Union Workers at Big Three Automakers Average $73 an Hour

By Pete Winn, Senior Writer/Editor, CNSNews.com, Tuesday, November 18, 2008

Economists in Michigan, the long-time home of the auto industry, say they don’t support the proposed multi-billion dollar bailout of Big Three automakers Chrysler, GM and Ford.

One reason why, they say, is the ultra-high labor costs for union workers employed by the Big Three. It costs over $73 per hour on average to employ a union auto worker, according to University of Michigan at Flint economist Mark J. Perry.

“Is it right to tax the average worker making $28.50 to bailout workers whose labor cost is over $73 an hour?” Perry asked.

He explained that in 2006, widely available industry and Labor Department statistics placed the average labor cost for UAW-represented workers at the former DaimlerChrysler at $75.86 per hour. For Ford it was $70.51, he said, and for General Motors it was $73.26.

“That includes the hourly pay, plus the benefits they’re receiving and all the other costs to General Motors, Ford and Chrysler, including legacy costs – retirement costs, pensions, and so on – so it’s looking at the total labor costs per hour worked for workers,” Perry said.

For U.S. workers at Toyota, however, the per hour labor cost is around $47.60, around $43 for Honda and around $42 for Nissan, Perry added, for an average of around $44.

“So we’re looking at somewhere around a $29 per hour pay gap between the Big Three and the foreign transplants that are producing cars in the United States,” Perry, chairman of the economics department, told CNSNews.com.

The average union worker at Chrysler, meanwhile, received 150 percent more in compensation than U.S. workers generally.

“Using Bureau of Labor Statistics numbers, the average compensation for manufacturing workers is around $31.50, and the average hourly compensation, including benefits, for the average worker in the U.S. economy is around $28.50,” Perry told CNSNews.com.

Bottom line: unless Chrysler, Ford and GM get a handle on their costs any government bailout is just going to delay the inevitable.

From the Washington Times:

GOP governors and state party chairmen say former House Speaker Newt Gingrich will be a leading Republican spokesman but not as its national chairman, a post likely to be filled by someone from within the ranks of the 168-member Republican National Committee.

Mr. Gingrich, considered a one-man idea factory who had wanted to be drafted for the top party post, would not give up his leadership of two other organizations he already heads, and that pretty much took him out of the running, interviews with Mississippi Gov. Haley Barbour, his fellow GOP governors and several influential state GOP chairmen indicated.

The Times story goes on to mention several other potential candidates including current RNC chairman Mike Duncan and Texas GOP Chairwoman Tina Benkiser.

I confess I don’t know much about Benkiser but at first glance she seems to have solid conservative credentials.

Why Bankruptcy Is the Best Option for GM

Chapter 11 would better preserve the valuable parts of the company than an ad hoc bailout.

By Michael E. Levine, Wall Street Journal, November 17, 2008

General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.

Consider the costs of tackling GM’s problems with some kind of bailout plan. After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of “change,” GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota’s.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM’s. But their expenses for benefits are a fraction of GM’s. GM is contractually required to support thousands of workers in the UAW’s “Jobs Bank” program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it’s not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

And therein lies the problem: The cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time. Read the rest…

The sad truth is any government bailout of the auto industry is only going to delay the inevitable. If GM is going to survive they’re going to have to make a lot of tough choices that they so far have been unable or unwilling to make.

4. A Republican candidate could have won the presidency this year.

I doubt it. In the hastily penned postmortems of campaign ‘08, much of the blame for McCain’s loss seems to have fallen at the feet of the candidate and his advisers, who (so the narrative goes) made a series of lousy strategic decisions that wound up costing the Arizona senator the White House. There’s little question that some of the choices McCain and his team made — the most obvious being the impulsive decision to suspend his campaign and try to broker a deal on the financial rescue bill, only to see his efforts blow up in his face — did not help. But a look at this year’s political atmospherics suggests that the environment was so badly poisoned that no Republican — not Mitt Romney, not Mike Huckabee, not even the potential future GOP savior, Louisiana Gov. Bobby Jindal — could have beaten Obama on Nov. 4.

Why not? Three words (and a middle initial): President George W. Bush.

In the national exit poll, more than seven in 10 voters said that they disapproved of the job Bush was doing; not surprisingly, Obama resoundingly won that group, 67 percent to 31 percent. But here’s an even more stunning fact: While 7 percent of the exit-poll sample strongly approved of the job Bush was doing, a whopping 51 percent strongly disapproved. Obama won those strong disapprovers 82 percent to 16 percent. And Bush’s approval numbers looked grim for the GOP even before the September financial meltdown.

Just one in five voters in the national exit polls said that the country was “generally going in the right direction.” McCain won that group 71 percent to Obama’s 27 percent. But among the 75 percent of voters who said that the country was “seriously off on the wrong track,” Obama had a thumping 26-point edge.

