Taxpayers: Time to Demand a Recovery Plan from the Government!

Regardless of how you feel about the domestic auto industry, its fat cat CEOs or the UAW, you probably feel it was reasonable for Congress to demand to see recovery plans before loaning them taxpayer money. And Congress seemed to feel it was quite appropriate for their CEOs to cut their pay to one dollar a year and for the autoworkers to take cuts in pay and benefits until the Big Three are viable again.

Yet Congress hands out trillions of dollars of taxpayer money like it was candy, especially to Wall Street, with absolutely no questions asked. What do they care? It’s your money, not their own.

Well, isn’t it time that we taxpayers held the federal government to the same standards as the automakers? Where is Congress’ recovery plan? What is their plan for returning the federal government to a budget surplus? And if it’s reasonable for CEOs to take a dollar in pay while their companies return to profitability, isn’t it reasonable to expect all of our elected federal officials, including Obama, Biden and every senator and congressman to do the same? And shouldn’t we expect that every federal worker take cuts in pay and benefits until the budget is repaired?

Some Congressmen suggest to the automakers that they simply go into bankruptcy and let the court straighten out their mess for them. Well, there is no entity on earth more worthy of bankruptcy than the United States. Why don’t we simply declare bankruptcy and escape our national debt? Now I’m being facetious, of course. Bankruptcy isn’t an option for the federal government.

But let’s not have a double standard. If it’s good business practice to demand recovery plans, dollar salaries and wage cuts for workers from the auto industry, then it’s also good practice for taxpayers to demand the same of Congress!

I’m encouraging all of you to write your senators and congressmen and demand that they produce a recovery plan for the federal government – a plan to put the federal budget back in the black – and that they be willing to accept one dollar per year in pay until the plan is accomplished, and that they cut the pay of every federal worker. (You’ll see a link on the right hand side of this blog that will make it easy to find out how to contact your elected officials.) Send a link to this post to all of your friends and encourage them to do the same. Feel free to reproduce this post on your own blogs. I think that if we all got behind this idea we could have a big impact on restoring some fiscal responsibility to the federal government. They clearly won’t do it on their own.

2 Responses to Taxpayers: Time to Demand a Recovery Plan from the Government!

  1. Pete,

    Great minds run in the same channel. Big grin. This is a portion of my blog a few days ago:

    The Big-3 should hire me to negotiate with Congress. I would take this approach: “Madam Speaker, esteemed members of Congress, I have come to an equitable solution to our closely shared problem. My clients are more than willing to bring forth their finely honed business plans for your scrutiny.”

    I would continue, “At the same time, we request that Congress present us with your plan to manage and balance your business. After all, that would only be fair.” To which Madam Speaker would reply, “How much do you want and where do you want the checks sent?” Truth is stranger than fiction.

    As I’ve stated before, I’m not in favor of a bailout for the big-3. They cannot be salvaged in their present form. Regardless of management and wages, none of the big three can sell enough cars in the current and future economic times to support their basic overhead. They have reached the point of diminishing returns.

    • Pete Murphy says:

      Mike, regarding the Big Three, we’ll just have to continue to disagree. I’m assuming that you’re assuming that the status quo of the economy would remain unchanged – that is, a huge trade deficit and relentless competition from two dozen foreign suppliers that makes it impossible to maintain market share and sell cars at a profit. In that scenario, you may be right. However, consider a scenario in which trade is balanced, which would do two things: (1) almost double the market share of the Big Three from less than 50% to about 90%, and (2) send incomes rising faster than inflation, something we haven’t seen in decades. (The latter would happen as a result of over six million jobs returning to the U.S.) In that scenario, I believe the domestic automakers could easily once again make decent returns on vehicle sales – something like $2,000 per vehicle. In that scenario, all three could easily be profitable. After all, GM has already shed its UAW health care obligations when the UAW agreed last year to take over the health care of its workers in return for $35 billion in VEBA payments, spread over the future. Also, with UAW wages down to $28 and change, (and non-technical UAW employees – in other words, just about everybody except people on the assembly line – down to $14 per hour) and total compensation down to about $52 (all of which was agreed to last year), Big Three wages are now quite competitive with the Japanese, where total compensation runs about $48 per hour.

      In testimony before the Senate hearing yesterday, Mark Zandi, chief economist at Moody’s, stated that he believed they can be saved, but the ultimate price tag may be more like $125-175 billion, a lot more than the $34 billion they’re requesting but still a fraction of the cost to the economy if they fail. He also stated that, if they fail, the consequences for the U.S. economy would be “cataclysmic” – his word, not mine.

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