Archive for March, 2009

Analysis of President Obama’s Plans for GM and Chrysler

March 31, 2009

Alright, as promised, here’s my full analysis on President Obama’s plans for General Motors and Chrysler, which he unveiled today.  Here’s a video of the press conference, courtesy of the White House.  I’ll also have my commentary below (I’ll go through the transcript and add in my commentary):

THE WHITE HOUSE

Office of the Press Secretary

_______________________________________________________________
For Immediate Release                         March 30, 2009

REMARKS BY THE PRESIDENT ON THE AMERICAN AUTOMOTIVE INDUSTRY

Grand Foyer

11:07 A.M. EDT

THE PRESIDENT: Good morning, everybody.

One of the challenges we’ve confronted from the beginning of this administration is what to do with the state of the struggling auto industry. In recent months, my Auto Task Force has been reviewing requests by General Motors and Chrysler for additional government assistance, as well as plans developed by each of these companies to restructure, to modernize, and to make themselves more competitive. Our evaluation is now complete. But before I lay out what needs to be done going forward, I want to say a few words about where we are and what led us to this point.

Well, government intervention is one of the things that led us to this point, but I’m guessing that you’re not going to talk about that.

It will come as no surprise that some Americans who have suffered most during this recession have been those in the auto industry and those working for companies that support it. Over the past year, our auto industry has shed over 400,000 jobs, not only at plants that produce cars, but at the businesses that produce the parts that go into them and the dealers that sell and repair them. More than one in 10 Michigan residents is out of work — the most of any state. And towns and cities across the great Midwest have watched unemployment climb higher than it’s been in decades.

That’s my state for you!

The pain being felt in places that rely on our auto industry is not the fault of our workers; they labor tirelessly and desperately want to see their companies succeed. It’s not the fault of all the families and communities that supported manufacturing plants throughout the generations. Rather, it’s a failure of leadership — from Washington to Detroit — that led our auto companies to this point.

Well, part of the fault lies with the unions, and those are the workers, but I’ll agree for the most part it’s the leadership’s failure.  The leadership has time and time again given in to the unionswhen the unions have threatened to strike.  That strengthens the UAW’s chokehold on the Big 3, but the leadership still should have stood up to the UAW.

Year after year, decade after decade, we’ve seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we’ve reached the end of that road. And we, as a nation, cannot afford to shirk responsibility any longer. Now is the time to confront our problems head-on and do what’s necessary to solve them.

Problems like not being able to pay the UAW workers, but giving in to their demands for ridiculous wage increases just so that you could avoid a strike.  Yeah, that’s one of the major factors that led us to where we’re at now.

We cannot, and must not, and we will not let our auto industry simply vanish. This industry is like no other — it’s an emblem of the American spirit; a once and future symbol of America’s success. It’s what helped build the middle class and sustained it throughout the 20th century. It’s a source of deep pride for the generations of American workers whose hard work and imagination led to some of the finest cars the world has ever known. It’s a pillar of our economy that has held up the dreams of millions of our people. And we cannot continue to excuse poor decisions. We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars. These companies — and this industry — must ultimately stand on their own, not as wards of the state.

Somehow I find that last sentence hard to take seriously, since we pumped billions of dollars into them because “bankruptcy wasn’t an option” (although now it may be), and you decided that GM CEO Rick Wagoner should go – yeah – that’s having them stand on their own.

And that’s why the federal government provided General Motors and Chrysler with emergency loans to prevent their sudden collapse at the end of last year — only on the condition that they would develop plans to restructure. In keeping with that agreement, each company has submitted a plan to restructure. But after careful analysis, we’ve determined that neither goes far enough to warrant the substantial new investments that these companies are requesting.

So we’re going to give them ANOTHER chance!  YAY for government spending!

And so today I’m announcing that my administration will offer GM and Chrysler a limited additional period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional taxpayer dollars. During this period they must produce plans that would give the American people confidence in their long-term prospects for success.

You do realize that you said that the LAST TIME, right?  Is this really their last chance?  Because “too big to fail” doesn’t seem like it’s conditional.  Either they are or aren’t too big to fail.

Now, what we’re asking for is difficult. It will require hard choices by companies. It will require unions and workers who have already made extraordinarily painful concessions to do more. It’ll require creditors to recognize that they can’t hold out for the prospect of endless government bailouts. It’ll have to — it will require efforts from a whole host of other stakeholders, including dealers and suppliers. Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry.

Because the unions have given up SO much already.  Give me a break.  If their wages were more in line with the foreign auto companies’ workers’, the American auto industry wouldn’t be suffering half as bad as it is now.

But I’m confident that if each are willing to do their part, if all of us are doing our part, then this restructuring, as painful as it will be in the short term, will mark not an end, but a new beginning for a great American industry — an auto industry that is once more out-competing the world; a 21st century auto industry that is creating new jobs, unleashing new prosperity, and manufacturing the fuel-efficient cars and trucks that will carry us towards an energy-independent future. I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars.

That’s a great goal, but that is not the purpose of the Federal Government.  I have NO problem with the auto industry succeeding.  Heck, I would love nothing better than for it to succeed, but making sure that it succeeds is NOT the purpose of the government!

And no one can deny that our auto industry has made meaningful progress in recent years — and this doesn’t get talked about often enough. Some of the cars made by American workers right now are outperforming the best cars made abroad. In 2008, the North American Car of the Year was a GM. This year, Buick tied for first place as the most reliable car in the world. Our companies are investing in breakthrough technologies that hold the promise of new vehicles that will help America end its addiction to foreign oil.

Agreed – I do love my family’s GM cars (especially our Chevrolet Impala – gosh, I love that car).

But our auto industry is not moving in the right direction fast enough to succeed in a very tough environment. So let me discuss what measures need to be taken by each of the auto companies requesting taxpayer assistance, and I’ll start with General Motors.