Those numbers speak to the damage that eight years of the Bush administration have done to the Republican brand. It’s a burden that any candidate running for president with an “R” after his — or her — name would have had to drag around the country.

5. McCain made a huge mistake in picking Sarah Palin.

No subject is more likely to break up a dinner party early than the Alaska governor McCain chose as his running mate. Everyone not only has an opinion about her qualifications (or lack thereof) but also feels it necessary to share those opinions with anyone within shouting range.

Love her or loathe her, the data appear somewhere close to conclusive that Palin did little to help — and, in fact, did some to hurt — McCain’s attempts to reach out to independents and Democrats. But just because Palin doesn’t appear to have helped McCain move to the middle doesn’t mean that picking her was the wrong move.

Remember where McCain found himself this past summer. He had won the Republican nomination, but the GOP base clearly felt little buy-in into his campaign. A slew of national polls reflected that energy gap, with Democrats revved up about the election and their candidate and Republicans somewhere between tepid and glum.

Enter Palin, who was embraced with a bear hug by the party’s conservative base. All of a sudden, cultural conservatives were thrilled at the chance to put “one of their own” in the White House. In fact, of the 60 percent of voters who told exit pollsters that McCain’s choice of Palin was a “factor” in their final decision, the Arizona senator won 56 percent to 43 percent.

For skittish conservatives looking for more evidence that McCain understood their needs and concerns, Palin did the trick. It’s hard to imagine conservatives rallying to McCain — even to the relatively limited extent that they did — without Palin on the ticket. And without the base, McCain’s loss could have been far worse.

I agree with Cillizza on both points.

1) Republicans had no chance in this election… Over the last decade they’ve abandoned traditional conservative principles in favor of some sort of squishy, centrist/populist quasi conservative “Republicanism” that lead to out of controlled spending and bad policy ideas like campaign finance reform, no child left behind, and amnesty for illegal aliens.

If Republicans expect to have any chance in the 2010 mid-terms or in 2012 Presidential election they need rediscover traditional conservative principles. Defining those principles isn’t a simple task but for me they start with a fundamental unwavering belief that, in the words of the Declaration of Independence, “… all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”

It used to be that Republicans embodied those principles by fighting for fiscal responsibility, limited government, private property rights, and a strong national defense. I’m not sure how or when the Republican party lost its way what I do know is they’ve lost lost two straight elections because they’ve alienated both their conservative base and independent voters.

2) Sarah Palin may not have helped McCain with independent voters she did energize the conservative base of the Republican party… Without her on ticket I think it’s a safe bet that Barack Obama’s margin of victory would have been larger.

Personally, I think some Palin’s problems with independent voters sterm from the McCain campaigns management of her. I think they would have been better served by having do a handful of interviews with talk radio and local media in swing states to tell her story directly to voters before her national media interviews with Charlie Gibson and Kattie Couric.

Of the 47 appointees named so far to transition or staff posts, 31 have ties to the Clinton administration, including all but one member of the 12-person Transition Advisory Board.

Transition chief John Podesta served as Clinton’s chief of staff from 1998 to 2001.

Other Clinton-era appointees include former Deputy Secretary of Defense John White, former State Department official Wendy Sherman, and former deputies to National Security Adviser Sandy Berger, Treasury Secretary Robert Rubin, Defense Secretary William Perry, and Secretary of State Madeleine Albright, Politico.com reports.

Also on the Obama team are transition adviser Michael Froman, who served as Rubin’s chief of staff, and Christopher Edley, who served Clinton and is married to a former Clinton deputy chief of staff.

Rep. Rahm Emanuel, a senior adviser to Clinton, has been named Obama’s chief of staff.

Just Say No to Detroit

Given the abysmal performance by Detroit’s Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack.

Before Michael Moore became famous for documentaries like “Fahrenheit 9/11″ and “Sicko,” his first big success came in 1989 with “Roger and Me.” In that film, Mr. Moore followed General Motors chairman and chief executive Roger Smith with a camera crew, asking him why the company was closing plants and producing low-quality vehicles. Mr. Smith looked flustered and inartfully avoided Mr. Moore’s camera crew while it lingered outside his country club or GM’s executive offices.

“Roger and Me” was entertaining, but it missed the real story about Roger Smith, who turned out to be a forward-thinking genius. Mr. Smith made big investments in information technology and satellite communications, acquiring Electronic Data Systems in 1984 for $2.5 billion and Hughes Aircraft in 1985 for $5.2 billion. Mr. Smith’s successors divested those businesses at huge profits — EDS was taken public in 1996 for more than $27 billion, and Hughes, renamed DirecTV, went public in 2003 for more than $23 billion. (The man who sold EDS to Roger Smith at a bargain price was H. Ross Perot, who then convinced many people that the experience qualified him to be president.)

