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UAW vs. Indiana’s PERF

Dear Editor:

Years ago Chrysler Corp. issued bonds at a pretty good interest rate.  Indiana invested billions of dollars from the Public Employee Retirement Fund to earn that really good interest.  Both parties were happy until the UAW bankrupted Chrysler.  Obama said to Indiana that all the money Indiana invested in Chrysler would have to go to the UAW.  Too bad, Indiana PERF.

Indiana’s PERF did not have enough money to pay out public pensions for more than a few years.  To extend the fund, Indiana assessed government subdivisions like Whitley County, Columbia City and the school corporation a huge chunk of change to make up the short fall and many in local government are wailing and gnashing their teeth about having to pay next year’s assessment (which ultimately we  taxpayers are going to have to pay).

My brother who is a Chrysler retiree told me that he deserved his retirement allotment and he didn’t care if Indiana’s retired teachers didn’t get theirs.  He said that Obama’s Hope and Change was a good thing for him.  He believes that the redistribution of wealth from Indiana’s PERF to Chrysler UAW was a good thing and he supported it.

I don’t have a dog in this fight because property taxes are frozen and the assessed value of my house declined $7,000 this year.  I won’t be on the South end of this wealth redistribution as these government officials tax you readers to pay government retirees.  How elected officials in the towns and city of Whitley County handle this matter may affect you in ways you won’t like.

Keep this in mind when you vote.

Terry L. Smith

General Motors CEO Wants Higher Gas Prices

From The Heritage Foundation:

If General Motors CEO Dan Akerson had anything to say about it, you would be paying a dollar more a gallon for gas. Yes, with $4/gallon prices hitting consumers in a tough economy, Akerson told the Detroit News: “You know what I’d rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas.”

Akerson, 61, was appointed CEO of GM last fall, having previously served as an Obama-appointed member of the board. He has been critical of the Obama Administration on several issues, including fuel economy standards, but now has discovered something in common: a love of high gas prices. He, like President Obama and Energy Secretary Steven Chu, believes that higher gas prices will force taxpayers to buy more fuel-efficient (and usually more expensive) vehicles.

In 2008, Secretary Chu said: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” And it was President Obama who told CNBC in 2008 that he preferred a “gradual” increase in gas prices. Obama and Chu know that only when matched dollar-for-dollar will Americans choose alternative energy sources that are much more expensive today. Since the already heavily-subsidized alternative energy sources are not getting cheaper, the only solution is to make cheap energy more expensive.

Akerson, Chu and Obama are wrong to embrace high gas prices. Hitting lower-income Americans with a punitive gas tax while unemployment remains near ten percent is a bad idea, regardless of what behavior you are hoping to mandate.

Akerson’s comments came in the context of a larger conversation on energy policy. Akerson correctly stated that the government’s imposed fuel standards are taxing production, which will cost jobs and raise the purchase price of cars. But passing that burden directly to consumers at the gas pump isn’t the solution. The idea that the government must either increase taxes on businesses or struggling taxpayers is a false choice.

High gas prices alone won’t encourage consumers to buy the hugely unpopular Chevy Volt. The Volt isn’t selling because even after substantial tax credits that the government cannot afford, the additional cost in buying a not-ready-for-market Volt, plus the cost of electricity (which isn’t free) is far greater than any potential gas savings.

In fact, Chevy, along with Ford and Hyundai, are selling more small cars with the less government aid. According to the Washington Post, it is non-hybrid, but super-fuel efficient, small cars that customers are currently snatching up at a much lower cost.

General Motors and Chrysler have been bailed out enough. They do not need the government to continue manipulating taxpayers into paying more to drive to their next job interview. And they don’t need government imposed auto mandates or more failed ‘Cash for Clunkers’ programs. If GM builds a fuel-efficient vehicle that is affordable and appealing, they won’t need Washington to trick consumers into buying one, or to help pick up the check.

Akerson was correct to hope that GM can disconnect itself from the taxpayers’ teat in the next year. He described it as: “It’s kind of like your in-laws: It was a nice long weekend. We didn’t say a week.” We couldn’t have said it better ourselves.

Cain: If Banks Struggle, ‘Let Them Fail’

From National Review:

Herman Cain, the former chief executive of Godfather’s Pizza, says that if were president, and major American banks were in financial trouble, he would “let them fail.”

Cain, who initially supported the Troubled Assets Relief Program in October 2008, tells NRO that his position on bank bailouts has evolved. “We were in this financial meltdown like I had never seen before in my business career,” he explains. “I don’t think the typical American understood just how dangerous that was, not only for this country, but for the world.”

“The concept of the government providing assistance to the banking system, to help them get their act back together, I did support,” Cain says. “What I didn’t support was how they implemented it, how they carried it out.”

The Inherently Ideological Evaluation of the GM Bailout

From National Review:

Megan McArdle has done consistently excellent reported pieces on the GM bailout, and her recent evaluation of its net effect on the U.S. Treasury is no exception. Her bottom line is that the deal caused U.S. taxpayers to:

burn $10-20 billion in order to give the company another shot at life. To put that in perspective, GM had about 75,000 hourly workers before the bankruptcy. We could have given each of them a cool $250,000 and still come out well ahead compared to the ultimate cost of the bailout including the tax breaks

This is in line with the Obama administration’s $14 billion estimate of the net cost to the Treasury, as reported in the Wall Street Journal. If anything, I think this understates the case on the direct costs, because it does not consider other direct transfers of economic value like the government support for Delphi that inflated the value of the asset that GM sold to create a big chunk of their headline profits this past quarter, green-car development subsidies, and uncompensated interest costs on the government investment.

But no matter what realistic direct bailout costs you estimate, the objection of bailout defenders is that it is dwarfed by the other receipts or avoided expenditures created by the bailout. According to the Wall Street Journal, this is exactly the defense offered by the Obama administration:

The White House report said the money invested in GM and Chrysler ultimately saved the government tens of billions of dollars in direct and indirect costs, including the cost of unemployment insurance and lost tax receipts that the government would have incurred had the big Detroit auto makers collapsed.

There is a lot to this point, but it’s not really so simple. You can’t compare all of these net tax receipts (or more broadly, economic activity) to what would happen in “the world as it is today, minus GM.”

Read the rest at National Review.

God Bless America

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