GM has made a good faith effort to restructure over the past several months — but the plan that they’ve put forward is, in its current form, not strong enough. However, after broad consultation with a range of industry experts and financial advisors, I’m absolutely confident that GM can rise again, providing that it undergoes a fundamental restructuring. As an initial step, GM is announcing today that Rick Wagoner is stepping aside as Chairman and CEO. This is not meant as a condemnation of Mr. Wagoner, who’s devoted his life to this company and has had a distinguished career; rather, it’s a recognition that will take new vision and new direction to create the GM of the future.

More like you told Rick Wagoner to step aside.

In this context, my administration will offer General Motors adequate working capital over the next 60 days. And during this time, my team will be working closely with GM to produce a better business plan. They must ask themselves: Have they consolidated enough unprofitable brands? Have they cleaned up their balance sheets, or are they still saddled with so much debt that they can’t make future investments? Above all, have they created a credible model for how not only to survive, but to succeed in this competitive global market?

 “Adequate working capital” – that just sounds scary.  What does that even mean?  That seems a little too broad for my comfort.  What is the definition of “adequate” here, and who’s defining it?

Let me be clear: The United States government has no interest in running GM. We have no intention of running GM. What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company.

HAH!  They may have no interest in running GM, but it’s a little late to say that!  Your administration just gave Wagoner the boot.  If that’s not running GM, I don’t know what is.

The situation at Chrysler is more challenging. It’s with deep reluctance but also a clear-eyed recognition of the facts that we’ve determined, after careful review, that Chrysler needs a partner to remain viable. Recently, Chrysler reached out and found what could be a potential partner — the international car company Fiat, where the current management team has executed an impressive turnaround. Fiat is prepared to transfer its cutting-edge technology to Chrysler and, after working closely with my team, has committed to build — building new fuel-efficient cars and engines right here in the United States. We’ve also secured an agreement that will ensure that Chrysler repays taxpayers for any new investments that are made before Fiat is allowed to take a majority ownership stake in Chrysler.

Alright, at least that’s fair to the taxpayers.  And at least here, the government intrusion isn’t too bad – the Chrysler/Fiat merger wasn’t the government’s original idea, so that means that it can’t be all that bad (I’m joking – not everything the government does is bad).

Still, such a deal would require an additional investment of taxpayer dollars, and there are a number of hurdles that must be overcome to make it work. I’m committed to doing all I can to see if a deal can be struck in a way that upholds the interests of American taxpayers. And that’s why we’ll give Chrysler and Fiat 30 days to overcome these hurdles and reach a final agreement — and we will provide Chrysler with adequate capital to continue operating during that time. If they are able to come to a sound agreement that protects American taxpayers, we will consider lending up to $6 billion to help their plan succeed. But if they and their stakeholders are unable to reach such an agreement, and in the absence of any other viable partnership, we will not be able to justify investing additional tax dollars to keep Chrysler in business.

Again – “adequate capital” scares me.  And, if it may not be justifiable to invest more tax dollars if Chrysler can’t reach a deal to get a partner, then that must mean that they really weren’t too big to fail.

Now, while Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plan they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger. Now, I want everybody to be clear about this. I know that when people hear the word “bankruptcy” it can be unsettling, so let me explain exactly what I mean. What I’m talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so that they can get back on their feet and onto a path to success; a tool that we can use, even as workers staying on the job building cars that are being sold.

If we’re going to use bankruptcy, why didn’t we just do that in the first place, BEFORE wasting BILLIONS of taxpayer dollars?  I thought bankruptcy wasn’t an option before?  What changed?

What I’m not talking about is a process where a company is simply broken up, sold off, and no longer exists. We’re not talking about that. And what I’m not talking about is a company that’s stuck in court for years, unable to get out.

The first one isn’t bankruptcy (per se), that’s liquidation.  I don’t think anybody’s advocating Chapter 7 bankruptcy.  I think we’d all advocate for Chapter 11 if bankruptcy winds up happening.

So it’s my hope that the steps I’m announcing today will have a salutary effect — will go a long way forward towards answering many of the questions that people have about the future of GM and Chrysler.

But just in case there’s still nagging doubts, let me say it as plainly as I can: If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than it’s ever been, because starting today, the United States government will stand behind your warranty.

I don’t know how I feel about this.  On the one hand, I don’t like the fact that it could cost the government tons of money if the companies go under; however, without this guarantee, I really don’t think people would buy GM or Chrysler cars.  Another option would be to have a private 3rd party back the warranties, and if we could get that type of program set up, I’d rather do that than have the government backing warranties.

But we must also recognize that the difficulties facing this industry are due in no small part to the weaknesses in our economy as a whole. And therefore, to support demand for auto sales during this period, I’m directing my team to take several steps.

First, we will ensure that Recovery Act funds to purchase government cars get out as quickly as possible and work through the budget process to accelerate other federal fleet purchases, as well.

Second, we’ll accelerate our efforts through the Treasury Department’s Consumer and Business Lending Initiative. And we are working intensively with the auto finance companies to increase the flow of credit to both consumers and dealers.

But credit should only be going to those who deserve it.  As I’ve said before, credit, when used irresponsibly is a VERY dangerous tool.

Third, the IRS is launching a campaign to alert consumers of a new tax benefit for auto purchases made between February 16th and the end of this year — if you buy a car anytime this year, you may be able to deduct the cost of any sales and excise taxes. And this provision could save families hundreds of dollars and lead to as many as 100,000 new car sales.

Finally, several members of Congress have proposed an even more ambitious incentive program to increase car sales while modernizing our auto fleet. And such fleet modernization programs, which provide a generous credit to consumers who turn in old, less fuel-efficient cars and purchase cleaner cars, have been successful in boosting auto sales in a number of European countries. I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting today.

