. Describing his spending orgy in terms of America’s national debt would be a great place to start.

Comments

  1. Tinkerbell says:

    Yes! The news coverage I saw said 60% of Americans believe foreign (Japanese & European) cars are better.

    That’s a mandate. And a wider margin than those who voted Dem.

    Now it appears we have the 52% (Dem) trying to outweigh the 60% (foreign car preference), using money from the 100% (all tax-paying citizens) to benefit the 40% (who prefer the American brands).

    Will this $ be temporary assistance used to address the essential problem: research & development, innovative features, mpg, reliability, pricing… which are the factors influencing consumer purchase decisions?

    Or will the increasing government subsidies to industries result in more government ownership… banks… auto manufacturers… until the government is the ONLY employer in town, and the only way to move up in the ranks or make a job change will be to voluntarily give up 1st amendment rights? Be assimilated?

    Just consider what next steps might be… like a row of dominoes… Does anyone see a parallel to Brave New World?

  2. The non-union auto industry in the U.S. is healthy. If the government gives money to GM, Ford, etc. it will not go into the business. The government will just be taking over their massive pension obligations. The unions want to unionize more industry and think that BO owes them. Going down the union road is not economic progress at this time in history.

  3. That’s what I’ve heard, too. The states with predominate non-union factories are great. Life in Michigan sucks right now, though.

  4. Randy in Richmond says:

    Cindy
    Someone wise once said ” It’s okay to have your head in the clouds as long as you keep your feet on the ground”.

  5. Well then, I guess we’re all waiting to see where his feet will land.

  6. Randy in Richmond says:

    Oh, it wasn’t a compliment.

  7. Again, Tinkerbell, the essential problem isn’t R&D…it’s huge pension obligations. As Cindy said, non-union factories (and union factories without suffocating pension liabilites) are doing just fine. MPG, reliability and pricing are more than competitive vs. Japanese automakers.

    The reliability rap is mostly due to negative perceptions of U.S. automakers domestically. Actually, GM is doing a fine job penetrating the Chinese market where GM is preceived to be a quality brand.

  8. i laughed when i read your ‘comparable’ line j. strupp. that’s ridiculous.

  9. I’d have to do some research, but I thought the pensions were funded in separate holding companies.

  10. J. Strupp –

    I think that GM does need better R&D. Their marketing research said market the Hummer while Toyota’s said stick with the Prius.

  11. Tinkerbell says:

    J-S,
    I understood big pensions were promised in the days when domestic autos were in demand: sales forecasts were bright & optimistic, not anticipating the downturn.

    IF domestic autos were in still in great demand here in our country today it may be possible that high demand would lead to sales figures which would not make the pensions seem out of line or burdensome.

    It seems we can cut costs, increase sales, or some combination of both.

    If we consider cutting pensions, how might that play out?

    If we provide increased perceived value through new engineering (fueled by R&D), that may stimulate new sales.

    Thank you for allowing me to clarify. What I read here may indicate we see the same problem. Solutions? For this piece of the puzzle or any other scenarios we may want to try to walk through?

  12. It’s been a long time, but when I worked in a GM facility, I needed a union electrician to move my PC from one desk to another. I was not allowed even to unplug my machine, much less wheel it across the room. The unions were a problem. They have made many concessions since then, but it’s hard to teach an old dog new tricks.

    Management was also territorial and unwilling to cooperate with other divisions even to cut costs. They were not happy to hear about ways to improve engineering processes or cut time to market. They did seem to be very concerned about what color binder we used for documents, and they insisted that we misspell employee (to save ink!) and add kitsch-y acronyms like DIRTFT to the bottom of pages.

    While I feel for the people of Michigan, I don’t want to pay to continue that sort of foolishness.

    The products, by the way, were excellent. They just cost too much time and money to produce.

  13. Tinkerbell,

    Unfortunately for “the big 3”, I don’t think it’s at all possible that increasing sales by improving quality through R&D, increasing penetration of foreign markets, or a more innovative product mix, would lead to a sustainable situation for these companies. Revenues are not the main problem; margins are, due to the insurmountable burden of pension obligations. I don’t think that it’s possible for the big 3 to increase sales enough to offset the huge pension liabilities currently hammering their balance sheets. These companies have got to get out from under these huge debt obligations in order to survive. I think bankruptcy restructuring will be the only long term viable option. It’s going to put a lot of people out of work but I don’t see how pumping more government money into a losing battle helps anyone at this point. Of course, no one wants to be the guy in charge who hammered the final nail in the coffin so you can be certain that another government “loan” is forthcoming.

    I’m sure I’m not alone in my thinking here.

  14. Dear J-S,
    When you express it that way, you have influence. Persoanlly I want to run for a balance sheet and see excatly what the pension obligations, sales figures, etc are. But another part of me prefers to put that time into other things, so I will (at least for now) accept your analysis as fact, believing it to be verifiable at a later time.

    Of course I have this luxury because I am not in the driver’s seat. But I believe it is incumbent upon our elected officials (pun) to be very familiar with the current financial figures, not accepting “common knowledge” as true until verified!

    Elsewhere on the economy, who is disappointed enough in the AIG vacations with OUR bail-out money, to actually contact their state Senators and Representatives? “Someone” ought to hold these companies accountable for their use of OUR funds! Nothing should be given carte-blanche. For each entity receiving $$, there ought to be a plan for how these monies will be used, and they ought to stick to it.

  15. I agree completely.

    As for the big 3, let me expand on something. I would be completely in favor of President Bush or President-elect Obama appropriating funds to “buyout” employees of the big 3 (following the denial of bailout loans which would no doubt lead to bankruptcy) on a one-time basis by providing severance packages that would include fully funding college educations for all now ex-autoworkers that would want to pursue higher education as a means to find another career path. This would be expensive and rather complicated to adopt but this type of government severance package would be a final farewell to government interventions into these failed corporations.