Since my last column on the auto industry, much has changed. The CEO‚Äôs of the big three are attending hearings this week in Congress to convince lawmakers to give them billions of dollars. In fact, they are getting so desperate that all of the CEO‚Äôs drove the 500 miles from Detroit to Washington, D.C. in hybrid vehicles. This is a far cry from the private jets used a few weeks ago, which in response to Congressional and public ire, are now being sold or put into storage.
The situation at Chrysler and GM is much worse than the situation at Ford. In fact, Ford is saying that it can probably last through most, if not all, of 2009 without any money whatsoever. Chrysler and GM, on the other hand, probably cannot make it through the end of this year.
At this point, both Nancy Pelosi and Harry Reid know that the necessary votes for their socialist bailout of the automakers are not there. Conservative Republicans are against it and many are voicing their opinions in this regard. Georgia Republican, Tom Rice, stated, ‚ÄúI don‚Äôt see the upside to the obligating of more taxpayer money for a private industry.‚ÄĚ In fact, the situation is so dire from the automakers viewpoint, that the UAW is actually considering serious concessions in order to stop the potential bankruptcies. As stated in my prior article, the unions would suffer the most if the Big 3 were forced to file for Chapter 11 protection. And, right now, the unions are really scared.
The UAW is the main the reason why American automakers have a higher per vehicle cost than other car makers. In fact, did you know that laid off autoworkers get 95% of their salary as part of the union contract? How can we compete with garbage like this as part of our economy? Simply put, we cannot.
The UAW, acting in true desperation, is offering major concessions, including the elimination of the above cited 95% welfare. They are also agreeing to open renegotiations of the union agreements which may mean lower salaries and more competitiveness. And, there may even be some movement on extra payments due the pension plans.
Movement is in the right direction. However, I still believe that the way for the auto industry to survive beyond the next 12 months is to file for Chapter 11 protection. In fact, Texas Representative Jeb Hensarling told Fox News just that: “It’s painful; it’s not a fun process. But some actually end up leaner, meaner, more profitable, more healthy in the back end of the process. I don’t buy into the fact that (bankruptcy is) simply not an option.‚ÄĚ
So, why are all of the democrats on Capital Hill still pushing for the bailout? As stated earlier, it‚Äôs because they must act for their union cronies. They cannot hope to get elected without the union money and the union influence over its members. The American people should not kowtow to this. The Republican Party should stand up for the belief in free enterprise and fight these union bullies. We should not agree to any bailout of the auto industry without even more substantial union concessions and then, only if, the economic plans of the car companies are not just a delay of the inevitable.
Who should we bailout instead? How about the American taxpayer? There is currently a bill being drafted by Texas Congressman Louie Gohmert that would do just that. Representative Gohmert is suggesting that the remaining funds from the 700 billion dollar bailout be cancelled and instead, every American should get a tax holiday for January and February of 2009.
The plan would suspend both income and FICA taxes on every wage earner for two months. It would not be a regressive benefit because the people hurt the most by FICA (social security and Medicare) are the lowest wage earners. And, by stopping income taxes on everyone, the wealthiest will have extra cash for investment. This extra cash would be used to create jobs and stimulate the economy.
I know that most of you are saying that this plan is ridiculous because of the geometrically expanding deficit. However, this plan is actually cheaper than almost every other proposal on the table. By enacting this plan, the total cost of the tax holiday would be approximately $334.4 billion. (Source: American Solutions, a conservative think tank founded by former Speaker of the House Newt Gingrich). This represents a savings to the American public of almost sixteen billion dollars from just the 700 billion dollar bailout. If this is the final amount of federal money spent, it would be an even greater savings. Remember, there are almost one trillion dollars worth of plans on the table in addition to the 700 billion dollar plan already passed by Congress.
However, you and I both know that the Democratic Congress would never do something like this. Imagine giving people their own money to spend and invest as they choose. The shame! The horror! Remember, they believe that government is the answer and solution to everything. People just are not smart enough to deal with their own fate. They need someone (the government) to tell them what to do. Bigger government will solve every problem.
I beg to disagree and I really believe that Gohmert is onto something. Maybe, he is thinking of Ronald Reagan. Remember, Reagan felt that government was the problem and not the solution.
If you support Mr. Gohmert‚Äôs plan, which I suggest you do, please go to: https://redstate.kimbia.com/taxholiday and register your support.
¬© 2008 Frank T. DeMartini ‚Äď All rights reserved. Permission to be copied will be granted freely upon request