Now, let there be no doubt, it will take an unprecedented effort on all our parts — from the halls of Congress to the boardroom, from the union hall to the factory floor — to see the auto industry through these difficult times. And I want every American to know that the path I’m laying out today is our best chance to make sure that the cars of the future are built where they’ve always been built — in Detroit and across the Midwest — to make America’s auto industry in the 21st century what it was in the 20th century — unsurpassed around the world. The path has been chosen after consulting with other governments that are facing this crisis. We’ve worked closely with the government of Canada on GM and Chrysler, as both those companies have extensive operations there. The Canadian government has indicated its support for our approach and will be announcing their specific commitments later today.

While the steps I’m taking will have an impact on all Americans, some of our fellow citizens will be affected more than others. So I’d like to speak directly to all those men and women who work in the auto industry or live in countless communities that depend on it. Many of you have been going through tough times for longer than you care to remember. And I won’t pretend that the tough times are over. I can’t promise you there isn’t more difficulty to come.

But what I can promise you is this: I will fight for you. You’re the reason I’m here today. I got my start fighting for working families in the shadows of a shuttered steel plant. I wake up every single day asking myself what can I do to give you and working people all across this country a fair shot at the American Dream.

Perhaps that’s the problem.  Perhaps instead of thinking what you should be doing to help the economy, you should be thinking of what you should just let go of and let it work itself out.  It’s a private business for a reason – keeping it that way some of the time wouldn’t hurt.

When a community is struck by a natural disaster, the nation responds to put it back on its feet. While the storm that has hit our auto towns is not a tornado or a hurricane, the damage is clear, and we must likewise respond. And that’s why today I’m designating a new Director of Recovery for Auto Communities and Workers to cut through the red tape and ensure that the full resources of our federal government are leveraged to assist the workers, communities, and regions that rely on our auto industry. Edward Montgomery, a former Deputy Labor Secretary, has agreed to serve in this role.

But damage from a natural disaster doesn’t fix itself.  Eventually an economy WILL fix itself.  Creating a new government department to cut through red tape – that seems oxymoronic to me.

And together with Labor Secretary Solis and my Auto Task Force, Ed will help provide support to auto workers and their families, and open up opportunity to manufacturing communities in Michigan and Ohio and Indiana and every other state that relies on the auto industry.

They will have a strong advocate in Ed. He will direct a comprehensive effort that will help lift up the hardest-hit areas by using the unprecedented levels of funding available in our Recovery Act and throughout our government to create new manufacturing jobs and new businesses where they’re needed most — in your communities. And he will also lead an effort to identify new initiatives we may need to help support your communities going forward.

“Unprecedented levels of funding” – translated means “really really unheard of high spending.”  Again, that’s why all of these talks of “adequate capital” and stuff like this scares me.  It takes the concept of carte blanche to a whole new level.

These efforts, as essential as they are, are not going to make everything better overnight. There are jobs that won’t be saved. There are plants that may not reopen. There’s little I can say that can subdue the anger or ease the frustration of all whose livelihoods hang in the balance because of failures that weren’t theirs.

But there’s something I want everybody to remember. Remember that it is precisely in times like these — in moments of trial and moments of hardship — that Americans rediscover the ingenuity and resilience that makes us who we are; that made the auto industry what it once was and what it will be again; that sent those first mass-produced cars rolling off the assembly lines; that built an arsenal of democracy that propelled America to victory in the Second World War; and that powered our economic prowess in the first American century.

Because I know that if we can tap into that same ingenuity and resilience right now, if we can carry one another through this difficult time and do what must be done, then we will look back and say that this was the moment when the American auto industry shed its old ways, marched into the future, remade itself, and once more became an engine of opportunity and prosperity not only in Detroit, not only in our Midwest, but all across America.

I’m confident we can make that happen, but we’ve got a lot of work to do. Thank you. Thank you, everybody.

END                        11:25 A.M
Additional materials regarding today’s announcement:
Warrantee Commitment Program
Chrysler Viability Assessment
GM Viability Assessment
Fact Sheet of GM and Chrysler 

Alright, so that’s the transcript of the President’s speech.  He definitely had an attitude of hopefulness and optimism in there, which is good, but I feel like it may not be warranted.

Personally, I think that his plan focuses WAY too much on government involvement in the auto industry.  Instead of trying to ensure that both GM and Chrysler succeed (which even Obama has said may not happen), I think it’s time to just let both of them go (it was time to do that months ago).  If they fail, they fail; if they succeed, they succeed.  And if they fail, another auto company may buy out a specific marque (or sub-company).  If GM fails, Ford may buy out Buick or Chrysler, etc.  And honestly, if one of them failed, I think the other 2 would rebound.

I really don’t see how the government intrusion is going to help.  And if one or both of the companies does fail after this plan, it would have been a HUGE waste of taxpayers’ money!

Ultimately, I hope the auto industry recovers, but I don’t see this plan as helping achieve that goal.

Done Ranting,

Ranting Republican

Obama Administration Pushes GM CEO Rick Wagoner Out in Exchange for Bailout Money

March 30, 2009

Well, this is breaking news coming out of Detroit and Washington, D.C. right now.  An anonymous White House official has told members of the press that the Obama administration asked General Motors Chief Executive Officer Rick Wagoner to resign, and that Wagoner agreed.  It is expected that GM’s Chief Operating Officer, Fritz Henderson, will take Wagoner’s place as CEO.

This comes as a surprise, since on March 19th, Wagoner had said that he was not planning on resigning.  This all comes the night before President Obama will reveal his plan for GM and Chrysler.

Chrysler’s CEO, Bob Nardelli, is not anticipating the same fate as Wagoner; however, Chrysler will be told to go through with a partnership with the Italian automaker Fiat within 30 days.

I’ll analyze the President’s full plan when it comes out, but already, I can tell that I’m not going to like it.  This alone is too much government intrusion.  Heck, it might not even help.  Even my liberal roommate has just said, “Let them fail.”

And the sad thing is, even after ALL of this MONEY that the government has spent on them, it still may not help.

