Barney Frank: We Lost Money on Obama's Auto Bailout But Made Money on Bush's Bank Bailout

Most of America’s media think President Obama's 2009 bailout of General Motors and Chrysler was a huge success.

Former Massachusetts Democratic Congressman Barney Frank threw cold water on this meme on NBC’s Meet the Press Sunday correctly informing viewers that the auto bailout lost money for the federal government. By contrast, we made money from George W. Bush's 2008 bank bailout (video follows with transcript and commentary):

BARNEY FRANK, FORMER CONGRESSMAN (D-MASSACHUSETTS): First of all, many of the banks didn't want this money. It’s not that we did it for them. But secondly, the federal government made money on the advances to the banks. What cost us money was the automobile industry bailout. But we made money on the banks.

HENRY PAULSON, FORMER BUSH TREASURY SECRETARY: We got all the money back plus $32 billion.

Indeed. Meanwhile, the government’s investment in General Motors stock is still underwater.

Via: Newsbusters

Continue Reading....

These 11 universities are awful and should be demolished down right now

The Great Recession has put a lot of people out of work and has taken a huge bite out of the value of pretty much everybody’s real property values. It bankrupted some historic companies, too, including Lehman Brothers and General Motors.

Education is a sector of the economy — a pretty large sector — that has managed to survive the malaise mostly unscathed. American colleges have been able to hang on, virtually en masse, with the tenacity of cockroaches — thanks in no small part to federal largesse in the form of Pell Grants and subsidized student loans.

That’s sad, really, because many public and private colleges and universities are delivering a sloppy, unfinished product. The 2011 “Pathway to Prosperity” study conducted by Harvard University found that only 56 percent of students complete four-year programs in fewer than six years.

Graduation rates don’t always accurately reflect the dropout rate. Some students don’t graduate because they leave at the first opportunity for better schools, for example. Also, students who obtain two-year degrees get missed in any four-year graduation count.

Still, way too many public and private nonprofit schools produce deplorable results — leaving dropouts on the hook for student loans and with little else, and leaving the government out billions in wasted grant money.

The slideshow below presents some of the worst offenders. Hopefully, your alma mater isn’t on the list. It’s probably not, though, because graduation rates are so low.

Via: The Daily Caller

Continue Reading....

Morning Bell: 10 Questions for the Vice Presidential Debate

Tonight’s debate between Vice President Joe Biden and Representative Paul Ryan is supposed to cover both domestic and foreign policy. The Heritage Foundation’s policy experts have submitted 10 questions they would like to see asked in the debate.

Watch with us tonight—we will be streaming the debate live at 9 p.m. ET on our Debate 2012 page, with an experts’ live blog.

DOMESTIC POLICY

1. Obamacare takes $716 billion out of Medicare to fund Obamacare. This includes $156 billion in cuts to Medicare Advantage. Currently, 27 percent of all Medicare beneficiaries are enrolled in Medicare Advantage, which is a private alternative to traditional Medicare. The Medicare Chief Actuary projects that by 2017, Obamacare’s severe cuts will decrease enrollment in Medicare Advantage by 50 percent and result in less generous benefit packages for those who do remain in the program. What changes would you make, if any, to ensure that these seniors are able to keep their current Medicare Advantage plan?

2. Patient choice is working well within Medicare and other government health programs. In addition to the private plans in Medicare Advantage, there are 1,100 plans in the Medicare drug program and hundreds of plans in the Federal Employees Health Benefits Program. None of these plans use “vouchers”; they receive a direct government contribution toward the cost of the plans. Would you expand patient choice in Medicare? Why or why not?

3. Most people under the age of 40 will pay more in Social Security taxes than they will receive in benefits, and Medicare adds to federal deficits faster than any other government spending program. How would you focus entitlement reform on reducing spending?