Mr. Smith understood all too well that GM shouldn’t continue investing in its failing automobile business. That was 25 years ago. Today, our government is being asked to put tens of billions of dollars in GM, Ford and Chrysler, but we would be much better off if Washington allowed these companies to go bankrupt and disappear. Read the rest…

From a purely academic point of view professor Yermack’s conclusions are interesting. From a political point of view they’re a non-starter. No politician democrat or republican liberal or conservative is going to allow 3 bellwethers of American industry to fail… Even if that means throwing good after bad.

The choice between Steele and Thompson is tough one, I don’t think we could go wrong with either one, ultimately I think Michael Steele embodies the idea of “change” more than Thompson does so I guess you can put me in the Steele camp.

Who’s your choice? Tell us why in comments.

THE TALKING TRAP: AFGHAN FOLLIES

By Ralph Peters, New York Post, November 13, 2008

NEGOTIATIONS are the heroin of the chattering classes, blinding them to every reality except the next fix they can inject into our foreign policy. The pushers - our delighted enemies - pile up strategic profits.

Certainly, there are situations in which negotiations make sense, such as structuring trade terms or defining alliance contributions. But the notion that, if only we can sit down with our enemies, we’ll inevitably persuade them to love us is a deadly self-delusion.

There’s a looming danger that President-elect Obama’s naive and profoundly anti-military cadres will misinterpret Gen. David Petraeus’ tactic of opening communications with Taliban elements and seek to make talks the centerpiece of the new administration’s Afghan policy. If so, we might as well pack up and leave now.

No American soldier should die just so diplomats can rack up frequent-flyer miles.

Negotiations during a conflict only work to our advantage when we’re in a position of strength that threatens the enemy’s existence or when bloodied opponents have wearied of the fight. Both conditions applied in Iraq.

They don’t apply in Afghanistan. In Iraq, al Qaeda had worn out its welcome. The Sunni Arabs wanted our help. In Afghanistan, Taliban-style Islamist fanaticism has a deep constituency. While most Afghans don’t want the Taliban back, a fierce minority does. And, unlike Iraq’s Sunni Arabs, the Taliban think they can win.

The equation is simple: We kill them, or we lose. Fighting fanatics is a zero-sum game.

The first suite due to be filed in filed in the District of Columbia seeks to strike down the soft-money ban that is the central tenet of the McCain-Feingold Act - “soft money” is largely unrestricted contributions from wealthy individuals, corporations and labor unions.

The second suit due to be filed in a Louisiana federal court seeks to strike down the limits on coordination between parties and their candidates.

GOP to file suit to undo McCain rules

Ralph Z. Hallow, Washington Times, Thursday, November 13, 2008

EXCLUSIVE:

MIAMI - The Republican Party will file federal lawsuits Thursday seeking to overthrow the McCain-Feingold federal campaign finance regulations, Republican National Committee Chairman Robert M. “Mike” Duncan revealed Wednesday night at a private dinner with the nation’s Republican governors.

The move is considered a slap in the face of the Republican Party’s failed 2008 presidential candidate, Sen. John McCain of Arizona, who was dramatically outspent by Democrat Barack Obama, and of President Bush, who signed McCain-Feingold into law in 2002.

“We will bring two federal suits tomorrow to strengthen the Republican Party,” Mr. Duncan told The Washington Times.

Mr. Duncan said one suit will be filed in the District of Columbia to strike down the soft-money ban that is the central tenet of the McCain-Feingold Act — formally known as the Bipartisan Campaign Reform Act of 2002. “Soft money” is largely unrestricted contributions from wealthy individuals, corporations and labor unions.

The second suit will be in a Louisiana federal court to strike down the limits under the law Mr. McCain co-sponsored with Sen. Russ Feingold, Wisconsin Democrat, that control coordination between parties and their candidates.

“It prohibits us from spending over $84,000 in coordination with a candidate in a congressional race,” Mr. Duncan said. “That means we have to find some group to raise and spend money but without any coordination” with the candidate, his campaign or the RNC.

“That does not allow for a unified message,” he said. “We don’t think there is anything corrupting about coordinating with a candidate.”

McCain-Feingold helped Republicans in 2004, when Mr. Bush, under the increased hard-dollar contribution limits in the bill, set what was then a campaign fundraising record in his successful re-election bid. Hard-money contributions are lower-amount donations — $2,300 per election to individual candidates, with a higher limit for political parties — that can be spent on any election activity. Read the rest…

It’s about time someone challenged the Constitutionality of McCain-Feingold, I for the life of me can’t understand why Republicans supported it in the first place.

Ed has additional details at Hot Air.

I’m currently reading Dark Horse by Ralph Reed… The book is political thriller about a third party run for presidency. I’m about three quarters of the way through it, it’s an excellent read.