According to the New York Times, “[T]wo senior officials, offering a preview on condition of anonymity, made clear that some form of bankruptcy – a quick, court-supervised restructuring, as they described it – could still be an option for one or both companies.”

So, we may have spent billions of dollars just to let them go into bankruptcy, something I (and many others) advocated months ago?  It’s ridiculous.  It’s absolutely ridiculous.  Folks, I have money invested in the auto industry.  I have 2,500 shares of Delphi stock.  If GM rebounds, so would Delphi, and I seek to gain tens of thousands of dollars.  But I STILL advocate for letting them fail if that’s what has to happen.  I’d rather lose my money than use taxpayer dollars to help the auto industry recover.  Additionally, if one fails, the other 2 will rebound (which is why I plan on buying some Ford stock in the near future).

We have to stop this government intrusion of the private business sector, or we’re going to find the government running everything.

Done Reporting,

Ranting Republican

Where Is the Democrats’ Outrage Over Obama’s Special Olympics Comments?

March 22, 2009

It’s a common thought in America that Democrats are the “caring” party, the party who cares about those who are less fortunate, while the Republicans are the party who only cares about rich white men.

Well, by now, I’m sure you all heard about President Obama’s gaffe regarding the Special Olympics being similar to his lack of bowling skills.  If not, watch the following video:

Obama, realizing that that was a pretty poor choice of words, called Timothy Shriver, the chairman of the Special Olympics to apologize.

Shriver released the following statement:

President Obama called last night and expressed his regret and he apologized. He said that he did not intend to humiliate Special Olympics athletes or people with intellectual disabilities. He was sincere and heartfelt, and said that he is a fan of our movement and is ready to work with our athletes to make the United States a more accepting and welcoming country for all people with special needs. “

Words hurt and words matter. Words can cause pain and result in stereotypes that are unfair and damaging to people with intellectual disabilities. And using “Special Olympics” in a negative or derogatory context can be a humiliating put-down to people with special needs.”

This is a teachable moment for our country. We are asking young people, parents and leaders from all walks of life to engage in conversation and help dispel negative caricatures about people with intellectual disabilities. We believe that it’s only through open conversation and dialogue about how stereotypes can cause pain that we can begin to work together to create communities of acceptance and inclusion for all. “

Special Olympics is not a program, but a worldwide movement operating 30,000 events a year in more than 180 countries. Every one of them is a chance for people of all ages to get involved, to think differently about attitudes and perceptions they may have about people with intellectual disabilities, and to make a difference. “

And so we challenge people to join our “Spread the Word to End the Word” campaign, a youth-led national awareness effort that will launch on March 31, where we are asking people to pledge their respect for people with special needs. We’re asking people to sign our “R-word” pledge, to join in our Unified Sports programs, to volunteer, and to be fans of our athletes and our movement.”

Additionally, we challenge policy leaders at all levels to commit to improving the support and resources for people with intellectual disabilities in areas such as healthcare, education, housing and recreation. “

Finally, we invite the President to take the lead and consider hiring a Special Olympics athlete to work in the White House. In so doing, he could help end misperceptions about the talents and abilities of people with intellectual disabilities, and demonstrate their dignity and value to the world.

Now, I’m not a huge fan of being politically correct.  I call most things as I see them.  I’m not somebody who will sugar coat stuff.  I can’t stand people who claim that they are just “big boned” because they don’t want to admit that they’re really overweight.  My school’s name is the Chippewas, and I have no problem with that, due to the fact that the tribe has told the administration that they WANT us to keep using their name.  But there are some PC police out there who find our name offensive.

But I have always disliked people making fun of mentally challenged individuals, or using the word “retarded” as an insult.

So, where are the Democrats?  Where’s their outrage?  I decided to go over to Democratic Underground, and as I expected, most people on the website were dismissing his comments.  For those who said that they did find them offensive, most were saying that we should move on.  In fact, one that was posted around 10:00 A.M. the morning after the Tonight Show aired had said that the media should already be moving on.  I couldn’t even find anything talking about it on Daily Kos.

But this isn’t the first time I’ve heard a Democrat mock the mentally challenged.  Back during the election, I heard a liberal make the following joke (**contains language that could be offensive to some**):

What’s the difference between Sarah Palin’s mouth and her vagina?  Not everything that comes out of her vagina is retarded.

And this was a liberal who disliked Palin especially for her being religious, and that she needed to be more accepting to homosexuals.

Personally, I’m glad he apologized, but why aren’t the Democrats outraged over this?  Had this have been Bush, Keith Olbermann would’ve dedicated a whole show to it, and people would be playing the video clip for months to come (look at how often gaffes of President Bush were played by the media).  Or look at the outrage over George Alan’s Macaca comment.

At least show the same disappointment as you would have if this had been a Republican.

Done Ranting,

Ranting Republican

House of Representatives Votes to Tax AIG Executives’ Bonuses at 90%

March 19, 2009

The House just passed H.R. 1586, officially titled “To impose an additional tax on bonuses received from certain TARP recipients” (sponsored by Charlie Rangel [D-NY]), which taxes the bonuses of AIG executives.  The bill technically places a tax on any bonuses given by companies who received TARP (Troubled Asset Relief Program) money.

The following is the text of the legislation:

HR 1586 IH

 

111th CONGRESS 

1st Session

H. R. 1586

To impose an additional tax on bonuses received from certain TARP recipients.