4. Under Obamacare, the Health and Human Services (HHS) preventive services mandate requires nearly all employers to cover abortion drugs and contraception regardless of religious or moral objection, effectively exempting only formal houses of worship. Should Americans be able to live out their faith commitments outside the four walls of their church—in the public square and in the way they run their businesses or non-profits?

5. It has been almost four years since the federal government took control of General Motors. Vice President Biden has said the bailout of the firm was a success. Was this a success? Why or why not? And when should the federal government sell the shares it still owns?

Gasparino: GM’s Devil’s Bargain

GM’s devil’s bargain - Still stuck with Uncle Sam

The Obama campaign raves about how it “saved the auto industry” — that is, the government’s bailout mainly of General Motors — and so preserved millions of jobs.

But if it was such a success, why is the bailout losing so much money — and why do current GM managers want nothing to do with Washington as they try to save the company?

The answer: They know that with the lefties in the Obama administration breathing down their necks, their chances of ever restoring GM to its past glory are anywhere from slim to none.

Of course, it’s hard to feel sorry for GM’s management, which news reports and my own sources say has been prodding the administration to sell off its remaining 26.5 percent stake in the company. GM’s bosses invited Uncle Sam in — tough luck for them that he doesn’t want to leave.

For way too long, the Big Three — GM, Ford and Chrysler — kept on cutting generous wage and benefit deals with their unionized workforce as if it was still the 1950s and ’60s, when foreign competition didn’t exist. By 2009, that heyday was long, long past — and the Great Recession brought their highly flawed business model crashing down.

The $17 billion in loans from the Bush administration in its waning days wasn’t enough. GM and Chrysler came hat in hand to the President Obama for a little more hope and change.

An easy solution would have been to let the companies reorganize under Chapter 11 of the bankruptcy code. They’d have had a good chance to survive; plenty of other companies have restructured under bankruptcy protection and emerged later as viable businesses. American Airlines is doing it right now, and without major disruptions in service, or mass layoffs.

As it turned out, Chrysler and then GM did declare banktuptcy — but the resolution wasn’t the normal court-overseen reorganization. Under Obama, the feds dumped in tens of billions more into the companies and took controlling stakes in an industry that was once a bedrock of free-market capitalism.

In the administration-overseen restructuring, bondholders got hit hard in what many legal experts say was a violation of bankruptcy laws, and dealerships around the nation got slammed

.

But the president’s buddies in the United Auto Workers largely feasted. Sure, the absurd “jobs bank” — Detroit’s version of a “no show job,” where the auto companies basically handed fired workers free money — got shut down. And new hires lost out on the old guaranteed pensions for the market-driven 401-k plan that most of the rest of us rely on for retirement.

Via: New York Post

Continue Reading...

General Motors Pushing U.S. to Sell Stake: Report

CHICAGO (MarketWatch) -- The Treasury Department is resisting General Motors' push for the government to sell off its stake in the auto maker, The Wall Street Journal reports. Following a $50 billion bailout in 2009, the U.S. taxpayers now own almost 27% of the company. But the newspaper said GM executives are now chafing at that, saying it hurts the company's reputation and its ability to attract top talent due to pay restrictions. Earlier this year, GM GM -1.16% presented a plan to repurchase 200 million of the 500 million shares the U.S. holds with the balance being sold via a public offering. But officials at the Treasury Department were not interested as selling now would lead to a multibillion dollar loss for the government, the newspaper noted. 

Via: Market Watch

The Great Green Car Fleet Pentagon buying Chevy Volts to ‘green up’ military

The Pentagon is buying Chevrolet Volts to help “green up” the military—while propping up sales of the bailed-out automaker’s most politicized car.

The Department of Defense began purchasing the struggling luxury electric car, which retails at $40,000, this summer as part of its goal to purchase 1,500 such green vehicles. The Marine Corps Air Station in Miramar, Calif. purchased its first two Volts in July, and 18 more vehicles will come shortly to Joint Base Andrews in Maryland, where Air Force One is based, according to military magazine Stars and Stripes.

