It seems as though Congress might finally have realized that they can't print enough money or confiscate enough from us to bail out every business in America. (Link to Reuters story here.)This is good news. A realization that may have come $700 billion too late. But better late than never.
But who is Senate MAJORITY Leader Harry Reid (D-Nevada) criticizing for the "failure" to bail out Detroit? The MINORITY Republicans, of course. According to Reid, isn't everything the Republicans fault? Quoting Reuters, Reid "cautioned that success of the bailout rests with Senate Republicans and the White House." These Republicans must be the most powerful minority in history.
Blocking another blundering bailout is not "failure" but success of rational capitalism and market economics.
And when your party has a majority, blaming the opposition for not allowing you to pass legislation is just silly.
Who will the Democrats have to blame for their failures with expanded majorities next year and Barack Obama in the White House?
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It looks like the folks in DC are hell-bent to give the stimulus package another try seeing as the first one didn't have any real effect.
This time it's the car industry.
While the sanity of blowing cash around and running the national debt up even further is questionable; it seems inevitable - so this time let's target unemployment, create AMERICAN jobs and pump up the economy all at one time.
Consider the following:
Manufacturing costs of motor vehicles are 65% labor (ie: W-2 income), that's not all direct but due to suppliers. GM alone has over 1300 suppliers. (That's a lot of jobs!)
1 in 10 Americans makes all or part of their income due to the automobile industry.
Money turns over 5 times in a year.
Thus a vehicle with a manufacturing cost of 20K produces 13,500 in W-2 income which in turn becomes a total of 65K in 12 months due to the 5 turnovers.
(This isn't magic, it's simply how the economy works.)
Our domestic car makers are saddled with legacy costs, most of which will reduce dramatically in 2010 due to contract changes. They need to survive to get there.
Here's the solution
Instead of either shipping cases of cash off to car makers; or sending us all another check:
Send out a voucher for say $1,000 good on a motor vehicle for the percentage of the vehicle that's domestic. (Civic = 70% Ford Explorer=80%)
Let those not interested in a new car sell or give away their vouchers (Ebay would be loaded with them in no time flat) and those that are so inclined can use as many as they can get their hands on up to the full MSRP of the vehicle.
This would bail out the car industry without giving them a dime directly
Further it would reduce the overall age of the nations cars which would in turn;
increase overall fuel economy & decrease pollution.
Strengthen the dollar!
Since vehicles with a higher domestic content would be moving better this would reduce our imports, strengthening our dollar which would in turn further reduce what we pay for anything imported ...like gas!
Jobs
Instead of simply bailing out a few big companies, this would cause such a run that it would create employment throughout the industry affecting over 1300 suppliers and their workers.
That would give the economy good swift kick right where it needs one!
Pays for itself!
Since money turns over 5 times, and the vouchers are only good for the domestic content of the vehicle, every dime would be spent in the United States creating taxable income.
What is the income tax on 65,000 anyway?
(Remember? 20K manufacturing cost = $13,500 W-2 income x 5 = $65,000)
Another Stimulus Package?
I'm sure you'll agree that this makes more sense than simply sending out checks; many of which will be used to buy new flat screen TV's usually made in Malaysia or some such place.
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