IN THE HOUSE OF REPRESENTATIVES

March 18, 2009

Mr. RANGEL (for himself, Mr. ISRAEL, Mr. PETERS, Mrs. MALONEY, Mr. STARK, Mr. LEVIN, Mr. LEWIS of Georgia, Mr. TANNER, Mr. POMEROY, Mr. THOMPSON of California, Mr. LARSON of Connecticut, Mr. BLUMENAUER, Mr. PASCRELL, Ms. BERKLEY, Mr. VAN HOLLEN, Mr. MEEK of Florida, Mr. DAVIS of Alabama, Mr. DAVIS of Illinois, Mr. ETHERIDGE, Ms. LINDA T. SANCHEZ of California, Mr. HIGGINS, Mr. YARMUTH, Mr. DINGELL, Mr. CONNOLLY of Virginia, Ms. FUDGE, Mr. LUJAN, Mr. MAFFEI, Mr. PERRIELLO, Mr. CARNEY, Ms. CASTOR of Florida, Ms. CLARKE, Mr. COHEN, Mr. ELLISON, Mr. HALL of New York, Mr. HARE, Mr. KLEIN of Florida, Mr. LOEBSACK, Ms. SCHAKOWSKY, Mr. SIRES, Mr. WELCH, Mr. WILSON of Ohio, Mr. WU, and Mr. HILL) introduced the following bill; which was referred to the Committee on Ways and Means

 


 

A BILL 

To impose an additional tax on bonuses received from certain TARP recipients.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. BONUSES RECEIVED FROM CERTAIN TARP RECIPIENTS.

    (a) In General- In the case of an employee or former employee of a covered TARP recipient, the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for any taxable year shall not be less than the sum of–

 (1) the tax that would be determined under such chapter if the taxable income of the taxpayer for such taxable year were reduced (but not below zero) by the TARP bonus received by the taxpayer during such taxable year, plus

(2) 90 percent of the TARP bonus received by the taxpayer during such taxable year.

    (b) TARP Bonus- For purposes of this section–

(1) IN GENERAL- The term `TARP bonus’ means, with respect to any individual for any taxable year, the lesser of–

(A) the aggregate disqualified bonus payments received from covered TARP recipients during such taxable year, or

(B) the excess of–

(i) the adjusted gross income of the taxpayer for such taxable year, over

(ii) $250,000 ($125,000 in the case of a married individual filing a separate return).

 (2) DISQUALIFIED BONUS PAYMENT-

(A) IN GENERAL- The term `disqualified bonus payment’ means any retention payment, incentive payment, or other bonus which is in addition to any amount payable to such individual for service performed by such individual at a regular hourly, daily, weekly, monthly, or similar periodic rate.

(B) EXCEPTIONS- Such term shall not include commissions, welfare or fringe benefits, or expense reimbursements.

(C) WAIVER OR RETURN OF PAYMENTS- Such term shall not include any amount if the employee irrevocably waives the employee’s entitlement to such payment, or the employee returns such payment to the employer, before the close of the taxable year in which such payment is due. The preceding sentence shall not apply if the employee receives any benefit from the employer in connection with the waiver or return of such payment.

(3) REIMBURSEMENT OF TAX TREATED AS TARP BONUS- Any reimbursement by a covered TARP recipient of the tax imposed under subsection (a) shall be treated as a disqualified bonus payment to the taxpayer liable for such tax.

    (c) Covered TARP Recipient- For purposes of this section–

(1) IN GENERAL- The term `covered TARP recipient’ means–

(A) any person who receives after December 31, 2007, capital infusions under the Emergency Economic Stabilization Act of 2008 which, in the aggregate, exceed $5,000,000,000,

(B) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation,

(C) any person who is a member of the same affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986, determined without regard to paragraphs (2) and (3) of subsection (b)) as a person described in subparagraph (A) or (B), and

(D) any partnership if more than 50 percent of the capital or profits interests of such partnership are owned directly or indirectly by one or more persons described in subparagraph (A), (B), or (C).

 (2) EXCEPTION FOR TARP RECIPIENTS WHO REPAY ASSISTANCE- A person shall be treated as described in paragraph (1)(A) for any period only if–

(A) the excess of the aggregate amount of capital infusions described in paragraph (1)(A) with respect to such person over the amounts repaid by such person to the Federal Government with respect to such capital infusions, exceeds

(B) $5,000,000,000.

    (d) Other Definitions- Terms used in this section which are also used in the Internal Revenue Code of 1986 shall have the same meaning when used in this section as when used in such Code.
    (e) Coordination With Internal Revenue Code of 1986- Any increase in the tax imposed under chapter 1 of the Internal Revenue Code of 1986 by reason of subsection (a) shall not be treated as a tax imposed by such chapter for purposes of determining the amount of any credit under such chapter or for purposes of section 55 of such Code.
    (f) Regulations- The Secretary of the Treasury, or the Secretary’s delegate, shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.
    (g) Effective Date- This section shall apply to disqualified bonus payments received after December 31, 2008, in taxable years ending after such date.

The bill passed 328 (243 Democrats, 85 Republicans)-93 (6 Democrats, 87 Republicans).

Personally, this bill is very troubling to me.  It’s debatable as to whether or not it’s Constitutional.  Some have said that it’s a bill of attainder (a bill that focuses on punishing 1 group of people).  Technically, it never names AIG as the focus of the bill, but that’s definitely the intent.

This bill is more legally binding than Representative Gary Peters’ bill (H.R. 1527) that would impose a 60% tax on bonuses paid to executives if “the ownership interest of the Federal Government” is at least 79%.  Basically that says that if the government owns at least 79% of a company’s stock, it can tax bonuses on that company’s executives at a rate of 60%.  The problem with that bill, which I talked about yesterday, is that the government technically doesn’t own AIG. 

Even if it is Constitutional, I find this a huge invasion of the business sector.  Two wrongs do not make a right.  It’s a complete twist of the American tax code, and it sets a VERY dangerous precedent.

I don’t think AIG executives should have received the bonuses, but that stipulation should have been placed in the original TARP legislation.

Now, that stipulation WAS in the original bill; however, when it went to the conference committee, the Democrats took out that provision.  The exact details of how that happened are still unknown, but Chris Dodd had said that he introduced an amendment at the request of the Obama administration.  When this actually gets sorted out, I’ll let you know what actually happened.

Regardless of how they were allowed to get the bonuses, they were, and taking the bonuses away like this is questionably constitutional, but in the least, a blatant perversion of the tax code.