The Obama administration championed the production of the Volt. Along with the president’s pledge this year to “buy one and drive it myself … five years from now when I’m not president anymore,” the government offers a $7,500 tax break to encourage sales.

Such perks, however, have failed to drive consumers to GM car lots. The vehicle has been forced to suspend production twice this year after the Volt failed to gain a foothold in the marketplace.

GM is now offering the vehicle for as low as $169 per month, a financing deal that is generally reserved for $15,000 cars—a price so low that GM is reportedly losing nearly $50,000 per vehicle. The struggling automaker will again suspend production later this month after only 2,500 Volts drove off the lots last month.

GM has spent $1.2 billion developing the electric car and is still working out kinks, such as the Volt’s tendency to electrocute firefighters and first responders to accidents. The Department of Defense has been involved in that process, helping to test the Volt’s battery safety and capabilities.

Via: WFB

Continue Reading...

Insight: GM's Volt - The ugly math of low sales, high costs

Loses $49,000 on each car sold. - General Motors Co sold a record number of Chevrolet Volt sedans in August — but that probably isn't a good thing for the automaker's bottom line.

Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.

Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce.

And while the loss per vehicle will shrink as more are built and sold, GM is still years away from making money on the Volt, which will soon face new competitors from Ford, Honda and others.

GM's basic problem is that "the Volt is over-engineered and over-priced," said Dennis Virag, president of the Michigan-based Automotive Consulting Group.

And in a sign that there may be a wider market problem, Nissan, Honda and Mitsubishi have been struggling to sell their electric and hybrid vehicles, though Toyota's Prius range has been in increasing demand.

GM's quandary is how to increase sales volume so that it can spread its estimated $1.2-billion investment in the Volt over more vehicles while reducing manufacturing and component costs - which will be difficult to bring down until sales increase.

But the Volt's steep $39,995 base price and its complex technology — the car uses expensive lithium-polymer batteries, sophisticated electronics and an electric motor combined with a gasoline engine — have kept many prospective buyers away from Chevy showrooms.

Via:Rueters

Fact-checkers find exaggerations in Obama, Biden conventions speeches

President Obama and Vice President Biden made statements in their convention speeches about unemployment, Medicare and other issues that fact-checkers say appear inaccurate or at least misleading.

Among the questionable remarks were Biden's argument that "after the worst job loss since the Great Depression we created 4.5 million private sector jobs in the past 29 months" – a frequent response by the Obama campaign when questioned about the slow economic recovery.

The Associated Press and others point out that statement is misleading because it counts jobs from the recession's lowest point  to where employment began to grow again – excluding jobs lost earlier in Obama's term and masking that overall unemployment has increased over that period.

"Overall, roughly 7.5 million jobs were lost during the recession that began in December 2007 and ended officially in June 2009," according to the wire service.

The Associated Press also points out that Obama said in his speech that he wants to use money saved by ending the wars to build highways, schools and bridges.

However, the wars were largely financed by borrowing "so there is no ready pile of cash to be diverted to anything else," the wire service writes.

The group FactCheck.org listed eight instances in which either Biden or Obama "spun" facts during their speeches Thursday night in Charlotte, N.C.

Via: Fox News

Continue Reading...

TARP and GM

In December of 2008, GM approached Congress and asked for a bridge loan to allow them to restructure. While the House passed legislation to accomplish this, it was not passed through the Senate. Days later, the Bush administration initiated a loan through the TARP program which would provide $14 Billion in loans and stock purchases to GM and follow many of the guidelines that were sought in that legislation. This included a restructure plan that would have to be approved by the Obama administration.

In February of 2009 GM presented their plan to the Obama administration. The plan was seen as preferential to union workers by bondholders and many stated their intention to oppose it. In March of 2009 President Obama announced that he was not accepting the viability plan put forth by GM, but that he was authorizing more funds to keep the company afloat. President Obama also initiated programs to provide funds to companies that supply parts to GM and Chrysler.