Done Ranting,

Ranting Republican

Bonuses for AIG Executives Are Disgusting, but Legally Necessary

March 18, 2009

I’m sure that by now, most of you have heard about AIG giving out $165 million in bonuses, and that has outraged many Americans, including many politicians because people don’t think that executives should be getting money for driving AIG into the ground and then receiving government bailout money.

Personally, I agree that they don’t deserve bonuses, especially after receiving government money.

The problem is, there’s really no way that I see the government LEGALLY stopping these bonuses.  The government lent out money to AIG originally, without putting any requirements on the money not going toward bonuses, so the government has no right to step in and stop it now.

The bonuses are in the executives’ contracts, and thus should be paid out.

And the idea to tax the bonuses 100% is just plain wrong – that’s government intrusion and it crosses the line.

And Representative Barney Frank’s (D-MA) solution isn’t exactly legal either.  He told CNN earlier today:

We own this company in effect, and we’re not asking that these bonuses be rescinded because we have lent money to the company.  I believe we are saying as the owners of the company, we do not think we should be paying bonuses or should have paid bonuses to people who made mistakes, who were incompetent.

No, I don’t think the American people want a situation where Congress, whenever it feels a contract shouldn’t have been signed, passes a law to abrogate that past contract.  That’s why I am saying we should assert our ownership rights.

I want to invalidate these contracts and say, look, we are the owners of this company.  Yes, contracts were signed with you that I wish hadn’t been signed.  But given how badly you performed, I want to argue that they did not perform under the contract.

The difference would be having a precedent that I don’t think the American people want, even if for this situation, we’d all like to see it different, where whenever Congress thinks a contract should be abrogated, it should be abrogated.  So, I’m talking about a legislative abrogation of a contract.  I’m talking about a lawsuit as an owner of the company [that wants to reward a] bonus, we ought to fine you for messing it up.

Well, I personally have a problem with Representative Frank’s plan.  Sure, the government pumped billions of dollars into AIG, but they did it as a loan.  We’re not talking about being the majority shareholder here – we’re not talking about buying stocks, we’re talking about a loan.  Giving a company a loan gives Congress absolutely no ownership rights, and the fact that Barney Frank thinks that the loan gave the government “ownership,” even in the slightest, is honestly quite scary.

Think of it on a more personal level than if it were a company.  Imagine that the government gave you a student loan.  If they gave you a loan intended for school, but never put in writing that it had to be spent on school, and you spent the money on candy bars, you have that legal right.  What Barney Frank wants to do is say, “The federal government is part owner of your life, and you are not allowed to buy candy bars.”  Well, I would be fine with that if it had been in the original agreement, but it wasn’t.  Now, what was in the original agreement was that the the government got “equity participant warrants” for 79.9% of AIG’s equity.  For those of you who don’t know what equity warrants are, they’re a contract that says that the government has the option and right to own 79.9% of the AIG shares; however, the government is not exercising that option now.  Until we exercise that option, the government has NO RIGHT to step in here.

If the government takes back any of this money and gets away with it, it sets a VERY dangerous precedent.

Now, Edward Liddy, the CEO of AIG, is encouraging employees to give back half of the bonus money.  And if they do, that’s fine, because THEY are giving it up.  But if the government takes the money simply because the executives dont’ deserve it, that would be a major government intrusion.

Done Ranting,

Ranting Republican

A Look at the 2010 Michigan Governor’s Race: Republicans Ahead So Far

March 18, 2009

Here are the results from a Marketing Resource Group poll conducted for Inside Michigan Politics:

For the Republican race:

  1. Oakland County Executive L. Brooks Patterson – 22%
  2. 2nd Congressional District Representative Pete Hoekstra – 17%
  3. Attorney General Mike Cox – 15%
  4. Secretary of State Terri Lynn Land – 12%
  5. Kalamazoo State Senator Tom George – 2%
  6. Undecided – 32%

Still a lot of undecided people out there.  Personally, I’m surprised at the results.  I would have guessed that the results would have been completely flipped (with the exception of George).  I figured that Land would lead, with Cox behind her.  Then I figured Patterson would be in either 3rd or 4th.  I haven’t decided yet who I’m supporting, but Patterson is definitely one of my favorite Michigan politicians.

Still, it’s too early to say for sure what’s going to happen.

Moving on to the Democrats’ race:

  1. Lt. Governor John Cherry – 26%
  2. First Gentleman Daniel Granholm-Mulhern – 10%
  3. Michigan State University Trustee George Perles – 4%
  4. Speaker of the House Andy Dillon – 3%
  5. Undecided – 57%

I really thought Cherry would be doing better than that.  He’s often considered the Democrats’ candidate for Governor, but perhaps not that many people have heard of him.  Even though there’s a lot of undecideds, I see Cherry winning that race.

Now, that takes us to the head-to-head general election polls:

Cox leads Cherry 41-34%.  Patterson leads Cherry 38-34%.  Land leads Cherry 39-34%.

The survey was conducted from March 4-10 of 600 Michigan registered voters. The margin of error is +/-4.1%. The margin of error for the GOP primary is +/- 5.7%. The margin of error for the DEM primary is +/- 5.8%.

Again, it’s still early, but I think the Republicans have a decent lead in this race.  If we could take back the Governor’s mansion here in Michigan, that’d be pretty fantastic.

I’ll continue following all of the Michigan races as more polls come out, and as more candidates declare.

Done Reporting,

Ranting Republican

A Look at the Causes of the Credit Crisis

March 17, 2009

Recently, there’s been a lot of talk about the American credit system.  Personally, I think Americans rely far too heavily on credit, and that is going to come back to haunt us VERY soon if we don’t make some drastic changes.

Back during the debate over the first bailout bill of this year, Senate Minority Leader Mitch McConnell (R-KY) made the following comments:

more about “A Look at the American Credit System …“, posted with vodpod

And it’s that type of thinking that leads to the credit crisis that we’re in now.  The credit system is like our circulatory system?  NO!  We should not be relying that heavily on our credit system.  Credit is NOT intended to be the same thing as money.  Equating credit with available spending money is one of the major factors that led to the Great Depression.  People were buying things on credit and laying out installment payment plans.  That enabled them to buy more stuff, and this created an artificially high demand for items (such as radios or cars, both of which were often being bought on credit).  But once they began having to pay multiple payments back, people could no longer to afford to continue buying stuff (thus why I called the demand “artificially high”) – the demand for those items was not necessarily high, people were just buying things immediately that they normally would have saved up for.  And when they didn’t keep track of how much that would cost in the long run, the credit bubble burst.

The other day, I posted a comment on a friend’s blog (Right Wing Reform), and that’s what got me thinking about all of this.  The following is my comment (with a little more added in – I wrote the original comment to be quick and short):

The credit system is intended to be used as a crutch.  You still do the walking, but you can’t quite walk all by yourself at the beginning of an injury (purchasing a large item).  Over time, you begin to pay off the debt (heal), and use less and less of the crutch, until eventually you don’t need it (the item is paid off).  The problem with the current way many Americans are using credit is that they’re using it more like a wheelchair than a crutch.  And it’s used too often, even to take one little step in a room (buying a meal at McDonald’s or a small purchase at the grocery store).  The problem with using it for small items is that over time, you begin to lose track of how much you’re spending (unless you have a GREAT memory), and a lot of people find themselves not being able to pay off the entire credit card bill at the end of the month.  And do you know what that means?  That’s right, they have to pay interest on that.  And that means less money in their pocket, meaning that they are MORE likely to use credit as cash.  And the person (or family) gets deeper and deeper into debt.

When you overburden the credit system and you never try to walk on your own, the crutch breaks.

Honestly, we’re never going to be able to get rid of credit.  And there’s no reason to.  When used responsibly, it’s a great tool.  But a strong financial system would be able to withstand a loss of a credit system (at least small item credit [the biggest example of a small item credit system would be credit cards; another example would be  installment payments for stuff like furniture] - I would argue that it should be able to withstand the loss of large item credit, but this would mean that buying a house would be something that takes a lot of work and time, and you’d go back to the days of people building their own houses and living with other people rather than a single person owning a home by the age of 23).

Right now, America would not withstand the loss of even the small item credit system, and THAT is a problem for us financially.

If Americans want to get through this financial crisis, keeping the credit cards at home more often would be one way to help.

Done Ranting,

Ranting Republican

Happy St. Patrick’s Day!

March 17, 2009

Happy St. Patrick’s Day everybody!

I just wanted to really quickly wish everybody a safe and happy St. Patrick’s Day (a little bit early for those of you not in the Eastern time zone).

So, have fun today, but make sure that if you drink too much, you don’t get behind the wheel and drive home.  It’s better to pay the money for a cab than pay the money for a ticket (or with your life).

But still – have fun and enjoy today.  And for any of my Catholic readers, I wish you the best for any church festival’s you’re having today.

And for any of my Irish readers (if I have any), enjoy your day off of work!

Done Celebrating,

Ranting Republican

Signing Statements and Earmarks: More of the Same from President Obama

March 13, 2009

Well, as I’m sure you’re aware, Congress passed the $410 billion omnibus spending bill (H.R. 1105, formally titled “Making omnibus appropriations for the fiscal year ending September 30, 2009, and for other purposes.”).  And, as usual, that appropriations bill was FILLED with pork.

Before I get into details about President Obama, I’d like to briefly comment on the vote on the bill.  The cloture vote passed 62-35.  I’d like to commend Senators Evan Bayh (D-IN), Russ Feingold (D-WI), and Claire McCaskill (D-MO) for voting against it; however, I am disappointed in Senators Andrew Alexander (R-TN), Kit Bond (R-MO), Thad Cochran (R-MS), Lisa Murkowski (R-AK), Richard Shelby (R-AL), Olympia Snowe (R-ME), Arlen Specter (R-PA), and Roger Wicker (R-MS) for voting for it.

It’s not that I’m against spending; I’m against all these earmarks, and I think that the Senate should have rejected this bill (especially the Republicans) and demanded that some of the pork be taken out.

Now, how does this relate to President Obama?

Well, last year during the campaign, Obama said, “We can no longer accept a process that doles out earmarks based on a member of Congress’ seniority, rather than the merit of the project.  We can no longer accept an earmarks process that has become so complicated to navigate that a municipality or non-profit group has to hire high-priced D.C. lobbyists to do it.”

And according to his website, he wanted to cut earmarks down: “Cut Pork Barrel Spending:Obama introduced and passed bipartisan legislation that would require more disclosure and transparency for special-interest earmarks. Obama and Biden believe that spending that cannot withstand public scrutiny cannot be justified. Obama and Biden will slash earmarks to no greater than year 1994 levels and ensure all spending decisions are open to the public.”

So, Mr. Obama, I’m sorry, but so far, this isn’t much “change we can believe in.”

Now, the signing statements.  I’m sure many of you remember that President Bush was criticized for his massive use of signing statements (where he says, “______________ part of this bill is unconstitutional” – it’s somewhat similar to a line-item veto, but not as legally binding [there are other uses for signing statements, such as defining vague terms in the bill, but the majority of the time they're used, it's for constitutional/unconstitutional issues]).  Well, Bush overused the signing statements, and Obama criticized him on it, as did the media.  The media was VERY crucial of his use of signing statements, and many Democrats and liberals claimed that they didn’t think signing statements were even legal.

Ironically, Obama’s signing statements came just two days after the President ordered a review on all of President Bush’s signing statements.