GM was placed into bankruptcy on June 1, 2009 and the company was supplied with an additional $30.1 Billion dollars, bringing the total loans and stock purchases to $50 Billion. The company was made a private entity at that time.

The bankruptcy restructuring plan agreed upon by the government and GM gave the US government a 60% share in the company and gave the Canadian government a 12% share. The United Auto Workers gave up a health and savings plan worth $20 Billion in exchange for a 17.5% share in the company and over $8 Billion in debt and preferred stock. Bondholders held $27 Billion in stock prior to the collapse and received only a 10% equity share in the new GM company. 

Throughout the bankruptcy process, President Obama stated that he had not desire to run a car company and would not interfere with daily GM business. This is at odds with numerous actions taken before and after the bankruptcy filings.

• Days before GM was placed into bankruptcy, the Obama administration demanded and received the resignation of company CEO Rick Wagoner.
• The Obama administration pushed for the closing of numerous GM dealerships
• The substance of the bankruptcy settlement was heavily tilted to favor unions - a result that many people suggest would not have occurred without political motivations
• The bankruptcy settlement allowed the US government, the Canadian, and the UAW Union to appoint chairs of the board - an action that would directly change the direction of the company for years

The TARP program established specific rules on what could be purchased with the funds. These rules stated that only Preferred Stock or Common stock without voting rights could be purchased. The reason for this was to prevent the government from controlling a company it purchased stock in through TARP funds. President Bush violated those rules when he used the money to provide a loan to GM. President Obama further violated those laws when he purchased stock in the company and used the ownership of that stock as authority to appoint board members. The creation of programs to give funds to companies simply because they depended on GM and Chrysler for business was also not allowed in TARP documents.

Via: The Political Guide

Continue Reading...

GM Suspending The Manufacture Of Chevrolet Volt

AP

GM Suspending Chevrolet Volt Output Due To Slow Sales

By James R. Healey

General Motors is halting, for a month, the manufacture of its well-known but seldom-sold Chevrolet Volt extended-range electric car, according to trade publication Automotive News.

It would be the second interruption in production for the Volt, which can go 38 miles on battery power before needing a recharge from its gasoline engine or via a plug-in.

Via: USA Today

Continue Reading...

DNC TO PROMOTE 'SUCCESS' OF AUTO BAILOUT

The DNC has plenty of good elected official seats still available. 

The (Convention planning) documents also give a glimpse of what parts of Obama’s record will get the most attention in the campaign, with one piece — the auto bailout — rating several mentions in the plan....

President Barack Obama claims the $82 billion auto bailout “created or saved” one million jobs.  But this is the Administration that claimed the $1 trillion so-called “Stimulus” bill “created or saved” jobs - in non-existent Congressional districts.

Chevy Volt

The administation spent $80 billion on “green jobs” - but couldn’t define what a “green job” was.  And when they finally started defining it - counted things like oil industry lobbyist, bus driver and garbage man. Suffice to say, President Obama and his Democrat cohorts have a long history of being...disingenuous.  And having a great deal of difficulty with math. 

We think the auto bailout rates several mentions - though we’re sure ours won’t come up at the Charlotte, North Carolina Democrat Lie-A-Thon.  Behold:

Taxpayers are poised to lose over $42 billion on the $82 billion auto bailout.  President Obama in late 2009 said we would make money on it.

$26.5 billion of the loss was a straight payoff to the Democrat-apparatchik United Auto Workers (UAW) union.

During the bankruptcy process, President Obama illegally paid off the UAW first and in full - before secured bondholders who should have been made whole before anyone else got a dime.  Which was incredibly disruptive and destructive of the entire bond market. 

President Obama illegally carried forward through the bankruptcy the ridiculously exorbitant UAW contracts, a huge contributing factor to GM going under in the first place - and are again, predictably, helping to wreck the bottom line.

Via Breitbart

Continue Reading...