The White House released a press release on the signing of H.R. 1105, including the 5 signing statements for H.R. 1105:

THE WHITE HOUSE

Office of the Press Secretary
_________________________________________________________________
For Immediate Release                                        March 11, 2009

STATEMENT BY THE PRESIDENT

Today I have signed into law H.R. 1105, the “Omnibus Appropriations Act, 2009.” This bill completes the work of last year by providing the funding necessary for the smooth operation of our Nation’s Government.

As I announced this past Monday, it is a legitimate constitutional function, and one that promotes the value of transparency, to indicate when a bill that is presented for Presidential signature includes provisions that are subject to well-founded constitutional objections. The Department of Justice has advised that a small number of provisions of the bill raise constitutional concerns.

  • Foreign Affairs. Certain provisions of the bill, in titles I and IV of Division B, title IV of Division E, and title VII of Division H, would unduly interfere with my constitutional authority in the area of foreign affairs by effectively directing the Executive on how to proceed or not proceed in negotiations or discussions with international organizations and foreign governments. I will not treat these provisions as limiting my ability to negotiate and enter into agreements with foreign nations.
  • United Nations Peacekeeping Missions. Section 7050 in Division H prohibits the use of certain funds for the use of the Armed Forces in United Nations peacekeeping missions under the command or operational control of a foreign national unless my military advisers have recommended to me that such involvement is in the national interests of the United States. This provision raises constitutional concerns by constraining my choice of particular persons to perform specific command functions in military missions, by conditioning the exercise of my authority as Commander in Chief on the recommendations of subordinates within the military chain of command, and by constraining my diplomatic negotiating authority. Accordingly, I will apply this provision consistent with my constitutional authority and responsibilities.
  • Executive Authority to Control Communications with the Congress. Sections 714(1) and 714(2) in Division D prohibit the use of appropriations to pay the salary of any Federal officer or employee who interferes with or prohibits certain communications between Federal employees and Members of Congress. I do not interpret this provision to detract from my authority to direct the heads of executive departments to supervise, control, and correct employees’ communications with the Congress in cases where such communications would be unlawful or would reveal information that is properly privileged or otherwise confidential.
  • Legislative Aggrandizements (committee-approval requirements). Numerous provisions of the legislation purport to condition the authority of officers to spend or reallocate funds on the approval of congressional committees. These are impermissible forms of legislative aggrandizement in the execution of the laws other than by enactment of statutes. Therefore, although my Administration will notify the relevant committees before taking the specified actions, and will accord the recommendations of such committees all appropriate and serious consideration, spending decisions shall not be treated as dependent on the approval of congressional committees. Likewise, one other provision gives congressional committees the power to establish guidelines for funding costs associated with implementing security improvements to buildings. Executive officials shall treat such guidelines as advisory. Yet another provision requires the Secretary of the Treasury to accede to all requests of a Board of Trustees that contains congressional representatives. The Secretary shall treat such requests as nonbinding.
  • Recommendations Clause Concerns. Several provisions of the Act (including sections 211 and 224(b) of title II of Division I, and section 713 in Division A), effectively purport to require me and other executive officers to submit budget requests to the Congress in particular forms. Because the Constitution gives the President the discretion to recommend only “such Measures as he shall judge necessary and expedient” (Article II, section 3 of the Constitution), the specified officers and I shall treat these directions as precatory.

BARACK OBAMA

THE WHITE HOUSE,
March 11, 2009.

Now, it did surprise me when he said that “it is a legitimate constitutional function.”  I’m curious as to whether he meant that it’s constitutional (as in legal under the Constitution”) or that it’s actually set down in the Constitution.  Because if he thinks it’s the latter, he’s utterly wrong.

Personally, I’ve never studied signing statements enough to be certain, but generally looking at them, I think they’re constitutionally legal when not overused and not used to circumvent other provisions of the Constitution.  So, I have no problem with Obama using them, I’m just kinda shocked that he used them 2 days after demanding a review on ALL of President Bush’s signing statements.  I’m also angry (but not surprised) at the media for not saying much about it.

Still, these 2 things (especially the earmarks) show me that we’re just in for “more of the same,” and that I won’t be seeing much “change we can believe in.”

Done Ranting,

Ranting Republican

Bristol Palin and Fiancé Levi Johnston Split Up

March 13, 2009

bristol-palin-levi-bWell, it’s a sad love story coming out of Alaska.  Earlier in the week, the tabloid magazine Star reported that the daughter of Alaska Governor Sarah Palin, Bristol, had broken up with her fiancé, Levi Johnston.  As you probably remember, Bristol and Levi had a little boy recently, and they named him Tripp.

The Star reported the following as coming from Levi Johnston’s sister, Mercede:

“Levi tries to visit Tripp every single day, but Bristol makes it nearly impossible. She tells him he can’t take the baby to our house because she doesn’t want him around ‘white trash’!” Bristol won’t even allow him to watch the baby for a few hours — unless he’s babysitting!

The worst part, Mercede continues, is that the former vice presidential candidate supports Bristol’s treatment of Levi, 19. “I used to love Sarah,” Mercede says sadly. “But I’ve lost lots of respect for her.”

According to Star, Mercede also said, “Bristol’s just crazy.  That’s the nicest way I can put it.  She and Levi actually broke up a while ago!”

Bristol then released the following statement through her mom’s political action committee, SarahPAC: “Unfortunately, my family has seen many people say and do things to ‘cash in’ on the Palin name.  Sometimes that greed clouds good judgment and the truth.”

The only quote that we have from Levi is that they mutually decided to end their relationship “a while ago.”  That was said outside of  his home in Wasilla, Alaska.

As I said when I learned of the pregnancy, I wish both Bristol and Levi the best.  Teenage pregnancy isn’t an easy thing to go through.  I will say that this all could have been avoided through abstinence.  Sure, Bristol said she thinks that it is “not realistic at all,” but I know plenty of people who are doing it (or rather not “doing it”) just fine, including myself (then again, I am single at the moment, so that does make it a tad easier).

Again though, I wish Levi and Bristol, and especially Tripp the best.

Done Ranting,

Ranting Republican


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